The State Bank of Vietnam has proposed new regulations to govern operation networks of commercial banks in a draft circular to replace its Decision No. 13/2008/QD-NHNN of April 29, 2008.
Under the 34-article draft circular, the opening, renaming, relocation, and termination of operation of transaction bureaus, branches, representative offices and non-business units of commercial banks must be approved by the SBV Governor in line with monetary policies in each period.
If the draft paper is approved, within one year from date of operation commencement, a commercial bank may open a transaction bureau and up to four branches, instead of one transaction bureau and two branches under Decision 13, provided that it meets certain conditions. These conditions include: gaining profits from business operations in the year immediately preceding the year of application for opening a transaction bureau or branch; having a proportion of outstanding loans to the total loan balance of below three percent; assuring safety ratios in banking operations and having classified loans and set up risk provisions under regulations. The applying commercial bank would be also required to have an efficient administration and execution apparatus and an information technology system capable of connecting its head office to the to-be opened transaction bureau or branch.
Under Article 20 of the draft circular, the State Bank would only consider and give the nod to the opening of overseas transaction bureaus or branches of commercial banks after the SBV’s Banking Inspection and Supervision Agency issues inspection and supervision agreements with competent authorities of the host countries.
Noteworthily, the draft circular shortens the time limit for competent authorities to examine and grant transaction bureau or branch opening licenses. Under Decision 13, it may take up to 40 working days before a license is granted to the applicant. Under the draft, this duration is reduced to 19 working days, including seven days for the SBV’s branch of the locality where the applying commercial bank is headquartered to examine the application dossier and send its opinion to the State Bank’s Banking Inspection and Supervision Agency, seven days for the Banking Inspection and Supervision Agency to appraise the dossier and submit its proposal to the Governor, and five days for the Governor to make an official approval.
The draft circular is currently posted at the SBV’s website sbv.gov.vn for public comment.-