This document provides an overview and summary of credit institution laws and regulations in Vietnam. It begins with definitions of key terms like credit institutions and their various forms such as banks, non-banking credit institutions, micro-finance institutions, and people's credit funds. The document then outlines the process for establishing different types of credit institutions in Vietnam, including the required conditions and capital requirements. It also summarizes the procedures for obtaining an establishment and operation license. Lastly, the document summarizes Vietnam's legal framework for lending activities of credit institutions. It covers topics like types of loans, borrowers, evaluation and lending decisions, loan agreements, and penalties for non-compliance.

1. 1
INTERNAL
TRAINING
Ms THAO PHUONG
Ms PHUONG UYEN
OVERVIEW OF FORMS AND
THE ESTABLISHMENT OF CREDIT INSTITUTION
UNDER THE LAW
ON CREDIT INSTITUTIONS 2010
PART 1
OVERVIEW OF LENDING ACTIVITIES BY CREDIT
INSTITUTIONS AND
FOREIGN BANK BRANCHES IN VIETNAM UNDER
CIRCULAR 39/2016/TT-NHNN
PART 2

2. 2
19 December 2020
Speaker: Nguyen Thao Phuong
INTERNAL TRAINING
PART 1
OVERVIEW OF LAW ON CREDIT INSTITUTIONS 2010

3. 3
LAW ON CREDIT INSTITUTIONS 2010
Chapter 1: General Provisions
Chapter 2: Establishment of
Credit Institutions
Chapter 3: Organization, Management and
Executive Operation of Credit Institutions
Chapter 5: Representative Offices of Foreign
Credit Institutions
Chapter 6: Restrictions to Ensure Security
During Operation of Credit Institutions
Chapter 4: Operation of Credit
Institutions
Chapter 7: Finance, Cost Accounting and
Reporting
Chapter 8: Special Control, Restructuring,
Bankruptcy, Dissolution and Liquidation of
Credit Institutions

4. 4
MAIN STRUCTURE
DEFINITIONS, CHARACTERISTICS
OF CREDIT INSTITUTIONS
FORMS OF CREDIT INSTITUTIONS
THE ESTABLISHMENT AND OPERATION
OF CREDIT INSTITUTIONS

5. 5
SECTION 01
1. Definition
2. Characteristics
3. Commercial presence of foreign CIs in
Vietnam
DEFINITIONS,
CHARACTERISTICS
OF CREDIT
INSTITUTIONS (CIs)

6. 6
I. DEFINITIONS, CHARACTERISTICS OF CIs
Characteristics
Definition
• a special form of corporation
• Main business operation is providing banking
service activities
• an enterprise
• conducts one, some or all banking activities

7. 7
I. DEFINITIONS, CHARACTERISTICS OF CIs
3. Commercial presence of foreign credit institutions in Vietnam
• Vietnamese commercial bank;
• Vietnamese finance company;
• Vietnamese finance leasing company.
Representative office
Joint venture bank, 100% foreign
owned bank;
Branch of Foreign Bank
Joint venture finance company, 100% foreign
owned finance company;
Joint venture finance leasing company, 100%
foreign owned finance leasing company

8. 8
SECTION 02
1. Banks
2. Non-banking CIs
3. Micro-finance institution
4. People’s credit fund
FORMS OF CIs

9. 9
I. BANKS
Classification
Definition
• COMMERCIAL BANK
• POLICY BANK
• CO-OPERATIVE BANK
Bank is a form of CIs which may conduct all banking
activities.
TYPE OF BUSINESS
COMMERCIAL
BANK
• Domestic commercial banks: shareholding company.
• State commercial banks: single member LLC with 100% charter capital
owned by the State.
• Foreign invested banks: Limited Liability Company
POLICY BANK According to distinct decision of the State Bank
CO-OPERATIVE
BANK
Co-operative

10. 10
II. NON-BANKING CIs
Classification
Definition
• FINANCE COMPANY
• FINANCE LEASING COMPANY
• OTHER NON-BANKING CIs
Non-banking CIs is a form of CIs which is permitted to conduct one or a
number of banking activities
except for receipt of deposits from individuals and provision of payment
services via accounts of clients
TYPE OF BUSINESS
• Domestic Non-banking CIs: Shareholding company, Limited Liability company
• Foreign invested Non-banking CIs: Limited Liability company

11. 11
III. MICRO-FINANCE INSTITUTION AND PEOPLE’S CREDIT FUND
3. Micro-finance institution:
• Micro-finance institution is a form of Cis which mainly conducts a number of banking activities aimed
at satisfying requirements of low-income individuals and households and of super-small enterprises.
4. People’s credit fund:
• People's credit fund is a Cis which is voluntarily established by legal entities, individuals and
households in the form of a co-operative in order to carry out a number of banking activities in
accordance with Law on CIs and the Law on Co-operatives, with its main purpose being mutual
assistance amongst members to develop their production and business activities and living standards.

