Circular No. 19/2019/TT-NHNN dated November 05, 2019 of the State Bank of Vietnam prescribing the operation network of microfinance institutions

CIRCULAR

Prescribing the operation network of microfinance institutions^[1]

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

Pursuant to the June 16, 2010 Law on Credit Institutions;

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

Pursuant to the November 26, 2014 Law on Enterprises;

Pursuant to the Government’s Decree No. 16/2017/ND-CP of February 17, 2017, defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam;

At the proposal of the Chief of the Banking Supervision Agency;

The Governor of the State Bank of Vietnam promulgates the Circular prescribing the operation network of microfinance institutions.

Chapter I

GENERAL PROVISIONS

Article 1.Scope of regulation

This Circular prescribes:

1. The establishment, termination of operation and dissolution of domestic branches, transaction bureaus, representative offices or non-business units of microfinance institutions; and the opening and termination of operation of transaction points of microfinance institutions.

2. The renaming and relocation of offices of branches, transaction bureaus, representative offices or non-business units of microfinance institutions; and the change of branches managing transaction bureaus of microfinance institutions.

3. The transformation of attached units of microfinance programs or projects into branches, transaction bureaus, non-business units or representative offices of microfinance institutions.

Article 2.Subjects of application

1. Microfinance institutions.

2. Organizations and individuals involved in the establishment, termination of operation or dissolution of branches, transaction bureaus, representative offices or non-business units; the opening or termination of operation of transaction points; the renaming and relocation of offices of branches, transaction bureaus, representative offices or non-business units; the change of branches managing transaction bureaus; and the transformation of attached units of microfinance programs or projects into branches, transaction bureaus, non-business units or representative offices of microfinance institutions.

Article 3.Interpretation of terms

In this Circular, the terms below are construed as follows:

1. Operation network of microfinance institutions includes domestic branches, transaction bureaus, representative offices and non-business units.

2. Branch means a dependent unit of a microfinance institution which has its own seal and is tasked to perform one or more than one function of such microfinance institution according to the latter’s internal regulations and law.

3. Transaction bureau means a type of branch or dependent unit of a microfinance institution which is managed by a branch of such microfinance institution. A transaction bureau has its own seal and office located in the operation area of the managing branch, and is tasked to perform one or more than one function of such microfinance institution according to the latter’s internal regulations and law.

4. Representative office means a dependent unit of a microfinance institution which has its own seal and acts as an authorized representative of such microfinance institution. A representative office may not conduct business operations.

5. Non-business unit means a dependent unit of a microfinance institution which has its own seal and performs one or more than one of the activities to support business operations of such microfinance institution in accordance with Article 6 of this Circular.

6. Time of request means a date written in a request for establishment of a branch, transaction bureau, representative office or non-business unit of a microfinance institution.

Article 4.Competence to approve contents concerning the network of microfinance institutions

1. Competence of the Governor of the State Bank of Vietnam:

a/ To approve the establishment of branches, transaction bureaus, representative offices and non-business units of microfinance institutions;

b/ To compel the termination of operation or dissolution of branches, transaction bureaus, representative offices and non-business units of microfinance institutions;

c/ To approve the transformation of attached units of microfinance programs or projects into branches, transaction bureaus, non-business units or representative offices of microfinance institutions.

2. Competence of directors of provincial-level branches of the State Bank of Vietnam (below referred to as the State Bank’s branches):

a/ To approve the relocation of offices of branches and transaction bureaus of microfinance institutions in localities (including the relocation of offices before inauguration of such branches and transaction bureaus);

b/ To approve the voluntary termination of operation or dissolution of branches and transaction bureaus of microfinance institutions.

Article 5.Transaction points

1. A microfinance institution shall decide on and take responsibility for the opening or termination of operation of a transaction point managed by its branch or transaction bureau within the operation area of such branch or transaction bureau in accordance with the Regulation on management of operation of transaction points and this Circular. The opening or termination of operation of a transaction point shall be notified to the commune-level People’s Committee of the locality where such transaction point operates within 5 working days after the microfinance institution decides to open or terminate operation of such transaction point.

