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Law on Credit Institutions 2024 in Vietnam
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1. Content of Law on Credit Institutions 2024
Law on credit institutions in Vietnam – Law No. 32/2024/QH15 includes the following contents:
| THE NATIONAL ASSEMBLY
_________ Law No. 32/2024/QH15 |
THE SOCIALIST REPUBLIC OF VIETNAM
Independence – Freedom – Happiness _______________________
|
LAW ON CREDIT INSTITUTIONS
Pursuant to the Constitution of the Socialist Republic of Vietnam;
The National Assembly promulgates the Law on Credit Institutions.
Chapter I
GENERAL PROVISIONS
Article 1. Scope of regulation
This Law stipulates the establishment, organization, operation, early intervention, special control, reorganization, dissolution, and bankruptcy of credit institutions; and the establishment, organization, operation, early intervention, dissolution, and cessation of operations of foreign bank branches; the establishment and operation of Vietnam-based representative offices of foreign credit institutions and other foreign institutions engaged in banking operations; the settlement of non-performing loans and disposal of collaterals of non-performing loans of credit institutions, foreign bank branches, and institutions with the function of purchasing, selling, and settling debts, of which 100% charter capital is held by the State.
Article 2. Subjects of application
1. Credit institutions.
2. Foreign bank branches.
3. Vietnam-based representative offices of foreign credit institutions and other foreign institutions engaged in banking operations (hereinafter referred to as foreign representative offices).
4. Institutions with the function of purchasing, selling, and settling debts, of which 100% charter capital is held by the State (hereinafter referred to as debt trading and settlement institutions).
5. Authorities, organizations and individuals related to the establishment, organization, operation, early intervention, special control, reorganization, dissolution, and bankruptcy of credit institutions; and the establishment, organization, operation, early intervention, dissolution, and cessation of operations of foreign bank branches; the establishment and operation of foreign representative offices; the resolution of non-performing loans and disposal of collaterals of non-performing loans of credit institutions, foreign bank branches, and debt trading and settlement institutions.
Article 3. Application of commercial practices
Organizations and individuals engaged in banking operations are entitled to reach agreement on the application of the following commercial practices:
1. International Commercial Terms published by the International Chamber of Commerce;
2. Other commercial practices which are not contrary to the fundamental principles of Vietnamese law.
Article 4. Interpretation of terms
In this Law, the terms below are construed as follows:
1. Factoring means a form of credit extension through redeeming receivable amounts of a seller or providing pre-payments on behalf of a purchaser under a contract on goods purchase or sale or service provision between such seller and purchaser.
2. Bank guarantee means a form of credit extension to a client under which a credit institution or foreign bank branch commits to the obligee to fulfilling financial obligations on behalf of the obligor if such obligor fails to fulfill or insufficiently fulfills its obligations as committed. The client shall acknowledge and repay the debt to the credit institution or foreign bank branch as agreed upon.
3. Early intervention means the State Bank of Vietnam (hereinafter referred to as the State Bank) imposing restrictive requirements and measures to credit institutions and foreign bank branches and requesting them to take remedies under the supervision of the State Bank, as specified in Clause 1, Article 156 of this Law.
4. Credit extension means an agreement allowing an organization or individual to use a sum of money or a commitment allowing the use of a sum of money on the repayment principle by such professional operations as lending, discount, financial leasing, factoring, bank guarantee, letter of credit and other credit extension operations.
5. Foreign bank branch means an economic institution without a legal entity status and a subsidiary of a foreign bank which is liable for all of the branch’s obligations and commitments in Vietnam.
6. Discount means a form of credit extension through purchasing on a definite term, or purchasing while reserving the right to claim, negotiable instruments and other valuable papers of beneficiaries prior to their due date.
7. Lending means a form of credit extension under which the lender gives or commits to give the borrower a sum of money for use for a specific purpose in a certain period as agreed upon on the principle of payment of principal and interest in full to the lender.
8. Major shareholder means a shareholder of a credit institution, which is a joint-stock company, holding 05% or more of the voting shares, including those indirectly held, of such credit institution.
9. Subsidiary of a credit institution means a company falling in any of the following cases:
a) The credit institution itself or together with its affiliated persons owns more than 50% of the charter capital or voting shares of such company;
b) The credit institution has the right to appoint a majority or all of members of the Board of Directors or Members’ Council, the Chief Executive Officer (Director) of such company;
c) The credit institution may modify the Charter of such company;
d) The credit institution itself or together with its affiliated persons directly or indirectly controls the adoption of resolutions and decisions of the Shareholders’ General Meeting, Board of Directors or Members’ Council of such company.
10. Controlling company means a company that possesses, either directly or indirectly, more than 20% of the charter capital of a commercial bank, or a company that controls a commercial bank, or a commercial bank that holds a subsidiary or an affiliated company.
11. Affiliated company of a credit institution means a company of which more than 11% of the charter capital or voting shares are held by the credit institution itself or together with its affiliated persons, other than a subsidiary of such credit institution.
12. Specialized finance company means a type of non-bank financial institutions whose main operation is factoring, consumer credit, and financial leasing in accordance with this Law.
13. General finance company mean a type of non-bank financial institution that conduct operations as specified in Section 3, Chapter V of this Law.
14. Provision of services of via-account payment means the provision of payment instruments; provision of services of payment by check, payment order, payment authorization, collection, collection authorization, bank card, and other payment services for clients via their payment accounts.
15. License may be a license for establishment and operation of a credit institution, or license for establishment of a foreign bank branch or a foreign representative office, which is granted by the State Bank. The State Bank’s document modifying a license is an integral part of a license.
16. Credit institution’s capital contribution or share purchase means a credit institution by itself or another institution under its entrustment contributing capital to form the charter capital; purchasing shares in an enterprise or another credit institution, including also transferring and purchasing shares or capital contributions of an enterprise or another credit institution; allocating or contributing capital to a subsidiary or an affiliated company of such credit institution; or contributing capital to an investment fund.
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