Press Release on the issuance of Circular No.23/2020/TT-NHNN
December 31, 2020 – The Governor of the State Bank of Vietnam (SBV) has issued Circular No. 23/2020/TT-NHNN stipulating the prudent limits and ratios in the operations of the non-bank credit institutions. Accordingly, Circular No.36/2014/TT-NHNN dated November 20, 2014 issued by the SBV Governor stipulating the prudent limits and ratios in the operations of the credit institutions and the foreign bank branches, and other documents amending and supplementing Circular No. 36/2014/TT-NHNN (Circular No.06/2016/TT-NHNN dated May 27, 2016, Circular No.19/2017/TT-NHNN dated December 28, 2017, Circular No.16/2018/TT-NHNN dated July 31, 2018, Article 4 of Circular No.13/2019/TT-NHNN dated August 21, 2019) shall cease to be effective.
The new Circular is composed of 3 Chapters, 23 articles and 5 appendices, with the following main substances:
- Chapter I: General provisions, consisting of 5 Articles (Article 1 to Article 5) regulating the scope of application; the subjects of application; the interpretation of terms; the internal regulations; and the IT system
- Chapter II: Specific provisions, consisting of 7 Sections and 13 Articles (Article 6 to Article 18), stipulating (i) the real value of the charter capital, and methods of resolution when the real value of the charter capital decreases lower than the legal capital, (ii) Equity capital and the capital adequacy ratio, (iii) the limits and credit extension target, conditions and target of credit extension for investment and trading of corporate bonds and shares, and credit extension management; (iv) the solvency ratios, management and resolution when the solvency ratios are broken; (v) the maximum ratio of short-term capital resources used for medium and long-term loans; (vi) the ratio for purchases and investment in the Government bonds and Government-guaranteed bonds; (vii) the limits for equity contributions and share purchases.
- Chapter III: Implementation, consisting of 5 Articles (Article 19 to Article 23) stipulating the transitional period; the resolution after the transitional period; responsibilities of the non-bank credit institutions; the effectiveness; and arrangements for the implementation.
- The appendices attached to this Circular provide guidance on (i) components and how to determine the equity capital; (ii) classification and determination of the total risk assets; (iii) the determination of the solvency ratios.
The new Circular will take effect from February 14, 2021.
Translated by Le Hang