2. A branch or transaction bureau of a microfinance institution may carry out one or more than one of the following activities at its transaction points:

a/ Conducting research and introducing clients;

b/ Providing counseling and instructions on the formation of groups of clients being savings depositors and borrowers;

c/ Providing clients with counseling and instructions on products and services and loan application dossiers; receiving loan application dossiers; disbursing capital and collecting debts under credit contracts signed between the branch or transaction bureau and its clients;

d/ Receiving compulsory savings or voluntary savings from a microfinance client with an amount of up to 1,000,000 Vietnam dong per day;

dd/ Paying compulsory savings or voluntary savings to microfinance clients.

3. Within the first 5 working days of the first month of every quarter, a microfinance institution or its branch shall send by post or submit directly a notice of the list of transaction points to the office of the State Bank’s branch of the locality where the branch is based. Such notice must have at least the following contents:

a/ List of transaction points operating in the locality, counting to the end of the last working day of the previous quarter, including information on the name of the branch, transaction bureau responsible for managing the operation of such transaction points, and places of operation of such transaction points;

b/ List of transaction points that were opened or terminated their operation in the previous quarter.

Article 6.Activities of non-business units

A non-business unit of a microfinance institution may carry out one or more than one of the activities to support business operations of such microfinance institution, including:

1. Researching, and proposing application of, technologies for the microfinance institution.

2. Providing professional and technical training and further training for executives and leaders of divisions and staff members of the microfinance institution.

3. Archiving databases and collecting and processing information serving business operations of the microfinance institution.

4. Carrying out other activities in support of business operations of the microfinance institution in accordance with law.

Article 7.Operation areas and names of branches and transaction bureaus

1. A branch of a microfinance institution shall operate within a province or centrally run city where its office is based.

2. A transaction bureau shall operate within the operation area of its managing branch.

3. The name of a branch or transaction bureau of a microfinance institution must comply with relevant regulations and is prescribed as follows:

a/ Name of a branch: Full name of the microfinance institution - Branch (name of the branch);

b/ Name of a transaction bureau: Full name of the microfinance institution - Branch (name of the branch managing the transaction bureau) - Transaction bureau (name of the transaction bureau).

4. In case the adjustment of administrative boundaries leads to the change of the operation area of a branch or transaction bureau or change of the office address of a branch or transaction bureau (without leading to the relocation of the office of the branch or transaction), a microfinance institution is not required to make adjustments under Clauses 1 and 2 of this Article. Within 5 working days after the adjustment of administrative boundaries, the microfinance institution shall send a notice of the change to the State Bank’s branch of the locality where the office of its branch or transaction bureau is based.

Article 8.Number of branches

The number of branches of a microfinance institution includes the number of branches already established and the number of branches requested to be established, ensuring that 3 billion Vietnam dong * N < C.

Of which:

- C is the real value of charter capital of the microfinance institution, which is equal to charter capital plus (minus) undistributed accumulated profit (unhandled accumulated loss) as shown in the account book up to the time closest to the date of request;

- N is the number of branches already established and requested to be established.

Article 9.Principles of making and sending dossiers and notices

1. Dossiers shall be made in Vietnamese. Documents in a dossier must be originals or duplicates from master registers, certified copies or copies together with the originals for checking. In case of receiving a copy together with the original for checking, the dossier-checking person shall sign such copy for certification and take responsibility for the accuracy of such copy against the original. Each dossier shall be accompanied by a list of documents.

2. Requests and notices of a microfinance institution shall be signed by a lawful representative of such institution. In case of authorized signing, a dossier must comprise a power of attorney made in accordance with law.

3. Dossiers and notices of a microfinance institution shall be sent by post or submitted directly at the office of the State Bank of Vietnam (below referred to as the State Bank) or the State Bank’s branches.

Article 10.Regulation on management of branches, transaction bureaus and transaction points

1. A microfinance institution shall formulate its Regulation on management of branches and transaction bureaus and Regulation on management of operation of transaction points to ensure safe, effective and lawful operation of branches, transaction bureaus and transaction points.

