Chỉ thị 01/2007/CT-NHNN

DIRECTIVE

ON THE REORGANIZATION OF OPERATION OF FINANCE LEASING COMPANIES

In recent years, finance leasing companies have made many efforts in the development of business production activity, market expansion, continuous improvement of the customer service qualityAs a result, one more important capital distribution channel has been created to satisfy the demand for economic development, especially to provide opportunity to small and medium enterprises to approach to the medium, long-term capital source with simpler conditions and modes. However, the actual operation of finance leasing companies in the past time also showed some shortcomings, some of which may cause effect to the prudence in operation of the companies, such as: the appraisal, selection of customers have not been closely performed, some customers who do not have adequate legal status, do not have sufficient financial capacity, lease the assets that are not in correspondence with the operational function of the companies, are still considered to lease finance by some companies; especially, some finance leasing companies showed the signal of abetting the lessee in raising the price of the leased asset, creating opportunity for the lessee to take advantage of the capital upon the lease of asset and violate the state laws; some companies relax their inspection, supervision to the lessee and the leased asset, as a result, there have been many cases where the lessee does not use leased asset but leases it again or sells the asset but finance leasing companies do not know, which causes risk in the operation of finance leasing companies.

In order to comply with provisions of laws, and intensify the responsibility of finance leasing companies in business activity, restrain risks caused by some individuals who take advantage of the aperture of the laws to intentionally contravene the laws and cause losses in asset, the State Bank of Vietnam would like to request:

1. Finance leasing companies:

a. To examine and fully issue legal documents, internal regulations on the organization and operation of the companies in compliance with provisions in the Decree No.16/2001/ND-CP dated 2/5/2001 of the Government on the organization and operation of finance leasing companies and the Decree No. 65/2005/ND-CP dated 19/5/2005 of the Government on the amendment, supplement of several articles of the Decree No.16/2001/ND-CP dated 2/5/2001 of the Government on the organization and operation of finance leasing companies and guiding documents of the State Bank of Vietnam.

b. To issue documents guiding the specific finance leasing operation in line with their conditions, particular characters and charter as provided for in the Circular No. 05/2006/TT-NHNN dated 25/7/2006 providing guidance on some contents concerning the finance leasing activity and finance leasing entrust services in accordance with provisions of the Decree No. 16/2001/ND-CP dated 2/5/2001 and the Decree No. 65/2005/ND-CP dated 19/5/2005 of the Government.

c. To check again the key officers apparatus (Board of Managers, Chief Accountant, Chief of operational divisions; internal inspection, supervision division) to arrange the experienced, capable officers in line with the assigned function, duties.

d. By 30/4/2007 at the latest, companies shall send documents stated in point a and point b hereinabove to the State Bank of Vietnam (Banks and Non-banking Credit Institutions Department, State Bank Inspectorate).

2. Companies which have branches must set up an online management system for the intensification of the internal inspection, supervision activity. The Governor of the State Bank only approves the companies to open branches where the above system is established.

3. Price of the leased asset:

Finance leasing companies must seriously comply with provisions at point 8.1 of the Circular No.05/2006/TT-NHNN dated 25/7/2006 providing guidance on some contents concerning the finance leasing activity and finance leasing entrust services in accordance with provisions of the Decree No.16/2001/ND-CP dated 2/5/2001 and the Decree No.65/2005/ND-CP dated 19/5/2005 of the Government, of which, special attention should be paid to the evaluation of the reasonability of the price of leased asset. Finance leasing companies must take self responsibility for their evaluation.

4. In order to have foundation for the due evaluation of the actual situation of current finance leasing activity and for the request to competent agencies or the State Bank of Vietnam to give support to the finance leasing activity in the new coming period, Board of Directors of finance leasing companies is requested to conduct the Executive Board to recheck all finance leasing contracts, classify customers, make provisions and deal with risky leased assets in accordance with current provisions of the Governor of the State Bank; to take measures of reorganizing, overcoming and dealing with arising violation acts (if any). Result of the self examination, rechecking must be reported in writing to the State Bank of Vietnam (including the report on any query and proposal on the organization, operation of the companies) prior to 30/4/2007.

5. Director of the Banks and Non-banking Credit Institutions Department, Heads of related units of the State Bank of Vietnam shall, based on their function, duties, be responsible for conducting the rechecking of the entire legal documents relating to the state management to the finance leasing activity so as to propose necessary amendment, supplement; researching, suggesting the Governor to propose relevant Ministries, branches or submit to the Government for the issuance of proper policies to support the finance leasing activity.

This Directive shall be effective after 15 days since its publication on the Official Gazette. Finance leasing companies must seriously implement this Directive. Any query that may arise during the implementation should be timely reflected to the State Bank of Vietnam (Banks and Non-banking Credit Institutions Department) for guidance and settlement.