On May 15, 2018, the State Bank of Vietnam (SBV) issued Document No.3436/NHNN-TTGSNH requiring credit institutions, foreign bank branches (hereinafter referred to as credit institutions) to redress their lending activities relating to consumer loans and loans for everyday life purposes.
In order to prevent the frauds and violations of the legal regulations on consumer lending and lending for everyday life purposes, to protect the legitimate rights of the clients and to ensure the safety of the lending activities as well as the issuance of credit cards by credit institutions, following Document No.1366/TTGSNH4 dated May 3, 2018 of the SBV on tightnening the compliance with Directive No.07/CT-NHNN concerning the consumer lending and lending for everyday life purposes by credit institutions, the SBV Governor required credit institutions to seriously implement the followings:
First, credit institutions are required to review their internal regulations to make sure of sufficient regulations in compliance with the laws, especially the internal policies on consumer lending, lending for everyday life purposes, loan management, credit card issuance and the provision of credit card payment services in line with the characteristics of the credit institution’s business operations and with several circulars issued by the SBV such as: Circular No.39/2016/TT-NHNN dated December 30, 2016 regulating the lending activities of credit institutions and foreign bank branches, Circular No.43/2016/TT-NHNN dated December 30, 2016 regulating the consumer lending by finance companies, Circular No.19/2016/TT-NHNN dated June 30, 2016 regulating the banking card operations, and Circular No.26/2017/TT-NHNN amending and supplementing a number of articles of Circular No.19/2016/TT-NHNN.
Credit institutions are responsible for communicating to and familiarizing their branches and subsidiaries with these regulations with a view to synchronously implementing and seriously complying with the legal and internal regulations on consumer lending and lending for everyday life purposes.
Second, credit institutions must seriously comply with all the legal regulations on lending for everyday life purposes, consumer lending, credit card issuance, especially the regulations as follows:
(1) Complying seriously with the regulations on interest rates, fees related to lending activities as stipulated in Circular No.39/2016/TT-NHNN; complying with the principles, methodology of interest and fee calculations, transparent credit interest rates in conformity with Circular No.14/2017/TT-NHNN dated September 29, 2017 on the methodology of interest rate calculations for deposits and credit provision of credit institutions.
(2) Seriously following the regulations on transparency of the lending operations, including: (i) publicizing the sample loan contract, common transactional conditions in line with the regulations of Circular No.39/2016/TT-NHNN; (ii) Providing the clients with sufficient information on lending interest rates, the principles and elements to calculate the interest rates in case of adjusting the interest rates, or applying the interest rates for overdue loans, fees and fee types in line with Circular No.39/2016/TT-NHNN.
Consumer finance companies are required to issue in full the regulations on consumer loan interest rates to be applied synchronously in the whole system in each specific period, including the maximum rate, the minimum rate applied to each consumer loan product and to report to the SBV on their loan interest rate frameworks as stipulated in Circular No.43/2016/TT-NHNN.
(3) Seriously following the principles for loan collection as stipulated in Circular No.43/2016/TT-NHNN and applicable legal regulations.
(4) Reviewing and closely managing their client service points, the staff who introduce the loan services to clients, the partners of credit institutions in order to ensure compliance with the legal regulations and the credit institution’s internal regulations.
(5) Closely supervising the issuance of credit cards to ensure the compliance with Circular No.19/2016/TT-NHNN dated June 30, 2016 on banking card operations and Circular No.26/207/TT-NHNN amending and supplementing a number of articles of Circular No.19/2016/TT-NHNN.
Third, credit institutions are required to strengthen the supervision, inspection and control of the compliance by credit institutions with the laws and the SBV regulations on credit provision in general, the consumer lending in particular in all branches and business units withing the credit institution’s network; to ensure that all staff and officers of the banks comply with the internal processes and regulations of lending as well as other relevant legal regulations; to detect and strictly handle with all violations against the laws and internal regulations for consumer lending in a timely manner in order to protect the legitimate rights and the interests of the clients.
Fourth, credit institutions are required to review and improve the quality of their human resources on the basis of increased recruitment quality and staff evaluations and minimizing ethical hazards; to enhance professional training and coaching of the staff to improve their skills and conscience of law compliance, professional ethics of the staff and officers of the credit institutions.
Fifth, credit institutions are required to collaborate with the competent authorities in information collection, to promptly announce and alert within the whole system to take preventive actions, minimise and eliminate the risks and possible violations within the credit institutions.
MH