2. A Regulation on management of branches and transaction bureaus shall be issued by the Members’ Council and must have at least the following contents:

a/ Transaction limit applicable to each management level at branches and transaction bureaus per service or group of services provided to clients;

b/ Mechanism for management and supervision and regime of information and reporting between the head office and branches and between transaction bureaus and their managing branches;

c/ Criteria and conditions for director of a branch, head of a transaction bureau or holder of an equivalent title as prescribed by law, ensuring that the holder of this title has sufficient professional qualifications and ethics meeting job requirements;

d/ Provisions on cash and vault, fire prevention and fighting, money transfer, and archive of documents to ensure asset security and safety, which must specify the limit of end-of-day cash in hand of a branch or transaction bureau, depending on practical operation conditions and security and safety conditions of such branch or transaction bureau. The amount exceeding the prescribed level shall be deposited into the bank account of the microfinance institution.

3. A Regulation on management of operation of transaction points shall be issued by the director general (director) of a microfinance institution and must have at least the following contents:

a/ Criteria for selecting a transaction point as suitable to its operation characteristics, ensuring risk control and safe and effective operation;

b/ The opening and termination of operation of a transaction point must comply with the order, procedures and competence for deciding on the opening and termination of operation of transaction points, covering delegation of powers and authorization for decision (if any);

c/ Scope of operation of transaction points, specifying the transaction limit applicable to each transaction point per service provided to clients;

d/ Process of performing transactions of receiving and paying savings deposits, receiving dossiers, disbursing capital, and collecting debts, and rights and obligations of staff members of the microfinance institution at transaction points;

dd/ Measures to ensure safety for humans; and security and safety measures to be taken for the transfer of money, documents and other assets during the operation of transaction points.

4. A microfinance institution shall periodically review regulations mentioned in Clauses 2 and 3 of this Article at least once a year and revise them (when necessary) to suit practical operation conditions in each period.

Chapter II

ESTABLISHMENT OF BRANCHES, TRANSACTION BUREAUS, REPRESENTATIVE OFFICES AND NON-BUSINESS UNITS

Article 11.Conditions for establishment of branches

1. A microfinance institution that has operated for at least 12 months (counting from the date of inauguration to the time of request for establishment of branches) may establish no more than 3 branches in a fiscal year when satisfying the following conditions:

a/ Having the real charter capital value not lower than the legal capital as of December 31 of the year preceding the year of request for establishment of branches;

b/ Conducting business at a profit, based on the independently audited financial statement of the year preceding the year of request for establishment of branches and the latest financial statement counting to the time of request;

c/ Not being disallowed to expand the operation area at the time of request for establishment of branches;

d/ Complying with regulations on prudential ratios in operations of microfinance institutions at the latest time of reporting, counting to the time of request for establishment of branches;

dd/ Having the ratio of non-performing loans to the total outstanding loans not exceeding 3% as of December 31 of the year preceding the year of request for establishment of branches and at the latest time of reporting, counting to the time of request, or another ratio decided by the State Bank Governor in each period;

e/ Complying with regulations on the number of members and structure of the Members’ Council and Supervisory Board. The position of director general (director) of a microfinance institution may not be vacant for over 6 months preceding the time of request for establishment of branches;

g/ Having an establishment scheme with the contents specified in Clause 3, Article 14 of this Circular;

h/ Ensuring the number of branches prescribed in Article 8 of this Circular.

2. A microfinance institution that has operated for less than 12 months (counting from the date of inauguration to the time of request for establishment of branches) may establish no more than 2 branches in a fiscal year when satisfying the following conditions:

a/ Having the real charter capital value not lower than the legal capital at the latest time of reporting counting to the time of request for establishment of branches;

b/ Having the ratio of non-performing loans to the total outstanding loans not exceeding 3% at the latest time of reporting, counting to the time of request for establishment of branches, or another ratio decided by the State Bank Governor in each period;

c/ Satisfying the conditions prescribed at Points c, d, e, g and h, Clause 1 of this Article.

Article 12.Conditions for establishment of transaction bureaus

A microfinance institution may establish transaction bureaus when satisfying the following conditions:

1. The conditions prescribed at Points a, b, c, d, dd, e and g, Clause 1, Article 11 of this Circular.

2. A branch expected to manage transaction bureaus must satisfy the following conditions:

a/ Having operated for at least 12 months counting from the date of inauguration to the time of request for establishment of transaction bureaus;

b/ Having the ratio of non-performing loans to the total outstanding loans not exceeding 3% as of December 31 of the year preceding the year of request for establishment of transaction bureaus and at the latest time of reporting, counting to the time of request, or another ratio decided by the State Bank Governor in each period;

c/ Refraining from managing more than 5 transaction bureaus.

