The landscape of financial services in Vietnam is evolving rapidly, with people’s credit funds playing an increasingly important role in the country’s banking sector. This comprehensive guide explores the latest requirements and procedures for obtaining a credit fund license in Vietnam, as outlined in Decree 162/2024/ND-CP.

Introduction to Credit Funds in Vietnam

People’s credit funds are cooperative financial institutions that serve local communities and play a vital role in Vietnam’s grassroots financial system. These institutions provide essential banking services to members while promoting financial inclusion and economic development.

Overview of Decree 162/2024/ND-CP

Decree 162/2024/ND-CP represents a significant update to the regulatory framework governing credit funds in Vietnam. This new legislation establishes comprehensive guidelines for:

  • Licensing requirements and procedures
  • Capital requirements and financial standards
  • Operational scope and limitations

Licensing Requirements and Eligibility Criteria

To obtain a credit fund license in Vietnam, applicants must meet several key requirements:

1. Capital Requirements

Minimum charter capital requirements must be met, with specific amounts varying based on the operational scope and location of the credit fund. The minimum charter capital must be equal to the statutory capital required by the government at the time of applying for the license.

2. Personnel Qualifications

Key personnel must possess relevant qualifications, including:

  • Individuals: Vietnamese citizens aged 18 and above, residing or temporarily residing within the area of operation of the credit fund, who have no criminal record and whose legal capacity is not restricted.
  • Households: Members must reside within the area of operation of the fund, share assets for production and business purposes, and designate a legal representative to exercise their rights and obligations.
  • Legal Entities: Must be a legally operating organization (excluding social funds and charitable funds) with a headquarters located within the area of operation of the credit fund, with a legal representative or authorized person participating.

Application Process and Documentation

Required Documentation

Principle Approval Dossier:

  1. Application for the License as per the template in Appendix No. 01 issued with Circular No. 04/2015/TT-NHNN.
  2. Draft Charter of the People’s Credit Fund approved by the Establishment Assembly.
  3. Proposal for the establishment of the People’s Credit Fund approved by the Establishment Assembly.
  4. List of personnel proposed for election or appointment as Chairman and other members of the Board of Directors, Head and other members of the Supervisory Board, and Director of the People’s Credit Fund.
  5. Documentation proving qualifications and competence.
  6. List of members contributing capital to establish the People’s Credit Fund.
  7. Certificate of employment, a copy of the recruitment decision, or employment contract.
  8. A copy of the Enterprise Registration Certificate or Establishment Decision or other equivalent documentation (for legal entities).
  9. Financial statements (for legal entities).
  10. Authorization letter for a representative to participate in capital contribution (if applicable).
  11. Application for membership as per the templates in Appendix No. 03, Appendix No. 04, and Appendix No. 05 of Circular No. 24/2023/TT-NHNN.
  12. Minutes of the Establishment Assembly.

License Application Dossier

  1. The Charter of the People’s Credit Fund 
  2. Minutes of the meeting of the founding congress of the People’s Credit Fund.
  3. The resolution of the founding congress on the approval of the Charter, the election of the Chairman and other members of the Board of Directors, the Head of the Supervisory Board, and other members
  4. The decision of the Board of Directors of the People’s Credit Fund on the appointment of the Director of the People’s Credit Fund
  5. Documents proving the ownership or legal right to use the location of the head office.

The application process involves several stages:

  1. The preparatory committee prepares the application for a license and submits it to the State Bank branch of the province or city.
  2. The State Bank branch confirms receipt of the complete application or requests additional documents within 10 working days.
  3. The State Bank branch sends a written request for feedback from the local People’s Committee and the Vietnam Cooperative Bank regarding the proposed personnel and the establishment of the credit fund within 10 days.
  4. The People’s Committee and the Vietnam Cooperative Bank have 10 days to provide feedback. If no feedback is received, the State Bank branch considers that there are no objections.
  5. The State Bank branch sends written approval for the principle of establishing the credit fund and the proposed personnel list within 30 days.
  6. The preparatory committee organizes the founding congress of the credit fund and submits the licensing application within 90 days.

Issuance of License:

  1. The State Bank branch confirms receipt of the complete application or requests additional documents within 5 working days.
  2. The State Bank branch issues the license within 60 days if the application is complete, or provides a written explanation if the license is not granted.

Foreign Investment

  • People’s credit funds are allowed to raise capital through borrowing from credit institutions and foreign bank branches (Article 24.4 Circular 29/2024/TT-NHNN).
  • People’s credit funds are entitled to receive funding from the State, domestic organizations, and individuals, as well as foreign entities (Article 29.4 Circular 29/2024/TT-NHNN).

Compliance and Ongoing Requirements

Licensed credit funds must maintain ongoing compliance with:

  • Regular reporting requirements: Submit periodic financial and operational reports to ensure transparency and regulatory oversight.
  • Capital adequacy standards: Maintain a minimum capital level relative to risk-weighted assets to ensure financial stability and solvency.
  • Risk management protocols: Implement frameworks to identify and mitigate risks, including credit, operational, and market risks.
  • Anti-money laundering regulations: Verify member identities, monitor transactions, and report suspicious activities to prevent illegal use of funds.

Common Challenges and Solutions

Institutions seeking credit fund licenses often face several challenges:

1. Documentation Complexity

The licensing process requires extensive and detailed documentation that may overwhelm applicants unfamiliar with Vietnamese regulations.

Solution: Engage experienced legal counsel familiar with Vietnamese banking regulations.

2. Capital Requirements

Meeting minimum charter capital thresholds is challenging, especially for smaller entities or startups.

Solution: Develop strong partnerships and secure committed investors early in the process.

3. Regulatory Compliance

Maintaining adherence to strict compliance standards is critical but resource-intensive.

Solution: Implement robust compliance systems and maintain regular communication with regulatory authorities.

Frequently Asked Questions

  • How long does the licensing process take?

    The typical timeline for obtaining a credit fund license is 5-10 months, depending on application completeness and regulatory review.

For details on Submission and Review Procedures, refer to this Article: Understanding Vietnam’s Decree 162 on Credit Fund Licensing: A Comprehensive Guide 

  • What is the minimum capital requirement?

    Capital requirements vary by location and scope of operations. Consult the latest regulations for specific requirements.

The minimum charter capital must be equal to the statutory capital required by the government when applying for the license. (Article 10 Decree 162/2024/ND-CP)

  • What is the maximum capital contribution limit for a member? (Article 10 Circular 29/2024/TT-NHNN)

The member’s capital contribution includes the capital contribution that establishes membership status and supplementary capital contributions: 

  • The minimum capital contribution that establishes membership status is 300,000 VND and is stipulated in the Charter; 
  • The supplementary capital contribution is carried out according to the provisions in the Charter.

The total maximum capital contribution of a member in a People’s Credit Fund shall not exceed 10% of the charter capital of the People’s Credit Fund or a lower ratio as specified in the Charter.

Conclusion

Obtaining a credit fund license in Vietnam requires careful planning, substantial resources, and thorough understanding of regulatory requirements. Success depends on meeting all technical requirements while maintaining strong relationships with regulatory authorities.

For the most current information and specific guidance, it is recommended to consult with qualified legal professionals and maintain direct communication with relevant regulatory authorities.

Harley Miller Law Firm “HMLF”

Head office: 14th floor, HM Town Building, 412 Nguyen Thi Minh Khai, Ward 05, District 3, Ho Chi Minh City.

Phone number: +84 937215585

Website: hmlf.vn 

Email: [email protected]

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