Circular 11/2019/TT-NHNN on special control of credit institutions

CIRCULAR

Providing the special control of credit 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 and the November 20, 2017 Law Amending and Supplementing a Number of Articles of the Law on Credit Institutions;

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 providing the special control of credit institutions.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

This Circular provides cases when credit institutions lose or are in danger of losing liquidity or lose or are in danger of losing solvency; competence to make decision in special control of credit institutions; form of special control; special control decisions; notification and disclosure of information on special control; real value of charter capital and reserve funds, decrease in charter capital of commercial banks placed under special control and having their compulsory transfer plans approved by the Government; extension of special control period and termination of special control; and composition, structure, operational mechanism, tasks and powers of special control boards.

 Article 2. Subjects of application

1. Credit institutions (excluding policy banks).

2. Organizations and individuals involved in the special control of credit institutions.

Article 3. Interpretation of terms

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

1. Reserve funds are funds of credit institutions which are deducted from their after-tax profits in accordance with law, including reserve funds for addition of charter capital, development investment funds and financial provision funds.

2. Liquid assets are:

a/ Liquid assets of credit institutions being banks or non-bank credit institutions, which are identified under regulations of the State Bank of Vietnam (below referred to as the State Bank) on prudential limits and ratios in operation of banks and non-bank credit institutions.

b/ “Credit” assets for immediate debt payment of credit institutions being people’s credit funds, which are identified under the State Bank’s regulations on prudential limits and ratios in operation of people’s credit funds.

c/ Cash and deposits at the State Bank and commercial banks (if any) of credit institutions being microfinance institutions, which are identified under the State Bank’s regulations on prudential ratios in operation of microfinance institutions. 

3. Tier-1 capital adequacy ratio is:

a/ Tier-1 capital adequacy ratio of credit institutions being banks or non-bank credit institutions, which is determined under the State Bank’s regulations on ranking of credit institutions and foreign bank branches;

b/ Tier-1 capital adequacy ratio of credit institutions being people’s credit funds or microfinance institutions, which is the ratio between tier-1 capital and total risk-weighted “credit” assets as prescribed in the State Bank’s regulations on prudential limits and ratios in operation of people’s credit funds and regulations on prudential ratios in operation of microfinance institutions.

4.  Restructured loans showing the latent risk of becoming non-performing loans are loans which have their repayment deadline rescheduled but are kept in their initial group and not yet re-classified as non-performance loans by credit institutions according to the State Bank’s regulations.

5. Non-performing loans sold to the Vietnam Asset Management Company (VAMC) but not yet handled are non-performing loans which credit institutions have sold to the VAMC and received special bonds as payment but have not yet been handled or recovered.

Chapter II

SPECIAL CONTROL, NOTIFICATION AND DISCLOSURE OF INFORMATION ON SPECIAL CONTROL, DECREASE IN CHARTER CAPITAL

Article 4. Credit institutions losing or being in danger of losing liquidity

1. A credit institution is in danger of losing liquidity when lacking liquid assets at the rate of 20% or higher at the time of calculating liquidity ratio, leading to failure to maintain the liquidity ratio prescribed at Point a, Clause 1, Article 130 of the Law on Credit Institutions (as amended and supplemented in 2017) and guided by the State Bank in 3 consecutive months.

2. A credit institution loses liquidity when being incapable of fulfilling its debt payment obligations within 1 month after these obligations become due and, at the time such 1-month period has just expired, having the ratio of the aggregate of non-performing loans as prescribed by the State Bank, restructured loans showing the latent risk of becoming non-performing loans, and non-performing loans sold to the VAMC but not yet handled to the aggregate of loans as prescribed by the State Bank and non-performing loans sold to the VAMC but not yet handled kept at 10% or higher.

3. When being in danger of losing or when losing liquidity, credit institutions shall promptly report to the State Bank on the actual situation, reasons, measures already applied and to be applied to remedy the situation, together with their proposals and recommendations.

