Thông tư 36/2016/TT-NHNN

CIRCULAR

ON PROCEDURES FOR CARRYING OUT BANKING INSPECTION

Pursuant to the Law on the State Bank of Vietnam No. 46/2010/QH12 dated June 16, 2010;

Pursuant to the Law on Credit Institutions No. 47/2010/QH12 dated June 16, 2010;

Pursuant to the Law on Inspection No. 56/2010/QH12 dated November 15, 2010;

Pursuant to the Government’s Decree No. 86/2011/ND-CP dated September 22, 2011 elaborating and providing guidelines for some articles of the Law on Inspection;

Pursuant to the Government’s Decree No.156/2013/ND-CP dated November 11, 2013 defining functions, tasks, powers and organizational structure of the State Bank of Vietnam;

Pursuant to the Decree No. 26/2014/ND-CP dated April 07, 2014 of the Prime Minister on organizational structure and operation of banking inspection and supervision authorities;

Pursuant to the Decree No.35/2014/QD-TTg dated June 12, 2014 of the Prime Minister defining functions, tasks, powers and organizational structure of the banking inspection and supervision authority affiliated to the State Bank of Vietnam;

At the request of the Chief Inspector of the Central Banking Inspection and Supervision Authority,

The Governor of the State Bank of Vietnam promulgates a Circular on procedures for carrying out banking inspection.

Chapter I.

GENERAL PROVISIONS

Article 1. Scope

This Circular provides for procedures for carrying out consolidated inspection of credit institutions, inspection carried out at the headquarters and all branches of the institution (hereinafter referred to as “extensive inspection”), inspection of units affiliated to credit institutions, inspection of foreign banks' branches according to the inspection plan approved by a competent authority or upon request.

Article 2. Regulated entities

This Circular applies to:

1. Banking inspection and supervision authorities.

2. The branches of State Bank of provinces and central-affiliated cities, except for Ho Chi Minh city branch of the State Bank and Hanoi city branch of the State Bank (hereinafter referred to as “the branch of the State Bank”).

3. Inspectorates, members of inspectorates and officials assigned to carry out banking inspection.

4. Credit institutions and foreign banks’ branches.

5. Organizations and individuals involved in inspection of credit institutions and foreign banks’ branches.

Article 3. Definitions

For the purposes of this Circular, the terms below shall be construed as follows:

1. “the affiliate of a credit institution” includes branches, transaction offices and representative offices of the credit institution.

2. “inspection of affiliates of a credit institution” is the inspection of one or some affiliates of the credit institution by implementing an inspection plan and issuing an inspection conclusion.

3. “extensive inspection” is the inspection of both the headquarters and all or some affiliates of the credit institution by implementing an inspection plan and issuing an inspection conclusion.

4. “consolidated inspection of a credit institution" is the inspection of both the credit institution’s juridical persons and all or some credit institution’s juridical persons that are subsidiaries of the credit institution under the management of the State Bank, institution by implementing an inspection plan and issuing an inspection conclusion.

5. “banking inspection and supervision authorities” are regulatory bodies that include:

a) The Central Banking Inspection and Supervision Authority affiliated to the State Bank (hereinafter referred to as “Central Banking Inspection and Supervision Authority”);

b) Provincial banking inspection and supervision authorities established in the province where a Provincial Department of Banking Inspection and Supervision affiliated to the Central Banking Inspection and Supervision Authority is not available.

6. “re-inspection” is the consideration, assessment and handling of the inspection conclusions when violations of law are suspected during the inspection and issuance of inspection conclusion.

Article 4. The power to decide inspections and re-inspections

1. The Chief Inspector has the power to:

a) issue the decision on consolidated inspection of a credit institution, extensive inspection, inspection of the affiliate of a credit institution and inspection of a branch of a foreign bank under the management of the State Bank as assigned by the Governor of the State Bank or at the request of the Governor of the Stated Bank;  

b) decide to carry out an inspection in case violations of law are suspected or there are risks to the operational safety of the credit institution and branch of a foreign bank and shall be responsible to the Governor of the State Bank for such decision.

c) In case violations of law are suspected or there are risks to the operational safety of the credit institution or branch of a foreign bank, request the Director of the branch of the State Bank to inspect the inspected entity as assigned by the Governor of the State Bank; in the event the Director of the branch of the State Bank rejects the request, the Chief Inspector may issue an inspection decision, inform the Governor of the State Bank and shall be responsible to the Governor of the State Bank for such decision;

d) decide to re-inspect the case that has been concluded by the Director General of the Provincial Department of Banking Inspection and Supervision and the Chief Inspector of the provincial banking inspection and supervision authority, but violations of law are suspected; the case that has been concluded by the President of the People’s Committee of the province and the Director of the branch of the State Bank but violations of law are suspected as assigned by the Governor of the State Bank;

2. The Director General of the Provincial Department of Banking Inspection and Supervision shall issue the decision on extensive inspection, inspection of the affiliate of a credit institution under the management of the Provincial Department of Banking Inspection and Supervision or at the request of the Chief Inspector. 