12. 12
SECTION 03
PROCESS OF
ESTABLISHMENT AND
OPERATION OF CIs
1. Conditions of establishment:
2. Establishment process
3. Operation of CIs

13. 13
III. PROCESS OF ESTABLISHMENT AND OPERATION OF CIs
1. Conditions of establishment:
CONDITIONS OF ESTABLISHMENT
Domestic CIs
prefer Clause 1 Article 20 Law on Credit Institutions, Article 9 Circular
40/2011/TT-NHNN.
Foreign-invested CIs
prefer Clause 2, 3, 4 Article 20 Law on Credit Institutions, Article 10
Circular 40/2011/TT-NHNN
Co-operative bank,
People's credit fund,
Micro-finance
institution
prefer Clause 5 Article 20 Law on Credit Institutions

14. 14
III. PROCESS OF ESTABLISHMENT AND OPERATION OF CIs
Commercial Bank
Individual:
• Finance capacity
• Be the manager of a profitable business for at least
3 consecutive years.
• Or having college degree in economics or law
Orginization:
• Equity must be at least VND 500 billion in 5
consecutive years
• Profitable business in 5 consecutive years
Legal Capital
Founding Individual/Organization
Managers, Executives of CIs
Proposal of establishment and feasible
business plan
Member of BOD, BOM
• having college degree or higher
• at least 03 years as a manager, executive officer of
Cis / at least 5 years as a manager or executive of an
enterprise operating in the finance, banking,
accounting, or auditing industry
Prefer Article 50 Law on Credit Institutions
• Finance capacity report
• List of expected managers, executives
• Risk management policy
• Expected business plan for the first 3 years
Prefer Circular 40/2011/TT-NHNN
Commercial Bank 3,000 Billion VND
Policy Bank 5,000 Billion VND
Co-operative bank 3,000 Billion VND
Finance Company 100 Billion
Finance Leasing Company 150 Billion VND
Branch of foreign Credit Institution 15 Million USD
People's credit fund operating in one commune, one
town
0,5 Billion VND
People's credit fund operating in one ward; people's
credit funds operating in inter-commune, inter-
commune, ward and inter-ward areas
01 Billion VND
Micro-finance institution 05 Billion VND

15. 15
III. PROCESS OF ESTABLISHMENT AND OPERATION OF CIs
Procedures for registration of Establishment and Operation License of Commercial Bank, Branch of
Foreign Bank:

16. 16
Authority: SBV
Step 1
Step 3
Step 4
Business
Registration
Commencem
ent of
operation
Submitting
dossiers
Publication
of
operational
information
Step 2
at least thirty (30) days
before the proposed date of
commencement
notify the State Bank at least fifteen
(15) days prior to the proposed date of
commencement of operation
within 180 days
Authority: DPI
within 05 working days

17. 17
III. PROCESS OF ESTABLISHMENT AND OPERATION OF CIs
Procedures for registration of Establishment and Operation License of Non-banking Credit Institution:

18. 18
Authority: SBV
Step 1
Step 2
Commencem
ent of
operation
Submitting
dossiers
notify the State Bank at least fifteen
(15) days prior to the proposed date of
commencement of operation
within 180 days

19. 19
3. Operation of CIs
III. PROCESS OF ESTABLISHMENT AND OPERATION OF CIs
Banking operation is regular business and provision of one or more of the following
services:
a. Receipt of deposits;
b. Extension of credit;
c. Provision of payment services via accounts.

20. 20
19 December 2020
Speaker: Nguyen Thao Phuong
INTERNAL TRAINING
END OF PART 1

21. 21
SPEAKER: NGUYEN HOANG PHUONG UYEN
INTERNAL TRAINING
PART 2
OVERVIEW OF LENDING ACTIVITIESBY CREDIT INSTITUTIONSAND
FOREIGNBANKBRANCHES IN VIETNAMUNDER CIRCULAR39/2016/TT-NHNN

22. 22
MAIN
STRUCTURE
1. Overview of lending activities by
credit institutions and
foreign bank branches (CIs)
2. Legal regime on lending
activities of CIs
3. Loan [credit] Agreement

23. 23
Realtor
1. OVERVIEW OF LENDING ACTIVITIES BY CREDIT INSTITUTIONSAND FOREIGNBANK BRANCHES
a. Lending: means the form of extension of credit whereby a CI provides a
client with or undertakes to provide a client with an amount of money to be
used for a specified purpose within a specified period of time as agreed, on
the principle of repayment of both principal and interest.
b. Lending credit institution (CI)
1.1. Definitions
Circular 39/2016/TT-NHNN governs lending activities by CIs to Client, instead
of lending activities as between CIs.
1.2. Governing scope and applicable entities

