Limit Placed on Procurement of Bank Assets

The Government of Vietnam has issued the Decree 57 providing financial regimes for credit institutions and foreign bank branches. According to the new ruling, credit institutions and foreign bank branches cannot spend more than 50 percent of charter capital plus provisioning funds used to raise chartered capital to procure fixed assets and make construction investments.

 

According to this decree, credit institutions are only allowed to use their charter capital and provisional funds for charter capital increase to contribute capital or purchase shares in enterprises or other banks as governed by the Law on Credit Institutions.

 

However, they are not allowed to contribute capital, purchase shares of enterprises and other credit institutions which are shareholders or capital-contributing members of such credit institutions.

 

In financial management principle, credit institutions and foreign bank branches are self-responsible for their business activities, obligations and its commitments.

 

The decree provides that credit institutions and foreign bank branches maintain the real value of charter capital or paid-up capital equal at least the legal capital stipulated by the Government. When there is a change in charter capital and paid-up capital, banks must make public new charter capital and paid-up capital.