3. When necessary, the Director of the branch of the State Bank shall issue the decision on consolidated inspection of a credit institution, extensive inspection at the headquarters of the credit institution, inspection of the affiliate of a credit institution, and inspection of branch of a foreign bank under the management of the branch of State Bank;

4. The Chief Inspector of the provincial banking inspection and supervision authority has the power to:

a) issue the decision on consolidated inspection of a credit institution, extensive inspection of the credit institution where its headquarters is located; inspection of the affiliate of a credit institution, inspection of branch of a foreign bank under the management of the branch of the State Bank or at the request of the Chief Inspector and the Director of the branch of the State Bank;

b) decide to carry out an inspection in case the inspected entity's violations of law are suspected or there is a threat to the operational safety of a credit institution and branch of a foreign bank under his/her management and be responsible to the Director of the branch of the State Bank for such decision.

5. When necessary, the Governor of the State Bank shall issue the decision on consolidated inspection of a credit institution, extensive inspection, inspection of the affiliate of a credit institution, and inspection of a branch of a foreign bank.

Article 5. Organizational structure of an inspectorate

1. An inspectorate includes a chief and members of the inspectorate. The chief of the inspectorate shall direct and administer activities of the inspectorate.

2. When necessary, the inspectorate includes a deputy chief and some team leaders. The deputy chief of the inspectorate and some team leaders shall assist the chief of the inspectorate in performing the assigned tasks and take responsibility for some inspectorate’s tasks assigned by the chief.

The inspection decider (hereinafter referred to as “inspection decider”) shall decide an official to act as a chief, deputy chief or members of the inspectorate. This shall be specified in the inspection decision. 

3. The members of the inspectorate shall perform tasks as assigned by the leader.

Article 6. Eligibility requirements applied to the chief of the inspectorate

1. The chief of the inspectorate is required to:

a) have good moral and political qualities, and sense of responsibility, are honest, objective and just;

b) hold professional knowledge of inspection; be good at analysis, assessment and consolidation of issues concerning inspection;

c) be capable of instructing inspectorate members to perform their tasks.

2. The official who is appointed as the chief of the inspectorate carrying out consolidated inspection of a credit institution must be holding the position of the Deputy Director General of Central Banking Inspection and Supervision Authority or Deputy Chief Inspector of the provincial banking inspection and supervision authority or principal inspector or higher and satisfy the eligibility requirements specified in Clause 1 of this Article.

3. The official who is appointed as the chief of the inspectorate carrying out the extensive inspection (except for the microfinance institution and People’s Credit Funds) must be holding the position of the department manager or principal inspector or higher or the inspector who has participated in at least 02 inspectorates, and satisfy the eligibility requirements specified in Clause 1 of this Article.

4. The official who is appointed as the chief of the inspectorate carrying out the extensive inspection of the microfinance institution, People’s Credit Funds, affiliates of a credit institution or branch of a foreign bank must be holding the position of the deputy manager of a department or inspector or higher, and satisfy the eligibility requirements specified in Clause 1 of this Article.

Article 7. Change of the chief of the inspectorate

1. The change of the chief of the inspectorate shall be made in the event he/she fails to satisfy the requirements of the inspection plan or violates law or fails to perform the assigned tasks due to objective reasons.

2. In the event the chief of the inspectorate requests the change, he/she shall submit a report to the inspection decider, stating reasons thereof.  In the event the inspection decider wishes to have him/her replaced, he/she shall issue a written notice to the chief of the inspectorate, stating reasons thereof before a decision on the change is issued.

3. The inspection decider shall issue a written decision on the change of the chief of the inspectorate, which shall be given to the inspectorate, inspected entity and relevant organizations and individuals.

4. The decision on the change of the chief of the inspectorate shall be made using the Form No. 01-TTr enclosed with this Circular.

Article 8. Change or addition of a member of the inspectorate

1. The change of a member of the inspectorate shall be made in the event he/she fails to satisfy the requirements of the inspection plan or violates law or fails to perform the assigned tasks due to objective reasons.

2. The addition of a member of the inspectorate shall be made to maintain the progress and quality of the inspection or satisfy other requirements and tasks that arise during the inspection.

3. In the event the chief of the inspectorate requests the change or addition of a member, the chief of the inspectorate shall submit a report specifying reasons for and contents of the change and addition to the inspection decider for consideration and decision.

