Press release on issuance of Circular No. 23/2021/TT-NHNN
Hanoi, December 31, 2021 – The Governor of the State Bank of Vietnam (SBV) has issued Circular No. 23/2021/TT-NHNN amending and supplementing a number of Articles of Circular No. 52/2018/TT-NHNN dated December 31, 2018 of the SBV Governor stipulating the rating of the credit institutions and the foreign bank branches.
The new Circular is composed of four (04) Articles, and has been issued in order to: (i) Further improve the legal basis for the rating of the credit institutions and the foreign bank branches (herein after referred to as the credit institutions); (ii) Fully reflect the actual situation and the levels of risks in the operations of the credit institutions; (iii) To be in line with the market conditions, the development and specialized operational characteristics of the different credit institutions, especially in the wake of the COVID-19 pandemic, which has adversely impacted the operations of the economy and the banking system [1]; (iv) Support the process of restructuring, and the handling of non-performing loans, improving the capabilities on governance, administration and control of the credit institutions in the future; (v) Contribute to enhancing the effectiveness of the banking supervision, helping to promptly take effective measures for each credit institution to ensure the safety and soundness of the credit institution system.
A number of basic substances of this Circular provide regulations on: (i) Clarifying some concepts and terms; (ii) Supplementing and replacing the method of calculating the scores for the qualitative indicator sets, taking into account such factors as: the total number of violations, the total amount of fines, the size of the credit institution, and the results of the implementation of the remedies as recommended or warned by the SBV related to the organization, governance or administration of the credit institution; (iii) Amending and supplementing the thresholds and weights of some quantitative indicators on capital and asset quality of the credit institutions; (iv) Supplementing regulations allowing foreign bank branches to report on the rating results to the parent bank provided that the parent bank commits not to provide the rating results in any form to a third party; (v) Adding the sources of information for the rating to include the information and data in the financial statements of the credit institutions, which have been independently audited in accordance with the law; (vi) Supplementing the regulations on the dissemination of the rating results, including information on the detailed scores of each indicator set.
The new Circular will take effect from February 15, 2022.
[1] Facing the negative impacts of the COVID-19 pandemic, the Communist Party, the National Assembly, the Government, the Prime Minister and the banking industry have proactively and drastically implemented multiple solutions and measures to remove the difficulties for the people and the enterprises, while mitigating the impacts of the COVID-19 pandemic on the credit institution system.
Translated by LK.