Article 13.Conditions for establishment of representative offices and non-business units

A microfinance institution may establish its representative offices and non-business units when satisfying the following conditions:

1. Having operated for at least 12 months counting from the date of inauguration to the time of request for establishment of representative offices and non-business units;

2. Satisfying the conditions prescribed at Points a, c, d and e, Clause 1, Article 11 of this Circular.

3. Having an establishment scheme with the contents specified in Clause 4, Article 14 of this Circular.

Article 14.Dossier for approval of establishment of branches, transaction bureaus, representative offices or non-business units of a microfinance institution

1. The microfinance institution’s request sent to the State Bank for approval of the establishment of branches, transaction bureaus, representative offices or non-business units, made according to the form provided in the Appendix to this Circular.

2. The Members’ Council’s resolution or decision on the establishment of branches and transaction bureaus or representative offices and non-business units.

3. A scheme for establishment of branches and transaction bureaus, which must have at least the following contents:

a/ Full names and abbreviated names in Vietnamese; and office addresses and operation contents of branches and transaction bureaus of the microfinance institution;

b/ Organizational structure of branches and transaction bureaus; tentative holders of key positions (directors of branches, heads of transaction bureaus, accountants, and others under internal regulations of the microfinance institution);

c/ Name and office address of the branch expected to manage transaction bureaus (in case of request for establishment of transaction bureaus);

d/ A paper analyzing the business environment (opportunities, challenges, strengths and weaknesses); potential clients and products to be provided;

dd/ Tentative business plan for the first 3 years of operation, which must at least include a projected balance sheet, report on business results, bases for formulation of the plan, and explanation about the plan feasibility in each year.

4. A scheme for establishment of representative offices and non-business units, which must have at least the following contents:

a/ Full names and abbreviated names in Vietnamese; and addresses and operation contents of representative offices and non-business units of the microfinance institution;

b/ Reasons for the establishment of representative offices and non-business units;

c/ Tentative holders of key positions (heads of representative offices and non-business units, accountants, and others under internal regulations of the microfinance institution);

d/ Tentative operation plan for the first year.

5. Documents proving the satisfaction of conditions for establishment of branches and transaction bureaus or representative offices and non-business units prescribed in Articles 11, 12 and 13, except the document proving the satisfaction of the condition prescribed at Point c, Clause 1, Article 11, of this Circular.

Article 15.Order for approving the establishment of branches and transaction bureaus or representative offices and non-business units of microfinance institutions

1. A microfinance institution shall make 1 dossier for each type of operation network of microfinance institutions prescribed in Article 14 of this Circular and send it to the State Bank.

2. Within 7 working days after receiving the dossier prescribed in Clause 1 of this Article, the State Bank shall send to the microfinance institution a written certification of whether the dossier is complete and valid. If the dossier is incomplete and invalid, the State Bank shall send a request to the microfinance institution for completing the dossier.

The microfinance institution shall complete the dossier within 60 days after receiving the State Bank’s request. Past this time limit, if the microfinance institution fails to complete the dossier, it shall send the dossier under Clause 1 of this Article to the State Bank for consideration and approval.

3. For a request for establishment of branches, within 7 working days after receiving a complete and valid dossier:

a/ The State Bank shall send a request for opinion on the microfinance institution’s request for establishment of branches to the provincial-level People’s Committee of the locality where the microfinance institution is expected to base its branches;

b/ The Banking Supervision Agency shall send a request for opinion on the microfinance institution’s request for establishment of branches to the State Bank’s branch of the locality where the microfinance institutions is expected to base its branches.

4. For a request for establishment of transaction bureaus, within 7 working days after receiving a complete and valid dossier, the Banking Supervision Agency shall send a request for opinion on the satisfaction of the conditions prescribed in this Circular for the branch expected to manage transaction bureaus in the locality to the State Bank’s branch of the locality where the microfinance institution is expected to base its transaction bureaus.

5. Within 10 working days after receiving the State Bank’s request for opinion, the units specified in Clause 3 or 4 of this Article shall give their written opinions.