In the event the inspection decider changes or adds an a member himself/herself, he/she shall issue a written notice to the chief of the inspectorate, stating reasons thereof before a decision on the change is issued.

4. The inspection decider shall give a written decision on the change or addition of a member, which shall be given to the inspectorate, inspected entity and relevant authorities, institutions and individuals.

5. The decision on the change of a member of the inspectorate shall be made using the Form No. 02-TTr enclosed with this Circular.

The decision on the addition of an inspectorate member shall be made using the Form No. 03-TTr enclosed with this Circular.

Chapter II.

PROCEDURES FOR CARRYING OUT AN INSPECTION ACCORDING TO THE INSPECTION PLAN

Section 1. PREPARATIONS FOR THE INSPECTION

Article 9. Collection of information and documents before the issuance of inspection decision

1. Before issuing an inspection decision, when necessary, the person who has the power to issue the inspection decision specified in Article 4 of this Circular (hereinafter referred to as “inspection decider”), according to the operation of the credit institution and branch of a foreign bank, and requirements of the inspection, shall direct the collection of information and documents in service of the issuance of inspection decision.

2. The information provider is the credit institution or branch of a foreign bank that is expected to undergo inspection according to the approved annual inspection plan and other entities supervised and inspected by the banking inspection and supervision authority (if any).

The inspected entity shall provide information and documents at the request of the inspection decider and officials or working group responsible for collecting information and documents (hereinafter referred to as “information collector”) as prescribed by law.

3. The appointment of an information collector and the scope of collection of information shall be confirmed in writing by the inspection decider. Information shall be collected within 15 working days.

When necessary, the information collector shall submit a report on the collection of information and documents at the working place of the inspected entity or at the authorities performing the state management of relevant fields in connection with inspection to the inspection decider; or shall directly work with relevant persons.

4. Upon performance of his/her tasks, the information collector shall produce: the assignment order specifying working duration and contents, and information that needs to be collected from the inspected entity; officials card or inspection card.

5. The information collector must not harass or cause troubles to the inspected entity; must not request information that is beyond the scope of the assigned tasks.

6. The information collector shall study, analyze and consolidate the collected information and documents; within 05 working days from the day on which the collection of information is completed, official or the working group leader shall submit a report on the results of the collection of information and documents to the inspection decider.

Article 10. Report on the results of collection of information and documents

The report on the results of collection of information and documents includes the following contents:

1. General overview of organizational structure, functions, responsibilities and powers of a credit institution or branch of a foreign bank that is expected to undergo inspection.

2. Financial condition and operations of the credit institution or branch of a foreign bank that is expected to undergo inspection; competent authorities’ inspection and audit results relating to the contents of the expected inspection (if any) and other relevant information.

3. Consideration and assessment of issues concerning collection of information.

4. Consider major issues and suspected violations of law.

5. Propose the inspection contents in conformity with the contents of the approved annual inspection plan; methods of carrying out the inspection; number of employees of the inspectorate.

Article 11. Issuance of inspection decision

1. Based on the approved annual inspection plan and the report on the results of collection of information and documents (if any), the person who has the power to issue the inspection decision specified in Article 4 of this Circular shall issue the inspection decision and direct the chief of the inspectorate to formulate an inspection plan.

2. An inspection decision includes the following contents:

a) Legal grounds for carrying out an inspection;

b) Scope, targets, contents and tasks of inspection;

c) Duration of inspection;

d) The chief and members of the inspectorate.

The inspection decision shall be made using the Form No. 04-TTr enclosed with this Circular.

3. Within 05 days from the day on which the inspection decision is signed, the inspection decision shall be sent to the inspected entity.

Article 12. Formulating, approving and outlining the annual inspection plan

1. Based on the inspection decision, the chief of the inspectorate shall take charge of drafting an inspection plan.

2. The inspectorate shall discuss the draft inspection plan.  Dissenting opinions shall be sent to the inspection decider for consideration.

3. The chief of the inspectorate shall submit the inspection plan to the inspection decider for approval. The inspection plan is a confidential and internal document of the inspectorate, must be kept and used in accordance with regulations, and must not be sent to the inspected entities.

The inspection plan shall be prepared using the Form No. 05-TTr enclosed with this Circular.

4. The duration of formulation and approval of the inspection plan shall be decided by the inspection decider, shall be confirmed in writing and shall not be more than 05 working days from the day on which the inspection plan is signed.

5. The chief of the inspectorate shall hold a meeting with staff of the inspectorate to outline the approved inspection plan and assign responsibility to some team leaders and members of the inspectorate to the inspection decider for approval; discuss and decide methods of carrying out inspections; cooperation between members of the inspectorate and relevant authorities and units during the inspection.

