On May 4, 2023, the State Bank of Vietnam (SBV) issued Document No. 3205/NHNN-TTGSNH requesting the credit institutions and the foreign bank branches to pay attention to a number of matters related to their operations.
Accordingly, implementing its state management functions in order to ensure safe and sound banking operations, the SBV has requested the credit institutions and the foreign bank branches to continue to improve the credit quality, limit arising new debts belonging to group 2 and non-performing loans (NPLs), and control strictly the credit quality for the potentially risky fields and sectors; classify assets; maintain and utilize the risk provisioning in line with the laws; continue to implement strictly the measures for the collection of NPLs and loans which the banks have used their provisioning to resolve the related risks.
The credit institutions are further requested to comply with the applicable regulations on share ownership, credit granting for shareholders and their related persons. For the credit institutions owning shares exceeding the limits as stipulated, they are required to urgently conduct measures to resolve this matter, coordinate closely with the major shareholders to formulate plans of divestment in line with the regulations and the guidance of the competent authority.
The credit institutions are also requested to strengthen the supervision and internal control; continue to review and closely monitor the credit granting activities and the changes in the share ownerships of shareholders and their related persons, as well as the group(s) of shareholders of interest (if any) in order to promptly detect and resolve any issues or violations related to share ownerships, credit granting and capital contributions, and to prevent cross ownerships and the manipulation of the banking operations.
The Document also requested the credit institutions to strengthen the inspection, review and internal control over the issuance of domestic letters of credit (L/C) (especially domestic UPAS L/C), ensuring full compliance with the laws and the internal regulations (noting the cases where the customer is an enterprise operating in the field of real estate and construction); take specific measures to control arising risks from the domestic L/C issuance, and minimize the risks of arising bad debts, contributing to ensuring the credit quality.
Le Hang