6. Within 15 working days after receiving opinions of the units specified in Clause 5 of this Article or after receiving a complete and valid dossier for establishment of representative offices and non-business units, the Banking Supervision Agency shall submit the microfinance institution’s establishment of branches and transaction bureaus or representative offices and non-business units to the State Bank Governor for consideration and approval.

7. Within 60 days (for a request for establishment of branches and transaction bureaus), or 45 days (for a request for establishment of representative offices and non-business units) after certifying that the dossier is complete and valid, the State Bank shall issue a written approval of the microfinance institution’s request for establishment of branches and transaction bureaus or representative offices and non-business units. In case of refusal, the State Bank shall reply in writing, clearly stating the reason.

8. Within 12 months after the State Bank issues a written approval mentioned in Clause 7 of this Article, the microfinance institution shall inaugurate branches and transaction bureaus or representative offices and non-business units. Past this time limit, if the microfinance institution fails to conduct inauguration, the State Bank’s approval will automatically be invalidated.

Article 16.Transformation of attached units of microfinance programs or projects

1. The transformation of microfinance programs or projects into microfinance institutions covers also the transformation of attached units of such programs or projects into branches, transaction bureaus, non-business units or representative offices of microfinance institutions and is not subject to the conditions prescribed in Articles 11, 12 and 13 of this Circular.

2. For a microfinance program or project to be transformed into a microfinance institution, a request for approval of the transformation of attached units of such microfinance program or project into branches, transaction bureaus, non-business units or representative offices of a microfinance institution shall be made and must have at least the following contents:

a/ Full names and abbreviated names in Vietnamese of branches, transaction bureaus, non-business units or representative offices;

b/ Office addresses of branches, transaction bureaus, non-business units or representative offices.

Article 17.Inauguration

1. A microfinance institution may inaugurate its branches and transaction bureaus (including those licensed on the basis of transformation of attached units of microfinance programs or projects) when meeting the following requirements:

a/ Having registered the operation of branches and transaction bureaus in accordance with law and disclosed information under Article 18 of this Circular;

b/ Having lawful ownership or use rights over offices of branches and transaction bureaus; such offices meet asset safety requirements and requirements on operation of branches and transaction bureaus;

c/ Having cash vaults or safes which meet safety requirements under internal regulations of the microfinance institution;

d/ Having an information technology system connected between the head office of the microfinance institution and branches and transaction bureaus and between the managing branch and transaction bureaus ensuring safety and security and meeting reporting and statistical requirements;

dd/ Having essential holders of key positions, including directors of branches, heads of transaction bureaus, accountants, and operations officers under internal regulations of the microfinance institution;

e/ The director of a branch must satisfy the criteria and conditions prescribed by the State Bank’s regulations and internal regulations of the microfinance institution. The head of a transaction bureau must satisfy the criteria and conditions under internal regulations of the microfinance institution;

g/ Having a Regulation on management of branches and transaction bureaus which satisfies the requirements specified in Clause 2, Article 10 of this Circular.

2. A microfinance institution may inaugurate its representative offices and non-business units (including those licensed on the basis of transformation of attached units of microfinance programs or projects) when meeting the following requirements:

a/ Having registered the operation of representative offices in accordance with law (in case of inauguration of representative offices);

b/ Having lawful ownership or use rights over offices of representative offices and non-business units;

c/ Having holders of key positions under internal regulations of the microfinance institution.

3. A microfinance institution shall send a Regulation on management of branches and transaction bureaus; and a notice of the tentative date of inauguration of branches and transaction bureaus and satisfaction of requirements for inauguration prescribed in Clauses 1 and 2 of this Article to the State Bank’s branch concerned at least 15 days before the tentative date of inauguration.

4. Branches and transaction bureaus or representative offices and non-business units of a microfinance institution which are licensed on the basis of transformation of attached units of microfinance programs or projects shall be inaugurated simultaneously with the inauguration of such microfinance institution.

5. Attached units of microfinance programs or projects which are transformed into branches and transaction bureaus or non-business units and representative offices of a microfinance institution shall be inaugurated within 12 months after the State Bank issues a written approval of their operation network. Past this time limit, if such units are not inaugurated, the microfinance institution shall formulate a plan on termination of operation of these units within 24 months from the date of expiration of the inauguration time limit and send such plan to the State Bank’s branch concerned.

