The Vietnamese government has issued a decree that requires credit agencies to have at least VND30 billion in chartered capital and set up relationship with above 20 financial institutions in order to be licensed by the central bank.
Under Decree No 10/2010/ND-CP which will take effect on April 15, credit rating will be authorized to supply basic information about borrowers to banks and other financial institutions, including names and relatives of borrowers, borrowing and payment history, assets and outstanding loans.
The agencies will be allowed to use borrower information from the five most recent years to create credit reports and will also be required to store such information for at least five years from the time it was received.
Borrowers will also have a right to obtain information from the agency database once per year free of charge and will have the rights to request a correction of inaccurate or false information.
Credit agencies will be required to apply for licenses under the new decree no later than April 15 of next year.
The State Bank of Vietnam will grant or reject applications by credit agencies for operating licenses within 30 days. Licenses will be revoked in cases of violations of regulations or misuse of information.
Vietnam Credit Information & Rating Co. (Vietnam Credit) late last year became the first local private firm to announce a bank ratings report, which based on 18 criteria such as capital adequacy ratio, liquidity, business efficiency, managerial ability and experience, brand, quality, service and asset expansion.
Most banks protested against the report, in which no banks in Vietnam are ranked AAA (highest ability for meeting financial commitments) and AA (high ability for financial commitments but lower than AAA).
“Vietnam Credit is a private entity so their ranking criteria have not had high accuracy”, Tran Xuan Huy, general director of Sacombank which graded BBB in Vietnam Credit’s report said. (Vietnam Economic Times)
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