Article 5. Credit institutions losing or being in danger of losing solvency

1. A credit institution is in danger of losing solvency when having tier-1 capital adequacy ratio falling below 4% in 6 consecutive months and, at the time such 6-month period has just expired, having the ratio of the aggregate of non-performing loans as prescribed by the State Bank and restructured loans showing the latent risk of becoming non-performing loans, and non-performing loans sold to the VAMC but not yet handled to the aggregate of loans as prescribed by the State Bank and non-performing loans sold to the VAMC but not yet handled kept at 10% or higher.

2. A credit institution loses solvency when being incapable of fulfilling its debt payment obligations within 3 months from the date these obligations become due.

3. When being in danger of losing or when losing solvency, credit institutions shall promptly report to the State Bank on the actual situation, reasons, measures already applied and to be applied to remedy the situation, together with their proposals and recommendations.

Article 6. Competence to make decision in special control of credit institutions

1. For credit institutions other than people’s credit funds, the State Bank Governor shall consider and decide on:

a/ The placement of credit institutions falling into the cases prescribed in Clause 1, Article 145 of the Law on Credit Institutions (as amended and supplemented in 2017) and Articles 4 and 5 of this Circular under special control;

b/ The form of special control according to Article 7 of this Circular;

c/ The formation of special control boards according to Articles 14 and 15 of this Circular;

d/ The special control period;

dd/ The notification of special control according to Article 9 of this Circular;

e/ The disclosure of special control information according to Article 10 of this Circular;

g/ The real value of charter capital and reserve funds and decrease in charter capital of the commercial banks under special control for which compulsory transfer plans have been approved by the Government under Article 11 of this Circular;

h/ The extension of the special control period according to Article 12 of this Circular;

i/ The termination of special control according to Article 13 of this Circular;

k/ Other contents prescribed in the Law on Credit Institutions (as amended and supplemented in 2017) and this Circular.

2. For credit institutions being people’s credit funds headquartered in their localities, directors of the State Bank’s branches of provinces and centrally run cities (below referred to as State Bank branches) shall consider and decide on:

a/ The contents prescribed at Points a, b, c, d, dd, e, h and i, Clause 1 of this Article;

b/ The contents prescribed at Points a and b, Clause 3, Article 146; Clauses 1, 2, 3, 4. 5 and 7, Article 146a (except the contents on grant of special loans by the State Bank and extension of special loan terms); Clauses 2 and 6, Article 146dd; Points a, b and d, Clause 2, Article 148b; Clauses 2, 3 and 4 (except the case prescribed in Clause 3 of this Article), Article 148c; Clauses 2, 3, 4, 5, 6 and 11, Article 148dd; Clauses 1 and 2, Article 149c; and Clauses 1 and 2, Article 149d, of the Law on Credit Institutions (as amended and supplemented in 2017).

For the contents prescribed at Point dd, Clause 2, Article 148b; Clauses 7 and 12, Article 148dd; and Clause 3, Article 149c of the Law on Credit Institutions (as amended and supplemented in 2017), directors of State Bank branches shall report them to the State Bank Governor (via the Banking Supervision Agency) to obtain the latter’s approval before implementation.

3. Directors of State Bank branches shall report and propose the State Bank  Governor (via the Banking Supervision Agency) to recommend the Government to implement the contents prescribed in Clause 1, Article 146 of the Law on Credit Institutions (as amended and supplemented in 2017) toward credit institutions being people’s credit funds headquartered in their localities.

Article 7. Forms of special control

1. Based on the actual situation and degree of risk in operation of a credit institution, the State Bank Governor or director of the concerned State Bank branch shall consider and decide on:

a/ The placement of the credit institution under special control in the form of special supervision or comprehensive control;

b/ The contents, scope, measures and activities to control operations, which shall be stated in the special control decision, in conformity the form of special control and the provisions of Clause 1, Article 15 of this Circular. 

2. Special supervision means the placement of a credit institution under the direct control of the State Bank through the direction, distance direct control and on-spot inspection by a special control board of operation of the credit institution under special control.

3. Comprehensive control means the placement of a credit institution under the direct control of the State Bank through direction and on-spot direct control by a special control board of day-to-day operations of the credit institution under special control.