Article 18.Disclosure of information about the establishment of branches and transaction bureaus or representative offices and non-business units

At least 7 working days before the tentative date of inauguration of branches and transaction bureaus or representative offices and non-business units (including attached units of microfinance programs or projects transformed into branches and transaction bureaus or representative offices and non-business units of a microfinance institution), the microfinance institution shall disclose information about the establishment of branches and transaction bureaus or representative offices and non-business units on the portal of the State Bank and the portal (if any) of the microfinance institution, and in 3 consecutive issues of a printed daily or on an online newspaper of Vietnam.

Chapter III

RENAMING AND RELOCATION OF OFFICES OF BRANCHES AND TRANSACTION BUREAUS OR REPRESENTATIVE OFFICES AND NON-BUSINESS UNITS; CHANGE OF BRANCHES MANAGING TRANSACTION BUREAUS

Article 19.Renaming of branches and transaction bureaus

A microfinance institution shall issue a decision on the renaming of its branches and transaction bureaus in accordance with law and this Circular, and send a notice thereof to the State Bank’s branch concerned within 5 working days after the issuance of such decision.

Article 20.Relocation of offices of branches and transaction bureaus

1. A microfinance institution may relocate offices of its branches and transaction bureaus within the operation area prescribed in Clause 1 or 2, Article 7 of this Circular provided that the new locations meet the requirements prescribed at Points b, c and d, Clause 1, Article 17 of this Circular.

2. A dossier for relocation of the office of a branch or transaction bureau must comprise:

a/ The microfinance institution’s request for approval of the relocation of the office of a branch or transaction bureau, which must have at least the following contents: current location, new location, reason for the relocation, and plan on relocation to ensure uninterrupted operation;

b/ The Members’ Council’s resolution or decision on the relocation of the office of a branch or transaction bureau.

3. Procedures for approving the relocation of the office of a branch or transaction bureau:

a/ A microfinance institution shall make 1 dossier prescribed in Clause 2 of this Article and send it to the State Bank’s branch concerned. If the dossier is incomplete or invalid, within 5 working days after receiving it, the State Bank’s branch shall send a request to the microfinance institution for completing the dossier;

b/ Within 10 working days after receiving a complete and valid dossier as prescribed in Clause 2 of this Article, the State Bank’s branch shall issue a written approval of the relocation of the office of a branch or transaction bureau. In case of refusal, it shall reply in writing, clearly stating the reason.

4. A microfinance institution shall send to the State Bank’s branch concerned a report on the tentative date of operation at the approved location and the satisfaction of the requirements mentioned in Clause 1 of this Article at least 15 working days before such date.

5. Within 12 months after the State Bank’s branch concerned issues a written approval, the microfinance institution’s branch or transaction bureau shall commence operation at the approved location. Past this time limit, if such branch or transaction bureau fails to commence operation at the new location, the State Bank branch’s approval will automatically be invalidated.

Article 21.Renaming and relocation of offices of representative offices and non-business units

1. A microfinance institution shall issue a decision on the renaming or relocation of offices of its representative offices and non-business units in accordance with law.

2. A microfinance institution shall send to the State Bank a notice of the renaming or relocation of offices of its representative offices and non-business units within 5 working days after the date of issuance of a renaming or relocation decision.

Article 22.Change of branches managing transaction bureaus

1. A microfinance institution shall issue a decision on the change of the branch managing its transaction bureaus. The branch expected to take over transaction bureaus for management must meet the conditions prescribed in Clause 2, Article 12 of this Circular.

2. Within 5 working days after issuing the above decision, the microfinance institution shall send to the State Bank’s branch a notice of satisfaction of the conditions on a branch managing transaction bureaus prescribed in Clause 2, Article 12 of this Circular.

Article 23.Disclosure of information about changes

Within 7 working days after a branch, transaction bureau, representative office or non-business unit (including attached units of microfinance programs or projects transformed into branches and transaction bureaus or representative offices and non-business units of microfinance institutions) is renamed or at least 7 working days before the tentative date of commencement of operation at the new location, the microfinance institution shall disclose information about the change on the portal of the State Bank’s branch concerned and its portal (if any), and in 3 consecutive issues of a printed daily or on an online newspaper of Vietnam.