When necessary, the inspection decider or the decision receiver shall authorize another person to attend the meeting and heighten the awareness of purposes, requirements and contents of the inspection and tasks of the inspectorate.

The assignment of responsibility to team leaders and members of the inspectorate shall be given in writing.

6. The team leaders and members of the inspectorate shall formulate the plan for performance of the assigned tasks and inform the chief of the inspectorate thereof before re-inspecting the credit institution.

Article 13. Creation of the outline of request for the inspected entities to submit reports

1. Based on the contents of the inspection and inspection plan, the chief of the inspectorate shall take charge and cooperate with members of the inspectorate in creating an outline of request for inspected entities submit reports.

2. The chief of the inspectorate shall submit a document to the inspected entities (enclosed with the outline of request for submission of reports) at least 05 days before the inspection decision is announced.

Article 14. Issuance of written notice about the announcement of inspection decision

Before announcing the inspection decision, the chief of the inspectorate shall issue a written notice about the announcement of inspection decision to inspected entities and other participants. The notice shall specify time and place of, and participants in the announcement session. The inspection decider shall be informed before the written notice is issued.

Section 2. INSPECTION PROCESS

Article 15. Announcement of inspection decision

1. Within 15 working days from the day on which the inspection decision is issued, the chief of the inspectorate has the responsibility for announcing the inspection decision to the inspected entity.

2. The chief of the inspectorate shall preside over the inspection decision announcement session, read aloud the entire inspection decision, specify the purposes, requirements, inspection methods, tasks and powers of the inspectorate, duration of the inspection, rights and obligations of the inspected entity, work program and other tasks relating to activities of the inspectorate.

3. The inspected entity shall inform the inspection contents according to the outline requested by the inspectorate.

4. Other members attending the session shall express their opinions about the inspection contents (if any).

5. The chief of the inspectorate shall assign members to keep a log of the announcement session. The log shall be signed by the chief of the inspectorate and legal representative of the inspected entity.

The log of the announcement session shall be made using the Form No. 06-TTr enclosed with this Circular.

Article 16. Procedures for carrying out an inspection

The inspectorate shall carry out an inspection under the following procedures:

1. Request the inspected entity to submit reports; provide information and documents relating to the inspection contents.

The request for provision of information and documents shall be made using the Form No. 07-TTr enclosed with this Circular. The record on delivery and receipt of information and documents shall be made using the Form No. 08-TTr enclosed with this Circular.

2. Study the collected information and documents to clarify the inspection contents; assess the compliance with policies and law, performance of tasks and exercise of rights by the inspected entity in connection with inspection contents; consider and assess level of risks and inherent risks to operations of inspected entity; determine additional documents relevant to unclear issues; determine the issues that need explaining.

In the event the inspected entity is required to submit a report on issues concerning the inspection contents, the chief of the inspectorate shall submit a written request for the inspected entity to submit the report.  The written request for submission of reports shall be made using the Form No. 09-TTr enclosed with this Circular.

3. In the event it is necessary to verify information and documents, or clarify issues concerning inspection contents:

a) The inspection decider or the chief of the inspectorate shall invite the legal representative of the inspected entity, representatives of relevant organizations or individuals to take part in a discussion.  The invitation shall be prepared using the Form No. 10-TTr enclosed with this Circular;

b) In the event it is necessary to verify information and documents at the organization related to the inspection contents, the chief of the inspectorate shall decide the contents that need verifying, inform the time, place, information and documents that need verifying in advance, and request such organization to provide information and documents relating to the verified contents and send them to the inspected entity.

The chief of the inspectorate shall directly verify or appoint members of the inspectorate to verify. When carrying out the verification, there must be at least two (02) members of the inspectorate.

When working with the inspected entity, the members of the inspectorate must produce the inspection decision, reference letter of the supervisory authority of the inspection decider and inspector cards (or officials card if the member of the inspectorate is not an inspector);

c) The verification results shall be recorded using the Form No. 11-TTr enclosed with this Circular.

In the event the inspected entity refuses to sign the record, the person who makes the record shall specify the reasons and take legal responsibility for the contents specified in the record. The inspected entity shall be responsible for adequacy, properness and accuracy of documents and information.

4. The inspection results shall be recorded using the Form No. 12-TTr enclosed with this Circular.

5. During the inspection, if violations are found and need to be dealt with immediately, the chief and members of the inspectorate shall make a record.

The violations shall be dealt with in accordance with regulations of the law on inspection and other relevant laws.

6. If it is suspected that the case is liable to criminal prosecution, the chief of the inspectorate shall request the inspection decider to consider transferring the case to an investigating authority.

