Originally published 19 March 2010
Keywords: Decree 10, credit information operations, lending, credit rating companies
On 12 February 2010 the Vietnamese Government issued Decree 10/2010/ND-CP on credit information operations ("Decree 10").
Decree 10 regulates credit information operations, credit rating companies and the rights and obligations of related organisations and individuals.
Credit information operations
Credit information means files, figures, data and information about borrowers at lending institutions.
Credit information products mean any information, reports, or publications which a credit rating company creates, on the basis of the credit information it has collated, in order to provide the same to lending institutions, other institutions and individuals.
Credit information operations mean the collation, processing and storing of credit information and provision of credit information products by a credit rating company.
Credit information permitted to be collated includes: personal identification of borrowers and their immediate relatives, loan history, buying/leasing history, debt history, repayment terms, credit limits, and information on pledged security.
Credit rating companies
A credit rating company means an enterprise established under the Law on Enterprises and operating in accordance with the provisions in Decree 10. It is compulsory to include the expression "credit rating" in the name of a credit rating company.
To be issued with a certificate of satisfaction of conditions for credit information operations, an organisation must have proper information technology infrastructure, a minimum charter capital of VND 30 billion (about USD 1.6 million), professional finance, banking, and information technology personnel, a feasible business plan and undertakings from a minimum of 20 commercial banks to exclusively provide their credit information.
Credit rating companies are allowed to contract with organisations and individuals for gathering and providing credit information, exchange credit information with their counterparts, and charge for their services and products. In addition, credit rating companies may provide credit information products to lending institutions and to borrowers in order for borrowers to prepare loan applications.
Credit rating companies are allowed to use borrower information from the five most recent years in order to create credit reports and must store such information for at least five years.
Rights and obligations of organisations and individuals related to credit information operations
Lending institutions have the following rights and obligations:
- To promptly provide complete and accurate credit information to a credit rating company in accordance with the contract signed between the two parties
- To notify borrowers about any contract signed with a credit rating company and information content provided to a credit rating company
- To lawfully use credit information products received from credit rating companies
- To co-ordinate with credit rating companies to detect and deal with any errors in credit information which has been collated, stored and provided; and to resolve complaints from borrowers about credit information
- To exercise other rights and discharge other obligations as stipulated by law
Borrowers have the following rights and obligations:
- To request a credit rating company provide, free of charge and at least once per year, credit information about such borrower
- To require a credit rating company consider and amend credit information items about such borrower if an error is discovered
- To lodge a well-founded complaint with the credit information company upon discovering that credit information about such borrower is erroneous
- To be obliged, while a complaint is being processed, to provide the lending institution or credit rating company with complete and truthful credit information
Authority to exercise State management of credit information operations
The State Bank of Vietnam (SBV) is the authority to exercise uniform State management of credit information operations nationwide.
The SBV will approve or reject applications for operating licences within 30 business days. After receiving an application, a licence may be revoked if a credit rating company is illegally gathering, distorting, and using State secret information or disturbing the legal operation of related organisations and individuals. A licence may also be revoked when a company does not start its permitted credit information operations within 24 months after obtaining its licence.
Decree 10 will come into force on 15 April 2010.
Within 12 months from this effective date, all enterprises engaging in credit information services must complete all necessary procedures for obtaining their licence. After this deadline, unlicensed enterprises must terminate their credit information activities and convert to an appropriate business line.
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