4. The change of the form of special control is conducted as follows:

a/ Based on the actual situation of and level of risk in operation of the credit institution under special control, the special control board shall propose the State Bank Governor (via the Banking Supervision Agency) to change the form of special control, for the credit institutions prescribed in Clause 1, Article 6 of this Circular, or propose the director of the concerned State Bank branch to change the form of special control, for the credit institutions prescribed in Clause 2, Article 6 of this Circular.

b/ Within 20 days after receiving the proposal of the special control board prescribed at Point a of this Clause, the State Bank Governor or director of the State Bank branch shall consider and decide to change the form of special control applied to the credit institution according to his/her competence as prescribed in Article 6 of this Circular.  

Article 8. Special control decisions

A special control decision must have the following contents:

1. The name of the credit institution under special control.

2. The reasons for placement of the credit institution under special control.

3. The special control period.

4. The form of special control; contents, scope, measures and activities to control operations of the credit institution under special control.

5. Full names and titles of members of the special control board, and tasks and powers of the special control board, its head and members.

6. The use of the State Bank’s seal, including also seal of the State Bank branch.

7. The transformation of refinanced loans into special loans.

8. Other contents.  

Article 9. Notification of special control

1. A notice of special control must comprise one or more than one of the following contents:

a/ The special control decision;

b/ The change of the form of special control;

c/ The extension or termination of special control;

d/ A competent authority’s approval of the restructuring plan.

dd/ Other contents.

2. The State Bank shall send a notice of special control of a credit institution placed under special control prescribed in Clause 1, Article 6 of this Circular to one or more than one of the following subjects:

a/ The Board of Directors or Members’ Council, Control Board or director general (director) of the credit institution under special control;

b/ The State Bank branch of the locality where the credit institution under special control is headquartered and the State Bank branch(es) of the locality(ies) where the credit institution’s dependent unit(s) is(are) operating;

c/ The Deposit Insurance of Vietnam;

d/ The provincial-level People’s Committee of the locality where the credit institution under special control is headquartered;

dd/ The Ministry of Finance (in case the credit institution under special control is a listed company; company having registered for securities trading; state enterprise; enterprise in which the State holds more than 50% of charter capital; subsidiary company or affiliate company of an insurance firm or finance-insurance group; and in case the credit institution under special control has a subsidiary company or an affiliated company operating in the field of securities or insurance);

e/ Other related agencies and organizations.

3. The concerned State Bank branch shall send a notice of special control of a credit institution placed under special control prescribed in Clause 2, Article 6 of this Circular to one or more than one of the following subjects:

a/ The Board of Directors, Control Board, or director general (director) of the credit institution under special control;

b/ The State Bank Governor;

c/ The Deposit Insurance of Vietnam;

d/ The Cooperative Bank of Vietnam;

dd/ The provincial-, district-, or commune-level People’s Committee of the locality where the credit institution under special control is headquartered;

e/ Other related agencies and organizations.

4. The State Bank Governor shall decide on the scope and contents of notification and recipients of notices of special control prescribed in Clauses 1 and 2 of this Article and time of notification of special control for the credit institutions under special control prescribed in Clause 1, Article 6 of this Circular.

5. Directors of State Bank branches shall decide on the scope and contents of notification and recipients of notices of special control prescribed in Clauses 1 and 3 of this Article and time of notification of special control for the credit institutions under special control prescribed in Clause 2, Article 6 of this Circular 

Article 10. Disclosure of special control information

1. Information on special control of a credit institution allowed to be disclosed includes one or more than one of the following contents:

a/ The name of the credit institution under special control;

b/ The form of special control, special control period and termination of special control;

c/ Other contents.

2. The State Bank shall disclose information on special control of a credit institution in one or more than one of the following forms:

a/ Posting the information on the State Bank’s website;

b/ Posting the information on the website of the credit institution under special control (if any);

c/ Publishing the information on at least 3 consecutive issues of a central newspaper or a newspaper of the locality where the credit institution under special control is headquartered;

d/ Disclosing the information at a press conference;

dd/ Announcing the information at the Shareholders’ General Meeting or Members’ General Meeting or before the Members’ Council of the credit institution under special control.

