The Law stipulates specifically the conditions for granting operation licenses of credit institutions. Conditions for issuance of a credit institution’s license in Vietnam. Let us learn about this topic with LSX law firm as follow:
As prescribed by Law, a credit institution is an enterprise that carries out one, several, or all banking activities. In essence, a credit institution is an enterprise operating under the management of the State Bank. The Law stipulates explicitly the conditions for an enterprise to have an operating license as follows:
1. Conditions for issuance of a credit institution’s license in Vietnam
Firstly, capital conditions for issuance of a credit institution’s license in Vietnam, the same as issuance of representative office establishment license: Having charter capital, the capital allocated is at least equal to the legal capital level. This capital level is specified in Decree 141/2005/ND-CP.
Second, the subject condition for issuance of a credit institution’s license in Vietnam:
+ The owner of the credit institution, a one-member limited liability company; is a legal entity operating legally and has sufficient financial capacity to contribute capital.
+ In addition, founding shareholders or members are individuals with total civil act capacity and enough financial capacity to contribute money.
Conditions for the owner of a credit institution being a one-member in limited liability company; founding shareholder, or founding member shall be prescribed by the State Bank;
+ Moreover, the manager, executive officer, member of the Supervisory Board fully meets the criteria; and conditions specified in Article 50 of the Law on Credit Institutions.
Thirdly, conditions on charter for issuance of a credit institution’s license in Vietnam: Having a Charter under provision of Law
The charter of the credit institution is the concretization under the Law; the alliance must not be contrary to the Law. To control the conditions in the charter of the credit institution; the credit institutions must register their accord at the State Bank.
Besides, other conditions: Having an establishment project; a feasible business plan that does not affect the safety and stability of the credit institution system; does not create a monopoly or restrict competition or unfair competition in the credit institution system.
2. Conditions for licensing of joint venture credit institutions, 100% foreign-owned credit institutions in Vietnam
In addition to meeting the primary conditions of a credit institution; a joint venture or 100% foreign-owned credit institution must satisfy the following requirements:
Firstly, the foreign credit institution is permitted to conduct banking activities under the country’s laws where the foreign credit institution’s head office is located.
Secondly, the activity expected to apply for a permit in Vietnam must be the activity that the foreign credit institution is currently permitted to conduct in the country where the foreign credit institution’s head office is located.
Thirdly, foreign credit institutions must have healthy operations and meet the conditions on total assets, financial situation, and safety ratios prescribed by the State Bank.
Moreover, the foreign credit institution must have a written commitment to support in finance; technology, administration, administration, and operation for the joint-venture credit institution, the 100% foreign-owned credit institution; ensure these organizations maintain the actual value of their charter capital not less than the legal capital level and comply with the provisions on safety assurance of this Law.
Finally, a foreign competent authority has signed an agreement with the State Bank on inspection and supervision of banking activities; exchange information on banking safety supervision, and made a written commitment to consolidated care under international practices for operations of foreign credit institutions.
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Related questions
Credit means receiving something of value now and promising to pay for it later, often with a finance charge added by the lender.
Credit institution is an enterprise that carries out one, several, or all banking activities. In which banking activities can be understood as the regular business and provision of one or a number of the following operations: receiving deposits, granting credit, and providing payment services through accounts. Credit institutions include banks, non-bank credit institutions, microfinance institutions, and people’s credit funds.
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