Biz Consult Law Firm
The State Bank of Viet Nam issued Circular No 45/2011/TT-NHNN on December 30 regulating overseas lending and borrowing by credit institutions. Under the circular, intended to control outbound foreign currency flows, domestic credit institutions are only allowed to lend to an enterprise with capital contributed by a Vietnamese enterprise in the form of a direct overseas investment. The State Bank will approve registration and modifications of such loans within 30 days. Each loan must be made via a single bank account used for making and collecting on foreign loans. The credit institution must disburse and make all collections via this account. The circular takes effect on February 13.
New provisions on internal audit
The State Bank of Viet Nam issued Circular No 44/2011/TT-NHNN on December 29 replacing decisions No 36/2006/QD-NHNN and No 37/2006/QD-NHNN on internal audit of credit institutions, including branches of foreign banks. Under Circular No 44, credit institutions and branches of foreign banks must establish internal audit systems in compliance with banking laws, with an explicit and transparent allocation of powers and duties to personnel and departments and specifying risk limits for banking transactions.
Credit institutions and branches of foreign banks must also annually evaluate the audit system of each unit and department and submit reports on these evaluations to their management bodies, e.g., board of management, members council, or controllers committee, along with the State Bank branch.
Circular 44 also provides regulations on internal audit management and operation of interal audit departments, subject to the specific management and instruction of the credit institution's controllers committee. For branches of foreign banks, internal audits may be conducted by the bank's headquarters or regional office. Internal auditors must meet criteria and requirements set by Circular No 44.
Circular No 44 takes effect on February 12 and allows institutions six months to establish internal audit systems in compliance with the circular.
New asset, capital rules for insurers
The Government issued Decree No 123/2011/ND-CP on December 28 detailing the Law on Insurance Business and amending Decree No 45/2007/ND-CP of March 2007 on insurance, reinsurance, brokerage and agency operations. Pursuant to Decree No 123, foreign insurance brokerage enterprises providing out-bound, overseas insurance brokerage services must have total assets of at least US$2 billion, while the recquirement is $100 million for domestic brokerage enterprises.
Under the new regulations, reinsurers must have legal capital of at least VND400 billion ($19 million); life insurers must have legal capital of VND700 billion ($33.3 million); and insurers offering both life and non-life, at least VND1.1 trillion ($52.38 million). Enterprises offering health insurance must have legal capital of VND300 billion ($14.28 million).
Decree No 123, which takes effect on February 15, does not apply to social insurance, health insurance, deposit insurance and other non-commercial insurance operations conducted by the State.