On 7th May 2014, the Government issued Decree No. 39/2014/ND-CP on operation of financial company and financial leasing company. Decree stipulates the general conditions for financial company to perform its banking operation, including:
- The banking operation of financial company must be specified in the Establishment and Operation Permit issued by State Bank.
- Having qualified staff with professional capacity, material facilities, technology, means, equipment and internal regulations as provided for by law for the implementation of banking operation specified in the Permit.
- For banking operations related to the foreign exchange, the financial company must comply with regulations of law on management of foreign exchange.
- Fulfilling the operational conditions for banking operation stipulated by the State Bank.
One of the new remarkable points of this Decree is detailing the conditions for the financial company to be entitled to issue credit cards such as the compliance with the prudential ratios in banking operations; debt classification and continuous appropriation of risks in all quarters of the preceding year of the proposal for operation supplementation; Bad debt ratio below the level provided by the State Bank; Not being sanctioned for administrative violations in the field of money and banking for 01 year from the time of request for additional operation backwards; Business operation with continuous profit at least in 02 years preceding the year proposed for additional operation; Having a minimum time of operation and plan for the issuance of credit cards as stipulated by the State Bank.
Factoring financial company and financial company for consumer credit shall not carry out these following activities: Underwriting of issue of corporate bonds and trading of corporate bonds; Receipt of entrusted capital of the Government, organizations and individuals to carry out investment activities in business and production projects; Entrustment of capital for other credits institutions to carry out the credit granting;
For the financial company and the financial leasing company that have been established and are operating under the Permit issued by the State Bank before the effective date of this Decree, this Decree specifies that the above mentioned company must ensure all conditions specified for the conditional activities as provided in this Decree within 12 months from the effective date of this Decree.
Particularly, the consolidated financial company and the financial company for consumer credit and the financial leasing company that have been established and are operating under the Permit issued by the State Bank before the effective date of this Decree which have activities prohibited by this Decree must stop such activities within 18 months, from the effective date of this Decree.
The Decree takes effect on 25th June, 2014