Press release on the issuance of Circular No.22/2019/TT-NHNN
On November 15th, 2019, the Governor of the State Bank of Vietnam (SBV) issued Circular No.22/2019/TT-NHNN stipulating the prudent limits and ratios in the operations of banks and foreign banks’ branches. Accordingly, the following documents and regulations shall cease to be effective on banks and foreign banks’ branches:
- Circular No. 36/2014/TT-NHNN dated November 20th, 2014 stipulating the minimum safety limits and ratios in the operations of credit institutions and foreign banks’ branches;
- Circular No. 06/2016/TT-NHNN dated May 27th, 2016 amending and supplementing a number of articles of Circular No. 36/2014/TT-NHNN of the SBV Governor stipulating the prudent limits and ratios in the operations of credit institutions and foreign banks’ branches;
- Circular No. 19/2017/TT-NHNN dated December 28th, 2017 amending and supplementing a number of articles of Circular No. 36/2014/TT-NHNN stipulating the prudent limits and ratios in the operations of credit institutions and foreign banks’ branches;
- Circular No.16/2018/TT-NHNN dated July 31st, 2018 amending and supplementing a number of articles of Circular No. 36/2014/TT-NHNN stipulating the prudent limits and ratios in the operations of credit institutions and foreign banks’ branches;
- Article 4 Circular No. 13/2019/TT-NHNN dated August 21st, 2019 issued by the SBV Governor amending and supplementing a number of Circulars on licensing, organization and operations of credit institutions and foreign banks’ branches.
Circular No. 22/2019/TT-NHNN is composed of 3 Chapters, 25 Articles and 3 appendices with the following main substances:
- Chapter I: General provisions, comprising of 5 Articles (Article 1 to Article 5) on Scope of regulation, Subjects of application, Interpretation of terms, Internal regulations, Information technology system requirements.
- Chapter II: Specific provisions, comprising of 8 Sections, 15 Articles (from Article 6 to Article 20) providing specific provisions on: (i) the actual value of the charter capital, allocated capital, and how to handle when the actual value of charter capital and allocated capital is lower than the legal capital; (ii) the equity capital and the minimum capital adequacy ratios; (iii) restrictions and limitations on credit extension, conditions, credit extension limits for investment and trading of corporate bonds, stocks and credit management; (iv) solvency ratios and management, handling of non-solvency ratios; (v) the maximum ratio of short-term funds used for medium and long-term loans; (vi) the ratios of buying and investing in the Government bonds and the Government-guaranteed bonds; (vii) limitations on capital contribution, share purchase, and conditions, limits on the purchase and holding of stocks of other credit institutions; (viii) the ratio of outstanding loans over total deposits.
- Chapter III: Regulations on the implementation, comprising of 5 articles (from Article 21 to Article 25) stipulating: The transitional provisions; Post-transitional period handlings; Responsibilities of the credit institutions and the foreign banks’ branches; Implementation; Effectiveness, amendments and supplements to Article 23 of Circular No. 41/2016/TT-NHNN dated December 30th, 2016 of the SBV Governor providing the capital adequacy ratios for banks, foreign banks’ branches and other documents/ regulations that shall cease to be effective.
- The Appendices of the Circular provide guidance on: (i) Components and methodologies of determining the equity capital; (ii) Guidance on grouping and how to determine the total risky assets; (iii) Guidance on how to determine the solvency ratio.
This Circular takes effect from January 1st, 2020.
Translated by VA