THE STATE BANK OF VIETNAM | THE SOCIALIST REPUBLIC OF VIETNAM Independence - Freedom - Happiness
No. 03/2015/TT-NHNN | Hanoi, March 20, 2015
CIRCULAR
PROVIDING GUIDELINES FOR SOME ARTICLES OF THE GOVERNMENT’S DECREE NO. 26/2014/ND-CP DATED APRIL 07, 2014 ON ORGANIZATIONAL STRUCTURE AND OPERATION OF BANKING INSPECTION AND SUPERVISION AUTHORITIES
Pursuant to the Law on the State Bank of Vietnam dated June 16, 2010;
Pursuant to the Law on Inspection dated November 15, 2010;
Pursuant to the Government’s Decree No.156/2013/ND-CP dated November 11, 2013 defining functions, tasks, powers and organizational structure of the State Bank of Vietnam;
Pursuant to the Government’s Decree No. 26/2014/ND-CP dated April 07, 2014 on organizational structure and operation of banking inspection and supervision authorities;
At the request of the Chief Inspector of the Central Banking Inspection and Supervision Authority;
The Governor of the State Bank of Vietnam promulgates a Circular providing guidelines for some articles of the Government’s Decree No. 26/2014/ND-CP dated April 07, 2014 on organizational structure and operation of banking inspection and supervision authorities.
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GENERAL PROVISIONS
Article 1. Scope
This Circular provides guidelines for some articles of the Government’s Decree No. 26/2014/ND-CP dated April 07, 2014 on organizational structure and operation of banking inspection and supervision authorities (hereinafter referred to as “Decree No. 26/2014/ND-CP) in terms of:
1. assignment of responsibility for banking inspection and supervision
2. independent audit serving banking inspection and supervision.
3. procedures for extending an inspection beyond 70 days.
4. disclosure of inspection conclusions.
5. eligibility requirements applied to banking inspectors.
6. provision of information and submission of reports.
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8. rights and responsibilities for cooperation between units affiliated to the provincial banking inspection and supervision authorities and the branch of the State Bank in carry out inspections at the headquarters and all branches of the inspected entities (hereinafter referred to as “extensive inspection”).
Article 2. Regulated entities
1. Banking inspection and supervision authorities.
2. The branches of the State Bank.
3. Inspected and supervised entities.
4. Organizations and individuals involved in organizational structure and operation of banking inspection and supervision authorities.
Article 3. Definitions
For the purposes of this Circular, the terms below shall be construed as follows:
1. The affiliates of an inspected entity or supervised entity include its branches, transaction offices, representative offices, other affiliates or dependent units that are not subsidiaries or associate companies.
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Chapter II
GENERAL PROVISIONS
Article 4. Assignment of responsibility for banking inspection
1. The following entities shall be inspected by the Central Banking Inspection and Supervision Authority:
a) Organizations and individuals under the management of the State Bank, except for the entities under the management of branches of the State Bank as assigned by the Governor of the State Bank;
b) Wholly state-owned commercial banks, joint stock commercial bank over 50% of charter capital of which is held by the State (hereinafter referred to as “commercial banks over 50% of charter capital of which is held by the State”), policy banks, cooperative banks;
c) Joint venture banks, wholly foreign-owned banks that have their headquarters in a province or central-affiliated city (hereinafter referred to as “province”) where a Provincial Department of Banking Inspection and Supervision is available;
d) The foreign banks’ branches that are located in a province where a banking inspection and supervision authority is available;
dd) Joint stock commercial banks (except for the joint stock commercial bank over 50% of charter capital of which is held by the State), microfinance institutions, non-bank credit institutions that have their headquarters in the province where a Provincial Department of Banking Inspection and Supervision is available;
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g) The People's Credit Funds that are located in a province where a Provincial Department of Banking Inspection and Supervision is available;
h) Representative offices of foreign credit institutions, other foreign institutions that are involved in banking operation located in the province where a Provincial Department of Banking Inspection and Supervision is available;
i) Institutions providing credit information;
k) Vietnam Asset Management Company, other state-owned enterprises established by the Governor of the State Bank;
l) Deposit insurance of Vietnam;
m) Foreign-based subsidiaries and affiliates of credit institutions when necessary;
n) Institutions involved in foreign exchange and gold business; non-bank institutions that provide intermediary payment services and are located in a province where a Provincial Department of Banking Inspection and Supervision is available;
o) Other organizations and individuals in the same province as the Provincial Department of Banking Inspection and Supervision regulated by regulations of law promulgated by the State Bank;
p) Subsidiaries and affiliates of the entities inspected by the provincial banking inspection and supervision authorities if they are located in the same province as the Provincial Department of Banking Inspection and Supervision;
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r) Reporting units under the management of the State Bank in the same province as the Provincial Department of Banking Inspection and Supervision in accordance with regulations of the law on prevention of money laundering other than those specified in Points b, c, d, dd, e, g, h, i, k, l, m, n, o, p and q of this Clause.
