Circular 17/2022/TT-NHNN environmental risk management in credit extension activities

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ATTRIBUTE

Circular No. 17/2022/TT-NHNN dated December 23, 2022 of the State Bank of Vietnam providing guidance on environmental risk management in credit extension activities of credit institutions and foreign bank branches
Issuing body: State Bank of VietnamEffective date:
Known

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Official number:17/2022/TT-NHNNSigner:Dao Minh Tu
Type:CircularExpiry date:Updating
Issuing date:23/12/2022Effect status:
Known

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Fields:Finance - Banking
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THE STATE BANK OF VIETNAM

_______

No. 17/2022/TT-NHNN

THE SOCIALIST REPUBLIC OF VIETNAM
Independence - Freedom - Happiness

_____________________

Hanoi, December 23, 2022

 

CIRCULAR

Providing Guidance on environmental risk management in credit extension activities of credit institutions and foreign bank branches

___________________

 

Pursuant to the Law on the State Bank of Vietnam dated June 16, 2010;

Pursuant to the Law on Credit Institutions dated June 16, 2010; the Law Amending and Supplementing a Number of Articles of the Law on Credit Institutions dated November 20, 2017;

Pursuant to the Law on Environmental Protection dated November 17, 2020;

Pursuant to the Government's Decree No. 102/2022/ND-CP dated December 12, 2022, prescribing the functions, tasks, powers and organizational structure of the State Bank of Vietnam;

At the request of the Director of the Department of Credit for Economic Sectors;

The Governor of the State Bank of Vietnam promulgates a Circular providing guidance on environmental risk management in credit extension activities of credit institutions and foreign bank branches.

 

Article 1. Scope of regulation

This Circular provides guidance on environmental risk management in credit extension activities of credit institutions and foreign bank branches in Vietnam in respect of investment projects requiring environmental risk management in credit extension activities as prescribed in Clause 1, Article 3 of this Circular.

Article 2. Subjects of application

1. Credit institutions, foreign bank branches in Vietnam (hereinafter referred to as credit institutions) that are established and operate under the Law on Credit Institutions, excluding microfinance institutions, people's credit funds, Vietnam Bank for Social Policies.

2. Organizations and individuals that are clients of credit institutions.

Article 3. interpretation of terms

1. Investment projects requiring environmental risk management in credit extension activities are investment projects prescribed in Appendices III, IV and V enclosed with the Government’s Decree No. 08/2022/ND-CP dated January 10, 2022, detailing a number of articles of the Law on Environmental Protection (hereinafter referred to as investment projects).

2. Environmental risk of an investment project (hereinafter referred to as environmental risk) is the probability of causing adverse impacts on the environment during the implementation of the investment project, leading to additional costs, reduced incomes or loss of capital and assets of client that is the investment project owner.

3. Environmental risk in credit extension activities is a credit risk of a credit institution that arises when its client encounters an environmental risk as prescribed in Clause 2 of this Article.

4. Environmental risk assessment in credit extension activities is the determination of the level of environmental risks in extending credit to an investment project.

5. Environmental risk management in credit extension activities means the identification and assessment of environmental risks in credit extension activities; monitoring, control and taking of measures to minimize environmental risks in credit extension activities.

Article 4. Rules for environmental risk management in credit extension activities

1. Credit institutions shall manage environmental risks in credit extension activities in compliance with regulations of the law on credit extension and credit risk management in banking sector.

2. Credit institutions shall conduct environmental risk assessment in extending credit to investment projects in order to determine credit risks, determine conditions of the credit extension and manage credit risks for credit amounts extended to clients.

3. Credit institutions shall organize assessment of environmental risks for investment projects or use the report on assessment of environmental risks for investment projects given by a qualified environmental risk assessment service provider or by another credit institution as agreed in the service contract.

4. If the investment project is determined to have environmental risks in credit extension activities, the credit institution shall reach an agreement with its clients on adding to the credit extension agreement the measures that the client commits to take in order to minimize the environmental risks in credit extension activities.

5. Clients shall be responsible for providing information for environmental risk management in credit extension activities at the request of the credit institutions and the accuracy of the provided information.

Article 5. Information on environmental risk management in credit extension activities

Information serving the environmental risk management in credit extension activities includes:

1. Environmental information about the client’s investment project.

2. Decision on approval of appraisal results of preliminary environmental impact assessment report, environmental impact assessment report as prescribed by law, environmental license and environmental registration (if any).

3. Inspection and examination results in terms of compliance with regulations on environmental protection by the investment project given by competent environmental protection agencies (if any).

4. Information on site surveys, information provided by functional agencies, social organizations, residential communities and individuals under direct environmental impact of the client’s investment project in relation to the compliance with regulations on environmental protection (if any).

5. The environmental protection reports submitted by the client to competent state agencies in accordance with the law on environmental protection.

6. Reports submitted by the client to the credit institution on the implementation of commitments to minimize environmental risks in credit extension activities specified in the credit extension agreement.

7. Environmental protection reports of agencies and organizations subject to environmental protection reports in accordance with the law on environmental protection (if any).

8. Other information related to environmental protection activities.

Article 6. Internal regulations on environmental risk management in credit extension activities

1. Credit institutions shall formulate their own internal regulations on environmental risk management in credit extension activities which may be separated from or included in their internal regulations on credit extension and internal control, and must be conformable with the law on credit extension and credit risk management.

2. Internal regulations on environmental risk management in credit extension activities of a credit institution shall include the following contents:

a) Identification and classification of applications for credit extension which require environmental risk assessment in credit extension activities;

b) Information to be collected to serve environmental risk management in credit extension activities;

c) Environmental risk assessment in credit extension activities that is conformable with the provisions of this Circular;

d) Environmental risk management in credit extension activities during the credit consideration, appraisal, approval and management;

dd) Internal reports on environmental risk management in credit extension activities.

Article 7. Effect

1. This Circular takes effect from June 1, 2023.

2. Regarding credit extension agreements concluded before the effective date of this Circular, credit institutions may reach agreements with their clients on environmental risk management in credit extension activities laid down in this Circular.

Article 8. Implementation organization

The Chief of the State Bank of Vietnam’s Office, the Director of the Department of Credit for Economic Sectors, heads of the State Bank of Vietnam’s affiliated units, credit institutions, foreign bank branches, relevant organizations and individuals shall implement this Circular./.

 

 

FOR THE GOVERNOR

THE DEPUTY GOVERNOR

 

Dao Minh Tu

 

 

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