7. In the event the chief of the inspectorate does not work at the place where the inspection is carried out, the chief of the inspectorate shall issue a written notice to the inspected entity and inform the inspection decider.

8. The management and use of inspection information and documents shall comply with regulations of the law on inspection and other relevant laws.

Article 17. Inspection reports

1. According to the approved inspection plan or at the request of the chief of the inspectorate, the members of the inspectorate shall submit a report on the performance of their tasks to the chief of the inspectorate. In the event issues are found being beyond the power to handle immediately, the members of the inspectorate shall promptly inform the chief thereof.

According to the report, the chief of the inspectorate shall provide instructions and consider proposals of the members. The chief of the inspectorate shall report the issues beyond his/her power to the inspection decider.

2. The chief of the inspectorate shall submit a report on the performance of the inspectorate to inspection decider according to the approved inspection plan or at the request of inspection decider.

According to the report, the inspection decider shall provide instructions and consider proposals of the chief of the inspectorate. The inspection decider shall report the issues beyond his/her power to the head of the supervisory authority thereof.  The inspection decider shall report the issues beyond the power of the head of the supervisory authority to the Governor of the State Bank thereof.

3. The report inspection progress report shall be prepared in writing and specify: performance of inspection tasks by the reporting date compared with the approved inspection plan; the completed tasks, incomplete tasks and inspection results; the next tasks to be performed; difficulties and proposals (if any); in case the inspection is behind the schedule or there are tasks that are incomplete according to the approved inspection plan, explanation and proposed solutions shall be specified in the report.

Article 18. Changes to the inspected entity or inspection contents

1. The inspection decider is also the person who makes changes to the inspection decision

2. A change to the inspected entity or inspection contents shall be made in any of the following cases:

a) It is requested by the State Bank;

b) It is requested by a relevant authority;

c) Such a change is considered necessary because of issues arising during the inspection.

3. Changes to the inspected entity or inspection contents specified in the inspection decision at the request of the inspection decider:

a) In any of the cases specified in Clause 2 of this Article, the inspection decider shall consider issuing a decision on changes to the inspection decision and request the chief of the inspectorate to comply with such decision. 

b) The chief of the inspectorate shall inform the members of the changes to the inspection decision; formulate a new inspection plan and organize the implementation thereof.

4. Changes to inspection contents and inspected entity specified in the inspection decision at the request of the inspectorate:

a) In any of the cases specified in Clause 2 of this Article, the inspectorate shall discuss the request for changes to the inspection contents and inspected entity.  Dissenting opinions shall be reported to inspection decider by the chief of the inspectorate;

b) On behalf of the inspectorate, the chief of the inspectorate shall submit a written request to the inspection decider for consideration and decision on the changes to the inspection decision. The written request for changes to the inspection decision shall specify reasons, changed contents, and other relevant contents. The opinions of the inspection decider shall be expressed in writing;

c) In the event inspection decider approves the changes to inspection contents and inspected entity specified in the inspection decision, he/she shall issue a decision on changes to the inspection decision and request the chief of the inspectorate comply with such decision. 

The chief of the inspectorate shall inform the members of the changes to the inspection decision; formulate a new inspection plan and organize the implementation thereof.

5. In the event the contents of the inspection decision that need changing change the inspection contents and inspected entity specified in the approved annual inspection plan, the inspection decider shall inform the head of the supervisory authority and the person who approves such annual inspection plan thereof.

6. The decision on the change or addition of the inspection team member shall be given to the entities that have been issued with the initial inspection plan and the additional inspected entities. The decision on the changes shall be made using the Form No. 13-TTr enclosed with this Circular.

7. The plan for implementing the new inspection plan shall be sent to the entities that have been issued with the initial inspection plan.

Article 19. Extension of duration of inspection

1. An inspection carried out by the banking inspection and supervision shall last for a maximum of 45 days. If the case is complicated and involves responsibility of multiple organizations and individuals, and it is required to extend the inspection duration, the chief of the inspectorate shall submit a written request to the inspection decider for extension of the inspection duration. The written request shall specify reasons and length of the extension; dissenting opinions of the members of the inspectorate about the request for extension of the inspection duration (if any).

2. In case the inspection has to take place for more than 70 days, according to the request of the chief of the inspectorate, the inspection decider shall issue the inspection decision shall consider, decide and report it to the head of the supervisory authority.