2. A provincial banking inspection and supervision authority shall inspect the following entity:
a) Organizations and individuals under the management of the Branch of the State Bank;
b) Joint venture banks, wholly foreign-owned banks whose headquarters are located in the same provinces as the branch of the State Bank;
c) The foreign banks’ branches that are located in the province;
d) Joint stock commercial banks (except for the Joint Stock Commercial Bank over 50% of charter capital of which is held by the State), microfinance institutions, non-bank credit institutions whose headquarters are located in the province;
dd) Subsidiaries and affiliates of the credit institutions specified in Points b and d of this Clause that are located in the province;
e) The People’s Credit Funds that are located in the province;
g) Representative offices of foreign credit institutions, other foreign institutions that are involved in banking operation located in the province;
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i) Other organizations and individuals in the province that are regulated by regulations of law promulgated the State Bank;
k) Subsidiaries and affiliates that are inspected by the Central Banking Inspection and Supervision Authority and other provincial banking inspection and supervision authorities if such subsidiaries and affiliates are located in the province where the branch of the State Bank is located;
l) Reporting entities under the management of the State Bank in the provinces in accordance with regulations of the law on prevention of money laundering other than those specified in Points b, c, d, dd, e, g, h, i and k of this Clause;
m) Other entities upon the assignment given by the Governor of the State Bank.
Article 5. Assignment of responsibility for banking supervision
1. The Central Banking Inspection and Supervision Authority shall carry out microprudential supervision of the following supervised entities:
a) The commercial banks over 50% of charter capital of which is held by the State, policy banks, cooperative banks;
b) Joint venture banks, wholly foreign-owned banks that have their headquarters in the province where a Provincial Department of Banking Inspection and Supervision is available;
c) The foreign banks’ branches that are located in the province where a Provincial Department of Banking Inspection and Supervision is available;
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dd) Subsidiaries and affiliates of the credit institutions specified in Points a, b and d of this Clause that are located in the province where a Provincial Department of Banking Inspection and Supervision is available;
e) The People's Credit Funds that are located in a province where a Provincial Department of Banking Inspection and Supervision is available;
g) Institutions providing credit information;
c) Vietnam Asset Management Company;
i) Deposit insurance of Vietnam;
k) Foreign-based subsidiaries and affiliates of credit institutions;
l) Subsidiaries, affiliates of the entities supervised by the provincial banking inspection and supervision authorities if they are located in the same province as the Provincial Department of Banking Inspection and Supervision;
m) Other supervised entities of the banking inspection and supervision authorities other than those supervised by the provincial banking inspection and supervision authorities.
2. The provincial banking inspection and supervision authorities shall carry out microprudential supervision of the following supervised entities:
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b) The foreign banks’ branches that are located in the province;
c) Joint Stock Commercial Banks (except for the Joint Stock Commercial Bank over 50% of charter capital of which is held by the State), microfinance institutions, non-bank credit institutions that have their headquarters in the province;
d) Subsidiaries and affiliates of the credit institutions specified in Points a and c of this Clause that are located in the province;
dd) The People’s Credit Funds that are located in the province;
e) Subsidiaries and affiliates of the entities supervised by the Central Banking Inspection and Supervision Authority and other provincial banking inspection and supervision authorities if such subsidiaries and affiliates are located in the province;
g) Other entities as assigned by the Governor of the State Bank.
3. The Central Banking Inspection and Supervision Authority shall carry out macroprudential supervision of entire system of credit institutions and foreign banks’ branches.
Article 6. Independent audit serving banking inspection and supervision
1. The power to request an independent audit:
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b) The Chief Inspector of the provincial banking inspection and supervision authority shall request the inspected and supervised entities to undergo an independent audit as prescribed in Clause 2, Article 4, Clause 2, Article 5 of this Circular.
