Press Release on issuance of Circular No.28/2016/TT-NHNN
The Governor of the State Bank of Vietnam (SBV) issued Circular No. 28/2016/TT-NHNN on October 5, 216 to revise several articles of Circular No.21/2014/TT-NHNN dated August 14, 2014 on guiding scope, conditions, procedures for forex operations of credit institutions and foreign bank branches.
The main revised substances of this Circular are as follows:
1. Adding the content of “approving the forex activities” to license or decision on revising license
The Circular supplements the regulation as follows: “after getting license/renewing license or decision on revising license from the SBV with the content of providing forex activities in the domestic and the international markets, commercial banks, cooperative banks, finance companies, leasing companies and foreign bank branches are allowed to conduct common forex activities in the domestic and international markets as prescribed in this Circular”.
After being licensed with the above mentioned content, credit institutions, foreign bank branches are permitted to conduct all basic forex activities in accordance with the Circular.
2. About scope for common forex operations in the domestic and international markets applied to commercial banks
Adding several common forex activities to Articles 5 & 6 of Circular No.21 as follows: opening payment accounts for overseas credit institutions; receiving term deposits of foreign credit institutions; conducting forward and swap transactions with foreign financial institutions to prevent risks from contracts signed with domestic customers, etc.
3. About basic scope for forex operations in the domestic and international markets applied to non-bank credit institutions and cooperative banks
The Circular added specific regulations on scope for forex operations applied to finance companies and cooperative banks in line with the typical features of institutions.
4. Regulations on conditions and documental forms for approval of common forex operations in the domestic and international markets
The Circular revises regulations on conditions and dossiers of basic forex activities in the domestic and international markets as stipulated in Articles 8, 9 and 11 of the Circular No.21 as follows:
(i) Revising or eliminating unappropriate conditions and dossiers as follows:
- Eliminating conditions and dossiers about manpower.
- Revising conditions and dossiers about infrastructure, equipments and information technology.
- Eliminating regulation on business plans and forex service provision.
(ii) Revising or eliminating conditions and dossiers to simplify administrative procedures as follows:
- Revising regulation on conditions and dossiers about procedures of managing risks for each forex activity. Accordingly, credit institutions are required to send to the SBV their common regulations on risk management for all forex activities (not for each forex activity).
- Revising regulation on conditions and dossiers about operational process. Accordingly, credit institutions are not required to submit to the SBV their operational process when applying for license. They are responsible for formulating and promulgating processes after getting license.
- Eliminating regulation on compliance with prudent ratios and not handling administrative violations of common forex activities in the following years.
- Eliminating condition of maintaining beneficial performance for 1 year when requesting for licensing common forex activities of commercial banks. Accordingly, commercial banks are allowed to conduct common forex operations right after establishment and operations.
5. Regulation on transforming forex operations
The Circular revises regulation on transforming forex operations as follows:
- About the scope: the SBV will change all common forex operations in the domestic and international markets of credit institutions.
- About dossiers: credit institutions submit application for transformation, document on approving licensed forex activities, regulation on managing risks related to forex operations.
- For transforming other forex operations, it is implemented in line with regulations on scoping, dossiers as stipulated in Circular No.21 to ensure close management of complicated and risky forex operations.
This Circular will take effect from November 18, 2016.
Translated by Le Hang