3. In the event the inspection has to take place for more than 70 days:

a) In the event the inspection decider is the Governor of the State Bank or the Chief Inspector, the Governor of the State Bank, at the request of the Chief Inspector, shall request the Prime Minister to decide. 

b) In the event the inspection decider is the Director General of the Provincial Department of Banking Inspection and Supervision, he/she shall submit a report to the Chief Inspector. The Governor of the State Bank, in consideration of the report submitted by the Chief Inspector, shall the Prime Minister to decide.

c) In the event the inspection decider is the Director of the branch of the State Bank, the Director of the branch of the State Bank shall submit a report to the Governor of the State Bank through the Central Banking Inspection and Supervision Authority. The Governor of the State Bank, in consideration of the report submitted by the Director of the branch of the State Bank, shall request the Prime Minister to decide;

d) In the event the inspection decider is the Chief Inspector of the provincial banking inspection and supervision authority, he/she shall submit a report to the Director of the branch of the State Bank who shall submit the report to the Governor of the State Bank through the Central Banking Inspection and Supervision Authority. The Governor of the State Bank, in consideration of the report submitted by the Director of the branch of the State Bank, shall request the Prime Minister to decide;

dd) According to the decision made by the Prime Minister, the inspection decider shall issue a decision on the extension of inspection duration;

e) In the event the Prime Minister is yet to decide the extension of inspection duration while the inspection duration has passed, the inspectorate shall suspend the inspection at the place where the inspection is carried out; the duration of suspension of inspection shall be added to the length of the extension. When the Prime Minister has decided the extension of inspection duration, the inspectorate shall continue the inspection at the place where it is carried out; in case the Prime Minister disagrees with the extension of inspection duration, the inspectorate shall end the inspection at the place where the inspection is carried out and perform necessary tasks to finalize the inspection under the procedures for carrying out an inspection as prescribed by law.

4. The decision on the extension of inspection duration shall be issued to the inspectorate, inspected entity and relevant organizations and individuals.

The decision on the extension of inspection duration shall be made using the Form No. 14-TTr enclosed with this Circular.

Article 20. Finalizing an inspection

1. To finalize the inspection, the chief of the inspectorate shall hold a meeting with staff of the inspectorate to reach a consensus on the tasks that need to be performed until the end of the inspection.

2. The chief of the inspectorate shall inform inspection decider of the plan for finalizing inspection.

3. The chief of the inspectorate shall submit a written notice about the ending date of the inspection to the inspected entity or, if necessary, hold a working session with the inspected entity to inform them of the end of the inspection; the working session shall be made into a record which has to be signed by the legal representative of the inspected entity and the chief of the inspectorate.

4. The written notice about the finalizing of an inspection shall be prepared using the Form No. 15-TTr enclosed with this Circular.

Section 3. FINALIZING THE INSPECTION

Article 21. Report on performance of the tasks by members of the inspectorate

1. Within 05 days from the day on which the inspection ends, each member of the inspectorate shall submit a report on the performance of their tasks to the chief of the inspectorate and some team leaders (if any) and shall take responsibility for accuracy and truthfulness of such report; send the meeting minutes and record on violations committed by the inspected entity, explanations provided by inspected entity and other documents (if any).

2. Report on performance of the tasks by members of the inspectorate contains at least the following contents:

a) Assigned tasks, results of examination and verification of inspection contents;

b) Conclusion on the examined and verified contents, corruption acts found through inspection (if any); regulations of law as the basis for conclusion;

c) Nature and severity of violations, causes and responsibilities of organizations and individuals committing violations of law (if any);

c) Assessment of inherent risks (if any);

dd) Proposed measures taken against organizations and individuals that commit violations of law (if any); recommended remedial measures; request for amendments to policies and laws (if any);

e) Difficulties during in the inspection, proposals and recommendations (if any).

3. For the inspectorate with an inspection team, within 10 days from the day on which the inspection ends according to the assigned tasks, the team leaders shall prepare an inspection report in accordance with the inspection plan of the inspectorate.

The Form No. 16-TTr enclosed with this Circular shall be used to prepare the aforementioned inspection reports.

4. In the event the contents of the report are found unclear or inadequate, the chief of the inspectorate, team leaders shall request the members of the inspectorate to make amendments and clarify.

Article 22. Compilation of inspection report by the inspectorate

1. Grounds for compilation of inspection report by the inspectorate:

a) Report on performance of the tasks by members of the inspectorate;

b) Inspection report of the inspection team (if any);

c) Minutes of the meeting with the inspected entity;

d) Record on violations committed by the inspected entity (if any);

dd) Written explanations provided by the inspected entity (if any);

e) Documents collected by the inspectorate during the inspection;

g) Other documents (if any).