2. Procedures for request for an independent audit:
a) The Chief Inspector shall submit a written request to the Governor of the State Bank for approval for the proposal of inspected and supervised entities that need to undergo an independent audit. The request shall contain the following information: purposes, request for audit, scope, contents, duration of the audit and time limit for submission of the audit report. Within 05 days from the day on which the Governor of the State Bank approves, the Chief Inspector shall issue a decision on inspected and supervised entities that need to undergo an independent audit in accordance with the contents approved by the Governor of the State Bank.
b) The Director of the branch of the State Bank, at the request of the Chief Inspector of the provincial banking inspection and supervision authority, shall request the Governor of the State Bank (through the Central Banking Inspection and Supervision Authority) to consider approving the proposal of inspected and supervised entities that need to undergo an independent audit. The request shall contain the following information: purposes, request for audit, scope, contents, duration of the audit and time limit for submission of the audit report and the result-receiving unit. Within 05 days from the day on which the Governor of the State Bank approves, the Central Banking Inspection and Supervision Authority shall inform the Chief Inspector of the provincial banking inspection and supervision authority (through the Director of the branch of the State Bank) thereof. Within 05 days from the day on which the notice is received, the Director of the branch of the State Bank or the Chief Inspector of provincial banking inspection and supervision authority shall issue a decision on inspected and supervised entities that need to undergo an independent audit in accordance with the contents approved by the Governor of the State Bank.
4. Within 30 days from the day on which the decision is received, the inspected and supervised entities requested to undergo an independent audit shall hire an independent audit company at the request of the banking inspection and supervision authority; within 05 days from the day on which the inspection results are received, the entities requested to undergo the audit shall submit the independent audit results, directly or by post, to the result-receiving unit.
Article 7. Procedures for extending an inspection beyond 70 days
1. The head of the inspectorate shall submit a written request for the person who issues the inspection decision to extend the duration of inspection. The written request must specify reasons and length of the extension.
2. In the event the inspection decision is issued by the Governor of the State Bank or the Chief Inspector, the Governor of the State Bank, at the request of the Chief Inspector, shall request the Prime Minister to decide.
3. In the event the inspection decision is issued by the Director General of the Provincial Department of Banking Inspection and Supervision, he/she shall submit a report to the Chief Inspector. The Governor of the State Bank, in consideration of the report submitted by the Chief Inspector, shall request the Prime Minister to decide.
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5. In the event the inspection decision is issued by the Chief Inspector of the provincial banking inspection and supervision authority, he/she shall submit a report to the Director of the branch of the State Bank who shall submit the report to the Governor of the State Bank through the Central Banking Inspection and Supervision Authority. The Governor of the State Bank, in consideration of the report submitted by the Director of the State Bank, shall request the Prime Minister to decide.
6. According to the decision made by the Prime Minister, the person who issues the inspection decision shall issue a decision on extension of duration of inspection.
7. In the event the Prime Minister is yet to decide the extension of duration of inspection while the duration of inspection has passed, the inspectorate must suspend the inspection at the place where it is carried out; the duration of suspension of inspection shall be added to the length of the extension. When the Prime Minister has decided the extension of duration of inspection, the inspectorate shall continue the inspection at the place where it is carried out; in case the Prime Minister disagrees with the extension of duration of inspection, the inspectorate shall end the inspection at the place where it is carried out and perform the necessary tasks to end the inspection under the procedures for carrying out an inspection as prescribed by law.
Article 8. Disclosure of inspection conclusions
1. The inspection conclusion shall be made publicly available as prescribed in Clauses 2, 3 and 4, Article 22 of the Decree No. 26/2014/ND-CP.
2. The sensitive contents that may affect the operation safety of the inspected entity or relevant credit institutions and foreign banks’ branches specified in Clause 2, Article 22 of the Decree No. 26/2014/ND-CP upon the disclosure include:
a) The content that may exert cash withdrawal effect on the credit institution or foreign bank’s branch;
b) The content that may exert negative effects on other inspected entities or the whole banking system;
c) The content that exerts negative effects on reputation of the inspected entity, thereby threatening its operational safety;
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dd) The content that may make clients terminate the banking service contracts, thereby threatening the operational safety of the inspected entity or relevant credit institutions and foreign banks’ branches;
e) The content that is related to violations of law or suspicions of violations of law but no conclusion is reached or such ones are still under investigation by a competent authority but no official conclusion is reached;
g) Other sensitive contents as prescribed by law.
3. If the conclusion of an extensive inspection has to be publicly posted at the premises of the inspected entity, such inspection conclusion shall be publicly posted at its headquarters.