3. The State Bank Governor shall decide on the scope, contents and form of disclosure of information on special control under Clauses 1 and 2 of this Article and the time of disclosure of information on special control of the credit institutions under special control prescribed in Clause 1, Article 6 of this Circular in conformity with the objective of ensuring the safety of the credit institution system.

4. Directors of State Bank branches shall decide on the scope, contents and form of disclosure of information on special control under Clauses 1 and 2 of this Article and the time of disclosure of information on special control of the credit institutions under special control prescribed in Clause 2, Article 6 of this Circular in conformity with the objective of ensuring the safety of the credit institution system.

Article 11. Real value of charter capital and reserve funds and decrease in charter capital of commercial banks under special control of which compulsory transfer plans are approved by the Government

1. Within 10 days after the Government approves its compulsory transfer plan, a commercial bank under special control shall complete the determination of, and submit to the special control board, its consolidated business result for the accounting period counting from the time an independent audit organization determines the real value of the bank’s charter capital and reserve funds under Clause 1, Article 151a of the Law on Credit Institutions (as amended and supplemented in 2017) till the last day of the month preceding the month when the Government approves such plan according to Vietnam’s accounting standards, accounting regimes and other relevant laws.

2. Within 20 days after the Government approves the compulsory transfer plan, the special control board shall complete the determination of, and report to the State Bank (via the Banking Supervision Agency) the consolidated business result of the commercial bank under special control for the accounting period prescribed in Clause 1 of this Article (even in case the commercial bank under special control cannot complete the determination of its consolidated business result as prescribed in Clause 1 of this Article) and request the State Bank (via the Banking Supervision Agency) to decide on the real value of charter capital and reserves funds and record the decrease in charter capital of the commercial bank under special control.

3. Based on the result of determination of the real value of charter capital and reserves funds prescribed in Clause 1, Article 151a of the Law of Credit Institutions (as amended and supplemented in 2017) provided by the independent audit organization and reports and proposals of the special control board prescribed in Clause 2 of this Article, the State Bank shall decide on the real value of charter capital and reserve funds of the commercial bank under special control.

In case the real value of charter capital and reserve funds determined by the independent audit organization under Clause 1, Article 151a of the Law on Credit Institutions (as amended and supplemented in 2017) plus the consolidated business result of the commercial bank under special control determined and reported by the special control board under Clause 2 of this Article produces a negative number, the State Bank shall decide to record in the compulsory transfer decision a decrease in the charter capital of the commercial bank under special control to zero (0) Vietnam dong in order to reduce accumulative loss. This capital level shall replace the charter capital level stated in the establishment and operation license granted by the State Bank to the commercial bank under special control.

Article 12. Extension of special control period

1. Based on the actual situation of operation of a credit institution under special control, at least 30 days before the special control period expires, the special control board shall propose the State Bank Governor (via the Banking Supervision Agency) to consider and decide to extend the period of special control, for the credit institutions under special control prescribed in Clause 1, Article 6 of this Circular, or propose the director of the State Bank branch to consider and decide to extend the period of special control, for the credit institutions under special control prescribed in Clause 2, Article 6 of this Circular.

2. Within 20 days after receiving the proposal of the special control board prescribed in Clause 1 of this Article, the State Bank Governor or the director of the State Bank branch shall consider and decide to extend the period of special control of the credit institution under special control according to his/her competence prescribed in Article 6 of this Circular.

Article 13. Termination of special control

1. When a credit institution under special control falls into one of the cases prescribed in Article 145b of the Law on Credit Institutions (amended and supplemented in 2017), the special control board shall propose the State Bank Governor (via the Banking Supervision Agency) to consider and decide to terminate special control, for the credit institutions under special control prescribed in Clause 1, Article 6 of this Circular, or propose the director of the concerned State Bank branch to consider and decide to terminate special control, for  the credit institutions under special control prescribed in Clause 2, Article 6 of this Circular.

2. The special control of a credit institution shall terminate from the time the decision on termination of special control takes effect.

