Press release on issuance of Circular No.41/2016/TT-NHNN

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Giọng Nam

 

Press release on issuance of Circular No.41/2016/TT-NHNN

dated December 30, 2016 on stipulating the capital adequacy ratio for foreign-owned banks and branches of foreign-owned banks.

The Governor of the State Bank of Vietnam (SBV) issued Circular No.41/2016/TT-NHNN, dated December 30, 2016, on stipulating the capital adequacy ratio for foreign-owned banks and branches of foreign-owned banks.

The Circular was issued pursuant to Article 130 of the Law on Credit Institutions and orientation as set out in the Scheme of “Development of the Vietnam banking sector towards 2010 and orientation towards 2020” under Decision No.112/2006/QD-TTg dated May 24, 2006 by the Prime Minister, the Scheme of “Credit institutions restructuring in the 2011–2015 period under Decision No.254/QĐ-TTg dated March 1, 2012 by the Prime Minister and Resolution No.24/2016/QH14 dated November 8, 2016 by the National Assembly on the plan for economic restructuring in the 2016–2020 period.

The Circular includes 4 chapters, 24 articles, particularly:

  • Chapter I: General provisions, including 5 articles (from Article 1 to Article 5) on the scope of regulation, subjects of application, interpretation of the terms, structuring organization and internal audit of management on capital adequacy ratio; data and information-technology systems; the independent rating of enterprises.
  • Chapter II: particular provisions, including 5 categories, 15 articles (from Article 6 to Article 20) regulating details on (i) the formula for determining the capital adequacy ratio; (ii) Risk-weighted assets (RWA), Credit risk-weighted (CRW) and measures to minimize credit risk; (iii) The requirement capital for operational risk; (iv) the requirement capital for market risk; (v) a mechanism for reporting and information announcements.
  • Chapter III: Provisions on SBV entities’ responsibilities, including 2 articles (Article 21 and 22).
  • ChapterIV:. Provisions to be implemented, including 2 articles (Article 23 and 24).

    • This Circular takes effect from January 1, 2020. Those foreign banks and branches of foreign banks that are able to meet the requirements on capital adequacy ratio in line with the provisions of this Circular before January 1, 2020 shall report to the SBV, then the SBV will announce a specific time for them to apply this Circular.