Article 9. Eligibility requirements applied to banking inspectors
1. In addition to the general eligibility requirements applied to the inspector as prescribed in the Law on Inspection and relevant legal documents, a banking inspector must:
a) hold state management and legal knowledge in relevant fields (this eligibility requirement is applied to inspectors, principal inspectors and superior inspectors);
b) hold a certificate of completion of a refresher course in banking inspection and supervision issued by the Banking Training School affiliated to the State Bank (this eligibility requirement is applied to inspectors and major inspectors); and
c) have participated in at least 02 inspections and remarked that he/she fulfills his/her duties and tasks by the head of the inspectorate (this eligibility requirement is applied to inspectors).
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Article 10. Provision of information and submission of reports
1. The Central Banking Inspection and Supervision Authority shall act as a focal point in submitting consolidated reports on the inspection, settlement of complaints and denunciations, and actions against corruption, crime and terrorism financing to the Governor of the State Bank, Inspector General, competent organizations and persons in accordance with regulations of law and at the request of the competent authority; submit consolidated reports on performance of functions and tasks, and other aspects of the Central Banking Inspection and Supervision Authority.
2. The Provincial Department of Banking Inspection and Supervision shall submit consolidated reports on its performance to the Chief Inspector.
3. The provincial banking inspection and supervision authorities shall submit consolidated reports on their performance to the Director of the branch of the State Bank that shall submit the reports to the Chief Inspector.
4. The Provincial Department of Banking Inspection and Supervision shall provide and exchange information and documents with the Branch of the State Bank within the province in order for the Director of the branch of the State Bank to act as a focal point within the province in performing the task of submitting reports and cooperating with executive committees, local governments and delegation of National Assembly deputies of provinces in considering proposals concerning finance and banking within the province, and performing other tasks assigned by the Governor of the State Bank.
5. Representative offices of foreign credit institutions; other foreign activities involved in banking operations; institutions involved in foreign exchange and gold business; non-bank institutions that provide intermediary payment services and are located in the province shall take responsibility for promptly, sufficiently and accurately providing information, documents and reports on a periodic basis or upon request to the Provincial Department of Banking Inspection and Supervision (the province where a Department of Banking Inspection and Supervision is not available) or the provincial banking inspection and supervision authority (the province where a Department of Banking Inspection and Supervision is not available) in accordance with regulations of the State Bank and at the request of the banking inspection and supervision authority.
Article 11. Relationship between the Central Banking Inspection and Supervision Authority and branches of the State Bank
1. Relationship between the Central Banking Inspection and Supervision Authority and branches of the State Bank of the provinces (including the provincial banking inspection and supervision authority) where a Provincial Department of Banking Inspection and Supervision is not available:
a) The Central Banking Inspection and Supervision Authority shall take responsibility for formulating and organizing the implementation of the annual inspection plan of the banking inspection and supervision authority; guide, monitor, encourage and inspect the implementation of the inspection plan at branches of the State Bank;
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c) In case violations of law are suspected or there is threat to the operational safety of credit institutions and foreign banks’ branches, the Central Banking Inspection and Supervision Authority shall request the Director of branch of the State Bank to carry out an inspection of the inspected entity under the management of the provincial banking inspection and supervision authority. In the event the Director of the branch of the State Bank does not agree to the request, the Chief Inspector shall issue the inspection decision, inform the Governor of the State Bank and be responsible to the Governor of the State Bank for such decision;
d) In case violations of law are suspected or there is threat to the operational safety of credit institutions and foreign banks’ branches, the branch of the State Bank shall request the Central Banking Inspection and Supervision Authority to inspect the inspected entities under the management of the Central Banking Inspection and Supervision Authority;
dd) The branch of the State Bank shall request the Central Banking Inspection and Supervision Authority to provide guidelines for the aspects concerning functions and tasks of the Central Banking Inspection and Supervision Authority;
e) The Central Banking Inspection and Supervision Authority shall direct and provide guidance for the provincial banking inspection and supervision authorities on banking inspection and supervision, settlement of complaints and denunciations, actions against corruption, money laundering and terrorism financing;
g) The provincial banking inspection and supervision authorities shall sufficiently, promptly and truthfully provide information and documents at the request of the Central Banking Inspection and Supervision Authority;
h) The Central Banking Inspection and Supervision Authority shall provide the provincial banking inspection and supervision authorities with inspection and supervision results relating to the inspected and supervised entities under the management of the provincial banking inspection and supervision authorities.
2. The relationship between the Central Banking Inspection and Supervision Authority and the branch of the State Bank of the province where a Provincial Department of Banking Inspection and Supervision is available shall be is prescribed in Article 12 of this Circular.
3. The Central Banking Inspection and Supervision Authority and the branch of the State Bank shall cooperate with each other in accordance with the working regulation of the State Bank.
