Non-banking financial companies may be allowed to set up a maximum of three branches in a fiscal year (Photo: antt.vn)Hanoi (VNA) - Non-banking financial companies (NBFC) may be allowed to set upa maximum of three branches in a fiscal year.
Itwas drafted in a circular released last week by the State Bank of Vietnam (SBV)asking for comment.
Thedraft circular states that NBFCs with operation duration of less than 12 months(from the date of inauguration to the time of proposal) are allowed to set uptwo branches at maximum while the number for NBFCs with operation duration ofmore than 12 months is three in a fiscal year. One branch cannot be managed bymore than three transaction offices.
NBFCincludes general financial companies, factoring companies, consumer lendingcompanies and financial leasing companies.
Toqualify for the opening of domestic branches and transaction offices, NBFC mustcomply strictly with regulations on debt classification and risk provisioningaccording to the SBV’s regulations.
Besidesthis, they are required to meet regulations on the ratio of bad debt to totaloutstanding loans of under 3 percent or as decided by the SBV governor in eachperiod.
Toset up a branch abroad, in addition to meeting conditions as the opening of adomestic branch, NBFC must have a minimum operation duration of three years andtotal assets of over 20 trillion VND (877.19 million USD) according to auditedconsolidated financial statements. They must also make profits for threeconsecutive years before the year of making the proposal.
Underthe draft, the SBV governor has the authority to approve or disapprove theestablishment of NBFC; termination of operation or dissolution of domesticbranches, transaction offices and representative offices; as well as theestablishment of branches and representative offices abroad.
Thegovernor of the SBV may authorise directors or chief inspectors of the bank’sbranches in provinces and cities to approve or disapprove of the establishmentof NBFC; termination of operation or dissolution of branches and transactionoffices at their locations; and the change of the name and location of thebranches’ headquarters or transaction offices.-VNA
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