SBV calls for revamp of credit institutions

18/01/2008 -- 7:58 PM

Ha Noi (VNA) – The State Bank of Viet Nam (SBV) has issued a decision to regulate the opening and closing of non-banks credit institutions based on their time in the market and holding capital. SBV deputy governor, Tran Minh Tuan, said the Decision No. 01/2008/QD-NHNN was designed to restructure the country’s non-bank credit institutions, which are mainly financial companies and finance leasing companies. Under the decision, which will take effect on January 24, non-bank credit institutions can open new branches in domestic markets after one year of operation, provided that they can meet the requirements on charter capital amongst others. The central bank’s newly publicised regulation stipulates that to open new branches, non-bank institutions must have a 20 percent ratio of pre-tax profit on stockholder equity in their previous year of operation. As for bad debt ratio, finance leasing companies cannot have their figures at less than 3 percent of total outstanding loans. The figure for financial companies is under 2 percent. Non-bank credit institutions wanting to open branches or representative offices abroad must have been operational for at least three years. The new decision also stipulates that countries where the institutions plan to open branches or representative offices must have signed agreements with Viet Nam ’s central bank on supervising the operation of the institutions’ branches. As for the opening of new branches and rep. offices, the newly publicized regulation states that non-bank credit institutions will not be allowed to open more branches or transaction offices if they already have enough branches as stipulated by current regulations. This law lays out that these institutions’ total number of branches and transaction points is calculated by the quotient, in which the numerator is the difference of the current chartered capital and the legal capital, while the denominator is 50 billion VND.-Enditem
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