Article 12. Relationship between the Provincial Department of Banking Inspection and Supervision and the branch of the State Bank of the same province
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2. The branch of the State Bank shall act as a focal point of the State Bank within the province in performing the tasks of submitting reports, cooperating with executive committees, local governments and delegation of deputies to National Assembly; shall submit reports and respond to enquiries at the request of executive committees, local governments and delegation of deputies to National Assembly, and considering proposals concerning finance and banking within the province.
3. The Provincial Department of Banking Inspection and Supervision authority shall sufficiently and promptly provide information and documents on a periodic basis or at the request of the branch of the State Bank about the banking inspection, supervision and management within the province in order for the State Bank to take its responsibility for acting as a focal point within the province.
4. When necessary or at the request of the branch of the State Bank, the Provincial Department of Banking Inspection and Supervision shall cooperate with the branch of the State Bank in discussing issues concerning banking inspection, supervision and management with executive committees, local governments and delegation of deputies to National Assembly and relevant authorities within the province.
5. The branch of the State Bank shall settle complaints and denunciations, take actions against corruption and crime within its competence, act as a focal point in disseminating and enforcing the law on complaints and denunciations, and actions against corruption and crime within the province; the Provincial Department of Banking Inspection and Supervision shall carry out administrative inspection, settle complaints and denunciations, and take actions against corruption and crime in accordance with regulations of the State Bank and law.
6. During the performance of the assigned functions and tasks, the branch of the State Bank shall promptly and sufficiently provide the Provincial Department of Banking Inspection and Supervision with information and documents relating to the inspected and supervised entities that are suspected of violating the law or likely to violate the law to inspect and verify, and impose penalties as prescribed by law.
Article 13. Relationship between the provincial banking inspection and supervision authorities
1. The Director of the branch of the State Bank of a province, at the request of the provincial banking inspection and supervision authority of the same province, may request the Director of another branch of the State Bank to request the provincial banking inspection and supervision authorities of their provinces to:
a) cooperate in carrying out extensive inspections;
b) inspect and supervise subsidiaries, associate companies and affiliates of the inspected entity or supervised entity located in their provinces;
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2. The provincial banking inspection and supervision authorities shall cooperate, provide and exchange inspection and supervision results, information and documents with each other in accordance with regulations of law to serve the performance and exercise of the assigned tasks and powers.
3. In case an inspected entity or supervised entity is suspected of violating the law or there is a threat to operational safety, the provincial banking inspection and supervision authority shall inform or send documents (if any) to and request relevant provincial banking inspection and supervision authorities to investigate, carry out an inspection or impose penalties in accordance with regulations of law.
Article 14. Rights and responsibilities for cooperation between units affiliated to the banking inspection and supervision authority, the branch of the State Bank in carrying out extensive inspections
1. The unit responsible for carrying out an extensive inspection has the right to request relevant units to provide information, documents and appoint banking inspectors and other officials to join the inspectorate; takes responsibility for assisting the person who issues the inspection decision in supervising the inspectorate.
2. The relevant unit shall take responsibility for cooperating in carrying out extensive inspections, providing promptly and sufficiently information and documents, appointing banking inspectors and other officials to join the banking inspectorate at the request of the unit responsible for carrying out the inspection; has the right to reject the request of the presiding unit, and inform the Central Banking Inspection and Supervision Authority if the request of the presiding unit is not consistent with regulations of law and direction of the Governor of the State Bank.
Article 15. Imposition of other regulations on inspection
The inspection by the banking inspection and supervision authority shall comply with regulations of the Decree No. 26/2014/ND-CP and this Circular. The regulations of the law on inspection and relevant regulations of the Governor of the State Bank shall apply to the issues that are not regulated by the Decree No. 26/2014/ND-CP and this Circular.
Chapter III
IMPLEMENTATION CLAUSE
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This Decree comes into force from May 07, 2015 and replaces the Circular No. 04/2000/TT-NHNN3 dated March 28, 2000 of the State Bank providing guidelines for the implementation of the Government’s Decree No. 91/1999/ND-CP dated September 04, 1999 on organizational structure and operations of the banking inspection authority.
Article 17. Implementation
Chief of Office, Chief Inspector, heads of the units affiliated to the State Bank, Directors of the branches of the State Bank of the provinces, Presidents and members of the Board of Directors, Board of Members, General Directors (Directors), credit institutions and foreign banks’ branches are responsible for the implementation of this Circular./.
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PP. GOVERNOR DEPUTY GOVERNOR Nguyen Phuoc Thanh