24. 24
Realto
r
2. LEGAL REGIMEON LENDING ACTIVITIES OF CIs
Legal regime on lending activities of CIs
1.Types of loans
1.Borrowers
Evaluation and decision on lending
Loan with security measures
Conditions for borrowing
1.Lending rules
1.Loan purpose
2.1
2.6
2.4
2.3
2.5
2.2
2.7

25. 252. LEGAL REGIMEON LENDING ACTIVITIES OF CIs
• Short term loans: one (1) year (365 days)
• Medium term loans: one (1) year up to a maximum five (5) years
• Long term loans: over five (5) years
2.1. Types of loans
• Lending for living requirements
• Lending for business and other activities (“business purposes”)
2.3. Loan purpose
Must be conducted in accordance with the agreements reached between
CIs and Clients
2.4. Lending rules
• Subject
 Legal entity
 Individual
• Purpose
• Utilization plan
• Financial capacity
• Objects [purposes] for which loans may not be provided
2.5. Conditions for borrowing
Depending on CIs' decisions following its internal evaluation process under
internal rules and applicable laws
2.7. Evaluation and decision on lending
• A legal entity
• An individual
2.2. Borrowers
• Agreement between CIs and Client on whether or not to apply security
measures
• A CI shall make its own decision, and be liable for same, on lending
without security
2.6. Loan with security measures

26. 263. LOAN [CREDIT] AGREEMENT
• Facility agreement/Facility
contract/Facility Letter/Loan Contract...
• Loan Agreement means an agreement
between parties whereby CI provides a
client with or undertakes to provide a
client with an amount of money to be
used for a specified purpose within a
specified period of time as agreed, on the
principle of repayment of both principal
and interest
3.1. Definition of Loan Agreement

27. 27
Realto
r
3.2. Contents of Loan Agreement
Loan term
Currency of loans and of loan repayment
Loan interest rate
Amount of loan
1.Repayment of principal and interest
1.Termination of lending, dealing with the debt, and
2.exemption [waiver] or reduction of interest, fees and charges
1.Penalties for breach and payment of compensation
3. LOAN [CREDIT] AGREEMENT
3.2.1
3.2.6
3.2.4
3.2.3
3.2.5
3.2.2
3.2.7

28. 283. LOAN [CREDIT] AGREEMENT
• VND or foreign currency
• The currency for repayment of a loan shall be the currency of such loan.
3.2.1. Currency ofloans and of loan repayment
Depending on agreement with a client on the amount of the loan
• Capital utilization plan
• Financial capacity
• Limits on extention of credit
• The capital sources of the CI
3.2.2. Amount of loan
Loan term means the period of time calculated from the day following the
date on which the CI disburses loan capital to the client up until the date
on which the client fully repays principal and interest on the loan in
accordance with the agreement reached between the CI and the client.
3.2.3. Loanterm
a) Depending on agreement between CIs and Client, except:
• Serving the sector of agricultural and rural development
• Implementing a plan on trading export goods
• Serving trading by a small or medium-sized enterprise
• Developing a support industry
• Serving trading by an enterprise applying high-tech
 Governor of SBV regulates a maximum loan interest rate
b) The items to be agreed on the interest rate for a loan comprise (i)
interest rate and (ii) the method of calculating interest on the loan.
c) Cases of interest payment
3.2.4. Loan interest rate3.2.5. Repaymentof principal and interest
a) Agreement between CIs and Client on the periods for repayment of principal and
interest as follows:
• Separate periods for repayment of principal and for payment of interest;
• The same periods for repayment of principal and payment of interest.
b) Agreement between CIs and Client on early repayment of the loan debt.
c) Restructuring the debt repayment periods or transferring the debt to overdue
debts
d) Agreement between CIs and Client on the order for recovering principal and
interest
a) Termination of lending
b) Dealing with the debt
c) Exemption [waiver] or reduction of interest, fees and charges
3.2.6 Termination oflending, dealing with the debt, and exemption [waiver]or reduction of
interest, fees and charges
a) Agreement between CIs and Client on penalties for breaches and
payment of compensation, except in the cases of breaching the
obligation on paying principal and loan interest.
b) A credit institution and its client may agree that the party in breach shall
be subject to:
• a fine without having to pay compensation; or
• that the party in breach must pay a fine and also pay compensation for
loss.
3.2.7. Penaltiesfor breach and payment of compensation

29. 29
CASE STUDY
Background information
Foreign bank branch in
Singapore (FBB Singapore)
Foreign bank branch in
Vietnam (FBB Vietnam)
Questions for Lawyers
Can FBB Vietnam receive an escrow
deposit of 20% the loan value and
conduct escrow account blockage
to secure the loan between the
Borrower and FBB Singapore?
Whether this transaction is legal
under the law of Vietnam?
(Borrower)

30. 30
Q&A

31. 31