Chapter III

COMPOSITION, STRUCTURE, OPERATIONAL MECHANISM, TASKS AND POWER OF A SPECIAL CONTROL BOARD      

Article 14. Composition, structure and operational mechanism of a special control board       

1. A special control board shall be organized in either of the following models to be composed of:

a/ The head of the special control board and other members; or,

b/ The head of the special control board, deputy head of the special control board, and other members. 

2. Members of a special control board are:

a/ Cadres, public employees, civil servants or employees of the State Bank, the Deposit Insurance of Vietnam, the Cooperative Bank of Vietnam (in case of special control of the credit institutions prescribed in Clause 2, Article 6 of this Circular), credit institutions other than the credit institution under special control, and other agencies and organizations involved in the special control, who are appointed or solicited by the State Bank or appointed by related agencies and organizations at the request of the State Bank;

b/ Experts in the fields of finance, banking, accounting, audit, and information technology, who are invited or solicited by the State Bank.

3. The head of the special control board of a credit institution prescribed in Clause 1, Article 6 of this Circular must be:

a/ A departmental leader or holder of an equivalent or higher post in a professional unit of the State Bank; or,

b/ A departmental leader or holder of an equivalent or higher post of the Banking Supervision Agency; or,

c/ The director or a deputy director of the State Bank branch of the locality where the credit institution under special control is headquartered; or,

d/ The Chief Inspector or a deputy chief inspector or holder of an equivalent post of the State Bank branch of the locality where the credit institution under special control is headquartered.

4. The head of the special control board of a credit institution prescribed in Clause 2, Article 6 of this Circular must be:

a/ The director or a deputy director of the State Bank branch of the locality where the credit institution under special control is headquartered; or,

b/ The Chief Inspector or a deputy chief inspector or holder of an equivalent post of the State Bank branch of the locality where the credit institution under special control is headquartered.

5. Members of a special control board must not be spouses, natural fathers, adoptive fathers, natural mothers, adoptive mothers, offspring, adopted children, siblings, brothers-in-law or sisters-in-law of members of the Board of Directors, Members’ Council, or Control Board, director general (director) or individuals being major shareholders or capital-contributing members of the credit institution under special control or individuals being at-law representatives of major shareholders, owners or capital-contributing members of the credit institution under special control.

6. Operational mechanism of the special control board:

a/ The special control board shall work on a collegial basis and apply the personal accountability regime in conformity with the contents and characteristics of the to-be-handled matters;

b/ The frequency of meetings, mechanisms of information exchange, decision making and summarization of opinions of members shall be decided by the head of the special control board in conformity with the form of special control and actual situation of the credit institution under special control.

7. The State Bank Governor shall decide on the composition, number of members and structure of the special control board, for the credit institutions under special control prescribed in Clause 1, Article 6 of this Circular. Directors of State Bank branches shall decide on the composition, number of members and structure of the special control board, for the credit institutions under special control prescribed in Clause 2, Article 6 of this Circular.  

Article 15. Tasks and powers of special control boards

1. A special control board shall perform the tasks and exercise the powers prescribed in Article 146b of the Law on Credit Institutions (as amended and supplemented in 2017). The special control board shall perform its tasks and exercise its powers through one or more than one of the following activities:

a/ To request the credit institution under special control to provide the information, documents and dossiers relating to its operation in an adequate, accurate and prompt manner, including information, documents and dossiers on:

(i) The financial status and real value of charter capital and reserve funds;

(ii) The actual situation of the organization, personnel, administration, governance, information technology system and internal control system;

(iii) The actual situation of operation, business and investment; capacity to repay debts upon maturity;

(iv) The actual state of assets and security assets, clearly reporting the state of non-performing loans, bad receivables, restructured loans showing the latent risk of becoming non-performing loans, non-performing loans sold to the VAMC and not yet handled, and accrued interests to be refunded in accordance with law but not yet refunded;

(v) The list of customers (excluding credit institutions and foreign bank branches) extended with credit; list of money depositors; and other creditors;

(vi) Other information serving the performance of tasks by the special control board.