2. Contents of the inspection report:

a) General overview of the inspected entity;

b) Summary of financial condition;

c) Results: results of actual examination and verification of inspection contents, regulations of law as the basis for determination of violations of law, nature and severity of violations (if any);

d) Conclusion: assessment of operations of the inspected entity; inspection contents; consolidation of violations of law, consequences, causes, and responsibility of organizations and individuals for each violation (if any); assessment of and remarks on the violations committed by relevant entities (if any); assessment of level of risks, risk management, inherent risks and effectiveness of the management system, audit system, internal control system and risk management system of the inspected entity, other conclusions (if any);

dd) Recommendations: remedial measures taken against violations found through inspection (if any); request for a competent authority to make amendments, annul or issue legislative documents to satisfy the state management requirements in finance and banking (if any); request for the inspected entity to take measures for minimizing and handling risks to ensure operational safety of banks and prevent violations of law (if any); other recommended remedial measures (if any);

e) Dissenting opinions of members of the inspectorate (if any);

g) Difficulties during in the inspection, proposals and recommendations (if any).

3. The chief of the inspectorate shall collect written opinions of the members of the inspectorate about the draft inspection report and complete the report. In the event the members of the inspectorate express dissenting opinions about the contents of the draft, the chief of the inspectorate shall inform the inspection decider thereof.

4. During the compilation of the inspection report, when necessary, the chief of the inspectorate shall consult with relevant organizations and individuals to ensure the conclusion and recommendations are handled in an accurate and objective manner.

5. In case of the proposal to pass the case to the investigation authority, the chief of the inspectorate shall hold a meeting so that members of the inspectorate evaluate evidences of contents of conclusions, recommendations and proposals, and a meeting minute must be made.

6. Within 25 days from the end of the inspection, the chief of the inspectorate shall submit an inspection report enclosed with the document concerning dissenting opinions of the member of the inspectorate about the inspection report (if any), and meeting minutes and record on violations committed by the inspected entity (if any), the written explanation of the inspected entity (if any); other documents (if any) shall be submitted to the inspection decider, unless the inspection conclusions are subject to approval by a competent authority or organization.

7. The chief of the inspectorate shall sign the inspection report.

Article 23. Consideration of the inspectorate’s inspection report

1. Inspection decider shall directly study or appoint specialized authority or unit or consultants to study and consider the contents of the inspection report.

2. In case the contents of the inspection report need clarifying or amending, the inspection decider shall hold a meeting with the inspectorate to directly receive the report or provide instructions in writing, request the chief of the inspectorate and members of the inspectorate to submit the report.

3. The chief of the inspectorate shall follow the instructions provided by the inspection decider; hold a meeting with staff of the inspectorate to discuss and prepare the report on amendments to and clarification of the inspection report.

The chief of the inspectorate shall submit the report on amendments to and clarification of the inspection report to the inspection decider, enclosed with dissenting opinions of the members of the inspectorate (if any).

Article 24. Preparation of the draft inspection conclusion

1. After the inspection report and report on amendments and clarification (if any) submitted by the inspectorate are received, the inspection decider shall direct the chief of the inspectorate to take charge of preparing a draft inspection conclusion and submit it to inspection decider.

2. The draft inspection conclusion includes the following contents:

a) General overview of the inspected entity;

b) Financial condition of the inspected entity;

c) Results: results of actual examination and verification of inspection contents, regulations of law as the basis for determination of violations of law, nature and severity of violations (if any);

d) Conclusion: conclusion on the implementation of policies, law, performance of tasks and exercise of powers by the inspected entity; assessment of and remarks on the violations committed by relevant entities (if any); nature and severity of violations of law, consequences, causes and responsibility of organizations and individuals for each violation (if any); assessment of level of risks, capacity for risk management, inherent risks and effectiveness of administration system, audit system, internal control system and risk management system of the inspected entity (if any); assessment of financial condition of the inspected entity; other conclusions (if any);

dd) Recommendations: remedial measures taken against violations found through inspection (if any); request for a competent authority to make amendments, annul or issue legislative documents to satisfy the state management requirements in finance and banking (if any); request for the inspected entity to take measures for minimizing and handling risks to ensure operational safety of banks and prevent violations of law (if any); other recommended remedial measures (if any).

3. During the preparation of the draft inspection conclusion, the inspection decider may request the chief of the inspectorate and members of the inspectorate to provide explanation for the conclusions in the draft.   

4. If it is necessary to assess the professional and technological contents to provide a basis for the conclusion, the chief of the inspectorate shall request the inspection decider to decide to solicit expertise. Expertise shall be solicited in writing, specifying requirements, contents, duration, and expertise-soliciting organization.

The decision to solicit expertise shall be made using the Form No. 17-TTr; A written solicitation shall be prepared using the Form No. 18-TTr enclosed with this Circular.

5. In case the draft inspection conclusion is submitted in order for the inspected entity to provide explanations, the written explanations from the inspected entity shall be enclosed with documentary evidence.

The chief of the inspectorate shall request the inspection decider to deal with the explanations from the inspected entity.

