Over the past time, network expanding for credit institutions has been managed carefully by the SBV in order to ensure the effective, safe and sound performance of banking system contributing to support the fulfillment of banking restructure in line with the orientation of the Central Party and Government.
expanding network for commercial banks
On September 9, 2013, the SBV issued Circular No.21/2013/TT-NHNN on operational network of commercial banks to stipulate strict conditions on granting the license of establishing branches, transaction offices of credit institutions. Accordingly, only profitable credit institutions can submit their documents and files to the SBV for requesting the opening of branches and representative offices when they are available to meet the requirements on operational safety in consecutive 12 months before the date of requesting; they have efficiently and fully implemented the requirements on classifying debts and risk provision; and their NPL ratio must not be higher than 3%.
The circular also stipulates the number of branches is allowed for a credit institution to be established in a year and the number of transaction offices opened in a location for the aim of managing network expanding in line with the governance capacity of credit institutions. More than that, the Circular increases the conditions for credit institutions to meet and reduce the number of new established branches and transaction offices in Ha Noi and Ho Chi Minh cities in order to orient credit institutions to expand their operations in provincial location, especially in rural areas to support for agricultural and rural economy...
Additionally, in order to decisively implement the Scheme on "Restructuring the credit institutions system", in the period of 2014 and 2015, the SBV has issued a number of documents to ask credit institutions to expand their network in close combination with the result of NPLs resolution and banking restructure.
Accordingly, the SBV shall only grant license on expanding network for those commercial banks that ensure sufficient dossier and condition, and are assessed to be available to meet the serious requirements of the restructure plan approved by the SBV, and complete NPL resolution plan and plan of bad debt selling to VAMC by October 30.
Therefore, the licensing of network development to commercial banks concentrated mainly in 2014, 2015 and 2016, more exactly, as after the October 30, 2015, is the time for SBV to announce the assessment results of commercial banks’ restructuring plans and NPLs resolution.
The number of branches and transaction offices licensed in 2014 and 2015 increased in comparison to 2013 has positively illustrated the fact that many commercial banks have met strict requirements of Circular No.21 and the SBV’s additional criteria and conditions on restructuring, NPLs resolution and sale for VAMC.
The transaction offices were licensed on the basis of converting from saving funds in line with Circular No.21 as banks are required to complete the transition plan of saving funds before end of 2015. Licensed branches and transaction offices are mainly located in the provinces outside Hanoi and Ho Chi Minh City.
The continuation of expanding network of credit institutions over the past two years in combination with the implementation of the restructuring Scheme made significant contribution to restructuring credit institutions, improving the capacity of banking services and customers’ approach to banking services, especially in rural and remoted areas, thereby enhance local social-economic development.
Overall, the licensing of expanding network for the commercial banks are implemented carefully by the SBV in order to ensure the efficient, safe and sound banking operations, supporting the successful implementation of the restructure Scheme of credit institutions under the orientation of Party and Government. In the coming time, the SBV will continue licensing and expanding the network of credit institution in strict and prudent manner, and recognize it as an effective tool to support the restructuring of institution credit system in Vietnam.
Mai Huong – Thoa Le