The State Bank of Viet Nam (SBV) is collecting comments on its draft revised Law on Credit Institutions to better ensure the safety of the banking system.

According to the SBV, the law, which was issued in 2010, currently shows a number of limitations, requiring an amendment to suit the actual operation of credit institutions and management practices of State agencies.

The law’s regulations on organisation, administration and operation of credit institutions overlap with other laws including Law on Enterprises and Law on Cooperatives.

While the Law on Credit Institutions has been promulgated since 2010, other relevant laws, such as the Law on Enterprises, Law on Investment and Law on Management and Use of State Capital for Investment in Production and Business of Enterprises, have been so far amended, supplemented or replaced. Therefore, some provisions of the Law on Credit Institutions need to be revised and supplemented to ensure consistency with the above laws.

Some operations of credit institutions, such as treasury activities and payment agent assignment, are not regulated in the Law on Credit Institutions, which causes difficulties for credit institutions in implementing the work.

Besides, the law’s regulations on some operations of credit institutions, such as letters of credit (L/C) and receiving deposits between credit institutions, also need to be improved to be consistent with reality and international practices.

A number of new rising problems, such as trading securities that are not stocks or bonds, and providing information about foreign bank branches to parent banks, have not been regulated in the law yet.

According to the SBV, a revision of the Law on Credit Institutions is necessary to ensure the safety of the banking system, market transparency, and fundraising for socio-economic development.

The current Law on Credit Institutions needs to be amended to complete the legal framework for credit institutions to control the operation, prevent risks and limit the occurrence of wrongdoing.

Under the draft revised law, the SBV and the Government Inspectorate will strengthen the inspection and supervision measures to effectively manage credit activities, and combat manipulation, group interests and cross-ownership.

The revised law will also include regulations to enhance the State management for weak credit institutions with an aim to limit and deal with the situation of depositors withdrawing money en masse like at the Saigon Commercial Bank (SCB) late last year.

Besides, the law will also regulate risk prevention and further strengthen the self-inspection, internal control and self-responsibility of credit institutions.

It is also necessary to develop tools to manage credit institutions, especially the appointment of their leaders with the consent of the SBV, according to the draft law. — VNS