b/ To request the credit institution under special control to inventory cash items and cash equivalents available in the system on the principle of cross inspection and supervision and report the result within 5 days after completing the inventory;

c/ To organize the supervision of the inventory process prescribed at Point b of this Clause in conformity with the actual situation and scope of operation of the credit institution under special control;

d/ Pending the issuance of a plan on restructuring the credit institution under special control or when such plan is not yet approved by a competent authority, on the basis of the information, documents and dossiers provided by the credit institution under special control prescribed at Points a and b of this Clause or information from independent audit reports, inspection conclusions and other sources, the special control board shall evaluate actual situation of the credit institution under special control so as to proactively apply or propose the State Bank Governor (via the Banking Supervision Agency) or the director of the concerned State Bank branch to apply appropriate measures in conformity with the actual situation of the credit institution under special control;

dd/ To give approval before the credit institution under special control conducts a number of transactions and activities;

e/ To request the credit institution under special control to report its operational results; the reporting contents and frequencies must suit the actual situation of the credit institution under special control;

g/ To decide to attend meetings of the Board of Directors, Members’ Council or Control Board of the credit institution under special control and give opinions on issues raised at these meetings and relevant to its powers and tasks;

h/ To direct, inspect, supervise and control operation of the credit institution under special control in order to prevent the hindering, dispersal, pledge, mortgage and transfer of assets and other acts that may cause damage to the credit institution under special control;

i/ To report, periodically as prescribed in the special control decision or when necessary or requested by the State Bank Governor or director of the State Bank branch, to the State Bank Governor (via the Banking Supervision Agency, for the special control boards of the credit institutions under special control prescribed in Clause 1, Article 6 of this Circular), or the director of the State Bank branch, (for the special control boards of the credit institutions under special control prescribed in Clause 2, Article 6 of this Circular), on the governance, administration, operation, business, investment, finance, liquidation and other matters (if any) of the credit institution under special control and propose handling measures (if any); and results, difficulties and problems in the process of implementation of the approved restructuring plan and propose handling measures (if any);

k/ To timely report to the State Bank Governor (via the Banking Supervision Agency, for the special control boards of the credit institutions under special control prescribed in Clause 1, Article 6 of this Circular), or the director of the State Bank branch (for the special control boards of the credit institutions under special control prescribed in Clause 2, Article 6 of this Circular), on abnormal developments, latent risks, possibility of losing safety and violations of the credit institution under special control; difficulties and problems arising in the process of exercising special control of the credit institution and propose handling measures;

l/ To promptly notify the credit institution under special control of information and direction of competent authorities concerning the operation of, and plan on restructuring, the credit institution;

m/ To perform other jobs assigned by the State Bank Governor or the director of the State Bank branch.

2. To advise and propose the State Bank Governor (via the Banking Supervision Agency, for the special control boards of the credit institutions under special control prescribed in Clause 1, Article 6 of this Circular) or the director of the State Bank branch (for the special control boards of the credit institutions under special control prescribed in Clause 2, Article 6 of this Circular):

a/ To propose the Government to apply Point c, Clause 1, Article 146 of the Law on Credit Institutions (as amended and supplemented in 2017);

b/ To implement Clauses 2, 3, 4 and 7, Article 146a and Clauses 2, 5 and 6, Article 146dd of the Law on Credit Institutions (as amended and supplemented in 2017).

3. To propose the director of the State Bank branch (for the special control boards of the credit institutions under special control prescribed in Clause 2, Article 6 of this Circular):

a/ To decide on the contents prescribed at Points a and b, Clause 3, Article 146 of the Law on Credit Institutions (as amended and supplemented in 2017);

b/ To propose the State Bank Governor to recommend the Government to apply Points a and b, Clause 1, Article 146 of the Law on Credit Institutions (as amended and supplemented in 2017).

Article 16. Rights and obligations of the head of a special control board

1. To lead and organize the performance of the tasks and exercise of the powers of the special control board specified in the Law on Credit Institutions (as amended and supplemented in 2017), this Circular and the special control decision.

2. To convene and chair meetings of the special control board.

3. To sign documents falling within the competence of the special control board on behalf of the special control board.

4. To assign tasks to members of the special control board.

5. To decide on the contents prescribed in Clause 6, Article 14 of this Circular.

6. To direct and supervise the performance of tasks by members of the special control board, including the management and storage of documents and dossiers, confidentiality of information relating to operations of the credit institution under special control as prescribed by law and directed by the State Bank Governor (for the credit institutions under special control prescribed in Clause 1, Article 6 of this Circular) or the director of the State Bank branch (for the credit institutions under special control prescribed in Clause 2, Article 6 of this Circular).