Chapter IV

TERMINATION OF OPERATION OR DISSOLUTION OF BRANCHES, TRANSACTION BUREAUS, REPRESENTATIVE OFFICES AND NON-BUSINESS UNITS

Article 24.Termination of operation or dissolution of branches, transaction bureaus, representative offices or non-business units

1. A branch, transaction bureau, representative office or non-business unit shall terminate its operation or be dissolved in the following cases:

a/ It automatically terminates its operation or is dissolved;

b/ It terminates its operation or is dissolved on a voluntary basis;

c/ It is forced to terminate its operation or be dissolved.

2. A microfinance institution shall:

a/ Settle issues related to assets, rights, obligations and related interests of its branches, transaction bureaus, representative offices or non-business units that terminate their operation or are dissolved in accordance with law;

b/ Archive documents, records and dossiers of its branches, transaction bureaus, representative offices or non-business units that terminate their operation or are dissolved, and documents related to the operation termination or dissolution;

c/ Carry out legal procedures for termination of operation or dissolution of branches, transaction bureaus, representative offices or non-business units in accordance with law.

Article 25.Automatic termination of operation or dissolution of branches, transaction bureaus, representative offices or non-business units

1. Branches, transaction bureaus, representative offices or non-business units shall automatically terminate their operation or be dissolved in case their microfinance institution terminates its operation or is dissolved.

2. Procedures for automatic termination of operation or dissolution of branches, transaction bureaus, representative offices or non-business units must comply with law.

Article 26.Voluntary termination of operation or dissolution of branches, transaction bureaus, representative offices or non-business units

1. A dossier for voluntary termination of operation or dissolution of a branch or transaction bureau of a microfinance institution must comprise:

a/ The microfinance institution’s request for termination of operation or dissolution of a branch or transaction bureau, stating the reason for operation termination or dissolution; name and address of the branch or transaction bureau that terminates its operation or is dissolved and commitment to settling issues related to assets, rights, obligations and related interests of such branch or transaction bureau;

b/ The resolution or decision of the microfinance institution’s Members’ Council on the termination of operation or dissolution of a branch or transaction bureau;

c/ A plan on settlement of issues related to assets, rights, obligations and related interests of the branch or transaction bureau that terminates its operation or is dissolved.

2. Procedures for approving voluntary termination of operation or dissolution of a branch or transaction bureau of a microfinance institution:

a/ The microfinance institution shall make 1 dossier prescribed in Clause 1 of this Article and send it to the State Bank’s branch concerned;

b/ Within 45 days after receiving a complete and valid dossier prescribed in Clause 1 of this Article, the State Bank’s branch shall issue a written approval of the microfinance institution’s request. In case of disapproval, it shall reply in writing, clearly stating the reason.

3. Within 45 days after the State Bank’s branch issues a written approval of the operation termination or dissolution of its branch or transaction bureau, a microfinance institution shall carry out legal procedures for operation termination or dissolution of such branch or transaction bureau, and send a notice of implementation results and date of operation termination or dissolution to the State Bank’s branch.

4. A microfinance institution shall issue a decision on voluntary operation termination or dissolution of its representative offices and non-business units. Within 5 working days after issuing such decision, the microfinance institution shall send a report to the State Bank, stating the reason for and date of operation termination or dissolution.

Article 27.Compulsory operation termination or dissolution of branches, transaction bureaus, representative offices and non-business units

1. Branches, transaction bureaus, representative offices or non-business units of a microfinance institution shall be compelled to terminate their operation or be dissolved when there are grounds to believe that a dossier for establishment of branches, transaction bureaus, representative offices and non-business units contains untruthful information, thus leading to misevaluation of the satisfaction of conditions for the establishment.

2. When detecting the case specified in Clause 1 of this Article, the State Bank’s branch concerned shall send to the State Bank a request for operation termination or dissolution of branches, transaction bureaus, representative offices and non-business units of the microfinance institution, stating the reason for the request.

3. Within 15 working days after receiving the State Bank’s branch’s request for operation termination or dissolution of branches, transaction bureaus, representative offices or non-business units of the microfinance institution as prescribed in Clause 2 of this Article, or when detecting the case specified in Clause 1 of this Article through inspection or supervision, the Banking Supervision Agency shall propose the State Bank Governor to request in writing the microfinance institution to terminate the operation of or dissolve its branches, transaction bureaus, representative offices or non-business units.

