Regulations on public sector financial company under Vietnamese law

Can a financial leasing company open a payment account at a foreign bank branch? Can a financial leasing company establish a subsidiary?

1. What is a financial leasing company?

According to Clause 7, Article 3 of Decree 39/2014/ND-CP, financial leasing is a medium- and long-term credit granting activity on the basis of a financial leasing contract between the financial lessor and the lessee.

According to Clause 4, Article 4 of the Law on Credit Institutions 2010, the company Financial leasing is a type of financial company whose main activity is financial leasing according to the provisions of this Law.

In simple terms, a financial leasing company is a non-bank credit institution operating in the form of financial leasing to provide capital to customers through the purchase and subleasing of assets. Its establishment and operation are under the state management of the State Bank.

Investment Financial leasing company is a credit institution that performs the following functions:

– Financial leasing

– Some banking activities

– Buying and subleasing in the form of financial leasing

2. Can a financial leasing company open a payment account at a foreign bank branch?

Pursuant to Clause 2, Article 114 of the 2010 Law on Credit Institutions, the regulations on opening accounts of financial leasing companies are as follows:

Opening an account of a financial leasing company

1. Financial leasing companies that accept deposits must open a deposit account at the State Bank and maintain on this deposit account an average balance not lower than the required reserve level.

2. Financial leasing companies are allowed to open payment accounts at commercial banks and foreign bank branches.

According to the above regulations, account opening activities of financial leasing companies include:

– Financial leasing companies that receive deposits must open a deposit account at the State Bank and maintain on this deposit account an average balance not lower than the required reserve level.

– Financial leasing companies are allowed to open payment accounts at commercial banks, foreign bank branches.

In addition, open and use accounts Payment between credit institutions is stipulated in Article 9 of Decree 101/2012/ND-CP on non-cash payments as follows:

Opening and using payment accounts between credit institutions

1. The opening and use of payment accounts between credit institutions must comply with the provisions of the Law on Credit Institutions. Payment accounts opened between credit institutions are only for payment purposes and cannot be used for other purposes.

Thus, financial leasing companies are allowed to open payment accounts at foreign bank branches for payment purposes.

The opening and use of payment accounts between credit institutions must comply with the provisions of the Law on Credit Institutions. used.

Payment accounts opened between credit institutions are only for payment purposes and cannot be used for other purposes.

The opening and use of payment accounts must be carried out by contract between related parties, which clearly defines the rights and responsibilities of the parties in accordance with the provisions of law.

3. Can a financial leasing company establish a subsidiary?

Pursuant to Article 115 of the Law on Credit Institutions 2010, regulations on capital contribution and share purchase of a financial leasing company are as follows:

Contributing capital and purchasing shares of a financial leasing company

Financial leasing companies are not allowed to contribute capital, buy shares, establish subsidiaries, affiliated companies in any form.

Thus, a financial leasing company is not allowed to establish a subsidiary in any form according to the above regulations.

What do the banking activities of a financial leasing company include?

In Article 112 of the Law on Credit Institutions 2010 regulates banking activities of financial leasing companies as follows:

Banking activities of financial leasing companies

1. Receive institutional deposits.

2. Issuing certificates of deposit, promissory notes, bills, and bonds to mobilize capital from organizations.

3. Borrowing capital from domestic and foreign credit institutions and financial institutions according to the provisions of law; borrowing from the State Bank in the form of refinancing according to the provisions of the Law on the State Bank of Vietnam.

4. Financial leasing.

5. Loans to supplement working capital for financial lessees.

6. Operating lease with the condition that the total value of operating lease assets does not exceed 30% of the total assets of the financial leasing company.

7. Implement other forms of credit when approved by the State Bank.

According to the above regulations, banking activities of financial leasing companies include:

– Receiving deposits from organizations.

– Issuing certificates of deposit, promissory notes, bills, bonds to mobilize capital from organizations organization.

– Borrowing capital from domestic and foreign credit institutions and financial institutions according to the provisions of law; borrowing from the State Bank in the form of refinancing according to the provisions of the Law on the State Bank of Vietnam.

– Financial leasing.

– Loans to supplement working capital for financial lessees.

– Operating leasing with the condition that the total value of operating leasing assets does not exceed 30% of the total assets of the leasing company. main.

– Implement other forms of credit when approved by the State Bank.

Accordingly, although the financial leasing company is a credit institution, it can only carry out some banking activities specified in Article 112 above.