Receipt of explanations from the inspected entity and opinions from relevant organizations and individuals (if any) shall be recorded in the inspection documents.

Article 25. Signing and issuing the inspection conclusion

1. Within 25 days from the day on which the inspection report is received, the inspection decider shall sign the inspection conclusion unless the inspection conclusion is subject to approval by a competent organization.

2. Within 10 days from the day on which the inspection conclusion is signed, the inspection conclusion shall be submitted as follows:

a) For the inspection carried out by the Central Banking Inspection and Supervision Authority, the inspection conclusion shall be submitted to the Governor of the State Bank, Inspector General, Chief Inspector, inspected entities and relevant organizations and individuals:

b) For the inspection carried out by the provincial banking inspection and supervision authority, the inspection conclusion shall be submitted to the Central Banking Inspection and Supervision Authority, the Director of the branch of the State Bank, inspected entities and relevant organizations and individuals.

3. The inspection decision shall be made using the Form No. 19-TTr enclosed with this Circular.

Chapter III

PROCEDURES FOR CARRYING OUT AN UNSCHEDULED INSPECTION

Article 26. Grounds for carrying out an unscheduled inspection

The unscheduled inspection of a credit institution or branch of a foreign bank shall be carried out in any of the following cases:

1. Violations of law are suspected or there is a threat to the safe and sound development of the credit institution or branch of a foreign bank.

2. The unscheduled inspection is requested by a competent authority to settle complaints and denunciations, take actions against corruption, money laundering and terrorism financing.

3. The head of the competent authority gives assignment.

Article 27. Issuance of unscheduled inspection decision

1. When the ground for carrying out an unscheduled inspection is given, the person who has the power to issue the inspection decision specified in Article 4 of this Circular shall issue a decision to carry out an unscheduled inspection of the credit institution or branch of a foreign bank and be responsible for his/her decision.

2. The contents of the unscheduled inspection shall comply with Clause 2, Article 11 of this Circular.

3. Within 05 days from the day on which the unscheduled inspection decision is signed, the inspection decision shall be sent to the inspected entity.

Article 28. Formulating, approving and outlining plan for the unscheduled inspection of a credit institution or branch of a foreign bank

1. The chief of the inspectorate carrying out unscheduled inspection shall take charge of drafting an unscheduled inspection plan.

The unscheduled inspection plan shall be prepared using the Form No. 05-TTr enclosed with this Circular.

2. The inspectorate shall discuss the draft inspection plan.  Dissenting opinions shall be sent to the inspection decider for consideration.

3. The chief of the inspectorate shall submit the unscheduled inspection plan to the inspection decider for approval. The unscheduled inspection plan is a confidential and internal document of the inspectorate and must not be sent to the inspected entities.

4. The duration of formulation and approval of the unscheduled inspection plan shall be decided by the inspection decider and shall not be more than 03 working days from the day on which the inspection plan is signed.

5. The chief of the inspectorate shall hold a meeting with staff of the inspectorate to outline the approved unscheduled inspection plan and assign responsibility to teams and members of the inspectorate; discuss and decide methods of carrying out the inspection; cooperation between units taking part in the unscheduled inspection and vice versa.

6. Each member of the inspectorate shall formulate a plan for their performance of the assigned tasks and inform the chief of the inspectorate thereof before re-inspecting the credit institution or branch of a foreign bank.

Article 29. Creation of the outline of request for the inspected entities to submit reports

Based on the contents of the inspection and inspection plan, the chief of the inspectorate shall create an outline of request for inspected entities submit reports and submit the outline to the inspected entity at least 05 days before the inspection decision is announced.

Article 30. Issuance of written notice about the announcement of an unscheduled inspection decision

The written notice about the announcement of unscheduled inspection of the credit institution or branch of a foreign bank shall comply with Article 14 of this Circular.

Article 31. Procedures for carrying out an unscheduled inspection of a credit institution or branch of a foreign bank

Procedures for carrying out an unscheduled inspection of a credit institution or branch of a foreign bank shall comply with regulations of the law on inspection and regulations from Article 15 to Article 15 of this Circular.

The contents of the report on performance of tasks, inspection report, draft unscheduled inspection and unscheduled inspection conclusion shall be consistent with the contents of the unscheduled inspection.

Chapter IV.

IMPLEMENTATION CLAUSE

Article 32. Effect

This Circular comes into force from February 18, 2017.

Article 33. Responsibility for implementation

Chief of Office, Chief Inspector, heads of the units affiliated to the State Bank, Directors of the branches of the State Bank of provinces, Presidents of the Board of Directors, Board of Members, General Directors (Directors), credit institutions and foreign banks’ branches are responsible for organizing the implementation of this Circular./.