4. Within 90 days after receiving the State Bank’s request for  operation termination or dissolution of its branches, transaction bureaus, representative offices and non-business units, the microfinance institution shall complete such operation termination or dissolution and send to the State Bank a notice of time and results of such operation termination or dissolution.

5. Within 24 months after receiving the State Bank’s request for operation termination or dissolution of its branch, the microfinance institution shall formulate a plan on dealing with transaction bureaus managed by such branch in accordance with this Circular.

Article 28.Disclosure of information about operation termination or dissolution of branches, transaction bureaus, representative offices and non-business units

1. Within 7 working days after the date of operation termination or dissolution of its branch, transaction bureau, representative office or non-business unit, a microfinance institution shall post up information about such operation termination or dissolution at its head office, office of the unit having terminated operation or been dissolved or office of the branch managing the transaction bureau (in case of operation termination of a transaction bureau), and disclose information about such operation termination or dissolution on the portal of the State Bank and the portal of the microfinance institution (if any), and in 3 consecutive issues of a central or local printed daily or on an online newspaper of Vietnam.

2. Information to be disclosed or posted up must at least include:

a/ Name and address of the branch, transaction bureau, representative office or non-business unit having terminated operation or been dissolved;

b/ Date of operation termination or dissolution;

c/ The microfinance institution’s responsibilities regarding assets, rights, obligations and related interests of the branch, transaction bureau, representative office or non-business unit having terminated operation or been dissolved.

Chapter V

IMPLEMENTATION PROVISIONS

Article 29.Responsibilities of microfinance institutions

1. To take responsibility before law for adequacy and accuracy of information and documents in dossiers.

2. To promptly notify the State Bank of any change related to the satisfaction of conditions and dossiers as prescribed in this Circular which occurs during the State Bank’s consideration of the request of microfinance institutions.

Article 30.Responsibilities of the State Bank’s branches

1. To receive dossiers and grant approval of the contents specified in Clause 2, Article 4 of this Circular.

2. To direct, supervise and inspect microfinance institutions in implementing the plan prescribed in Clause 5, Article 17 of this Circular.

3. To receive reports and notices of microfinance institutions in accordance with this Circular.

4. To coordinate with the Banking Supervision Agency in addressing arising problems related to the organization and operation of branches, transaction bureaus, representative offices or non-business units of microfinance institutions in localities.

5. Within 5 working days after issuing a written approval according to the competence provided in Clause 2, Article 4 of this Circular, or after receiving a notice of a microfinance institution prescribed in this Circular, to send to the State Bank information about:

a/ Inauguration of branches and transaction bureaus;

b/ Renaming or relocation of offices of branches and transaction bureaus;

c/ Change of branches managing transaction bureaus;

d/ Voluntary termination of operation of branches and transaction bureaus.

Article 31.Responsibilities of the Banking Supervision Agency

1. To act as the focal point in receiving, appraising, and submitting to the State Bank Governor for approval, the contents specified in Clause 1, Article 4 of this Circular.

2. To coordinate with the State Bank’s branches in addressing arising problems related to the organization and operation of branches, transaction bureaus, representative offices and non-business units of microfinance institutions in localities.

3. To receive reports and notices of the State Bank’s branches and microfinance institutions in accordance with this Circular.

Article 32.Effect

1. This Circular takes effect on January 1, 2020.

2. Microfinance institutions are not required to make adjustments under Article 8, and Point c, Clause 2, Article 12, of this Circular for branches and transaction bureaus established before the effective date of this Circular.

3. The State Bank Governor’s Circular No. 08/2009/TT-NHNN of April 28, 2009, guiding the operation network of small-sized financial institutions, ceases to be effective on the effective date of this Circular.

Article 33.Organization of implementation

The Chief of the Office, the Chief of the Banking Supervision Agency, and heads of units under the State Bank, directors of the State Bank’s branches, chairpersons and members of Members’ Councils and directors general (directors) of microfinance institutions shall organize the implementation of this Circular.-

For the State Bank Governor
Deputy Governor
DAO MINH TU

* The Appendix to this Circular is not translated.