7. Within 30 days after the decision on termination of special control of the credit institution takes effect, on behalf of the special control board, to hand over all documents and dossiers relating to the exercise of special control of the credit institution to the Banking Supervision Agency (for the heads of the special control boards of the credit institutions under special control prescribed in Clause 1, Article 6 of this Circular) or the State Bank branch of the locality where the credit institution under special control is headquartered (for the heads of the special control boards of the credit institutions under special control prescribed in Clause 2, Article 6 of this Circular).

8. To exercise other powers and perform other tasks assigned in the special control decision.

9. When absent, to authorize a deputy head or other members of the special control board to exercise the powers prescribed in Clauses 2, 3, 6 and 8 of this Article.

10. To be held responsible before the State Bank Governor or the director of the State Bank branch and before law for the performance of assigned tasks.

Article 17. Rights and obligations of members of a special control board  

1. To perform tasks assigned or authorized by the head of the special control board.

2. To promptly report to the head of the special control board on abnormal issues, latent risks, possibility of losing safety and violations of the credit institution under special control, and propose handling measures.

3. To be held responsible before the head of the special control board and before law for the performance of their assigned tasks.

Chapter IV

RESPONSIBILITIES OF RELATED UNITS

Article 18. Responsibilities of the Banking Supervision Agency

1. To promptly report to the State Bank Governor when the credit institutions prescribed in Clause 1, Article 6 of this Circular fall into one of the cases prescribed in Clause 1, Article 145 of the Law on Credit Institutions (as amended and supplemented in 2017), or Article 4 or 5 of this Circular.

2. To advise and propose the State Bank Governor to decide on the contents prescribed in Clause 1, Article 6 of this Circular.

3. To advise the State Bank Governor to direct and establish special control of the credit institutions prescribed in Clause 1, Article 6 of this Circular.

4. To advise and propose the State Bank Governor to decide on the contents prescribed in Clauses 2 and 3, Article 6 of this Circular which fall within the ambit of its functions and tasks.

5. To act as the focal point in receiving reports, proposals and recommendations related to special control of the credit institutions prescribed in Clause 1, Article 6 of this Circular, including also the contents prescribed in Clause 2, Article 15 of this Circular.

6. To advise and propose the State Bank Governor to process the reports, proposals and recommendations prescribed in Clause 5 of this Article which fall within the ambit of its functions and tasks.

7. To advise and propose the State Bank Governor to implement the provisions in Clauses 2, 3, 4, 5 and 7, Article 146a (except the contents on provision of special loans; exemption from or reduction of refinancing loan interests) and Clauses 2, 5 and 6, Article 146dd of the Law on Credit Institutions (as amended and supplemented in 2017), for the credit institutions prescribed in Clause 1, Article 6 of this Circular.

8. To receive, manage and store documents and dossiers and ensure confidentiality of information relating to special control of the credit institutions prescribed in Clause 1, Article 6 of this Circular as prescribed by law and directed by the State Bank Governor, including also the documents and dossiers prescribed in Clause 7, Article 16 of this Circular.

9. To propose directors of State Bank branches to consider and place the credit institutions prescribed in Clause 2, Article 6 of this Circular under special control.

10. To advise the State Bank Governor to assign related units of the State Bank to advise on and handle proposals, recommendations and contents related to special control of credit institutions which fall within the ambit of the functions and tasks of these units.

Article 19. Responsibilities of State Bank branches

1. For the credit institutions under special control prescribed in Clause 1, Article 6 of this Circular:

a/ To appoint their representatives to join special control boards;

b/ To perform jobs related to the exercise of special control of dependent units of credit institutions under special control in their localities as assigned by the State Bank Governor and advise and propose the State Bank Governor (via the Banking Supervision Agency) to apply handling measures according to their assigned competence and tasks;

c/ To handle according to their competence matters related to dependent units of credit institutions under special control in their localities;

d/ To coordinate with the Banking Supervision Agency, special control boards and state management agencies in their localities in the process of exercising special control of credit institutions;

dd/ To perform other tasks assigned by the State Bank Governor.

