Headlines 09/01/2021 16:46 CH

Regulatory requirements for financial companies' granting equity investment credit facilities

Thùy Liên

Circular No. 23/2020/TT-NHNN regulates the prudential limits and ratios of non-bank credit institutions.

According to this Circular, financial companies will be allowed to grant credit facilities with the term to maturity of up to 01 (one) year to customers for equity investment and trading purposes, and must meet the following requirements in order to grant credit facilities:

- Credit falling within prudential limits and ratios prescribed by laws may be granted;

- Bad debt ratio must be below 3%;

- Risk management regulations adopted by the State Bank must be fully observed, including:

+ Regulations regarding internal control systems of non-bank credit institutions;

+ Regulations regarding classification of assets, set-aside amounts and methods of setting aside amounts for risk provisions and use of risk provisions for handling of risks arising from operations of credit institutions and foreign bank branches.

Circular No. 23/2020/TT-NHNN is entering into force as of February 14, 2021.

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