2. For the credit institutions under special control prescribed in Clause 2, Article 6 of this Circular:

a/ To perform the jobs prescribed in Clauses 2 and 3, Article 6 of this Circular;

b/ To promptly report to the State Bank Governor when the credit institutions fall into one of the cases prescribed in Clause 1, Article 145 of the Law on Credit Institutions (as amended and supplemented in 2017), or Article 4 or 5 of this Circular;

c/ To receive and handle according to their competence matters on matters related to special control of credit institutions;

d/ To act as the focal points and coordinate with local state management agencies in handling matters arising in the course of exercising special control of credit institutions;

dd/ Before the 15^th of the subsequent month or when necessary or requested by the State Bank Governor, to report to the State Bank Governor (via the Banking Supervision Agency) on operation and business results, difficulties, problems, abnormal developments in operation, latent risks, possibility of losing safety, and violations of credit institutions under special control in their localities, and the impacts of credit institutions under special control on the safety of banking operations in the localities and propose handling measures;

e/ To receive, manage and store documents and dossiers and ensure confidentiality of information relating to special control of credit institutions as prescribed by law and directed by the State Bank Governor, including also the documents and dossiers prescribed in Clause 7, Article 16 of this Circular;

g/ To perform other tasks according to their competence.

Article 20. Responsibilities of the Cooperative Bank of Vietnam

1. To appoint its representatives to join special control boards of the credit institutions prescribed in Clause 2, Article 6 of this Circular.

2. To coordinate with the Banking Supervision Agency and State Bank branches of the localities where the credit institutions under special control prescribed in Clause 2, Article 6 of this Circular are headquartered and special control boards in the course of exercising special control of credit institutions.

3. To monitor developments and operations of the credit institutions under special control prescribed in Clause 2, Article 6 of this Circular, report and propose handling measures (if any) to the State Bank Governor or directors of the State Bank branches of the localities where the credit institutions are headquartered. 

Article 21. Responsibilities of the Deposit Insurance of Vietnam

1. To appoint its representatives to join the special control boards of credit institutions under special control being deposit insurance participants.

2. To coordinate with the Banking Supervision Agency, State Bank branches of the localities where credit institutions under special control being deposit insurance participants are headquartered, and special control boards in the course of exercising special control of credit institutions.

Article 22. Responsibilities of credit institutions under special control, owners, capital-contributing members, shareholders, Boards of Directors, Members’ Councils, Control Boards, and directors general (directors) of credit institutions under special control

1. To implement the provisions of Article 146c of the Law on Credit Institutions (as amended and supplemented in 2017) and this Circular.

2. To govern, administer, and control operations of credit institutions under special control on the principle of ensuring asset safety.

3. To be held responsible before law and the State Bank for the accuracy, promptness and adequacy of information, documents and dossiers provided to the special control boards.

4. To report to the special control boards difficulties, problems and risks arising during the process of special control. 

Chapter V

IMPLEMENTATION PROVISIONS

Article 23. Transitional provisions

Special control boards established before the effective date of this Circular shall continue implementing the issued special control decisions until these decisions are amended or supplemented. 

Article 24. Effect

This Circular takes effect on October 1, 2019, and replaces the State Bank Governor’s Circular No. 07/2013/TT-NHNN of March 14, 2013, on special control of credit institutions.

Article 25. Organization of implementation 

The Chief of the Office, the Chief of the Banking Supervision Agency, and heads of the units of the State Bank, directors of State Bank branches, the chairperson the Board of Directors and the Director General of the Deposit Insurance of Vietnam, the chairperson the Board of Directors and the Director General of the Cooperative Bank of Vietnam, chairpersons of the Boards of Directors or Members’ Councils, heads the Control Boards, and directors general (directors) of credit institutions under special control shall organize the implementation of this Circular.-

For the State Bank Governor
Deputy Governor
DOAN THAI SON