Banking and Finance in Vietnam

Banking and finance sector always attract investors as the growth of financial services in a growing economy. Our banking and finance lawyers in Vietnam constantly monitor the changes of the Vietnam regulations to update our client and provide them with best service.

Banking system in Vietnam has been organized according to the traditional model in which State Bank manages all commercial banks and other credit organizations. According to the Vietnam Law on Credit Institutions, there are six organizational forms of credit institutions: domestic commercial bank established and organized as joint stock company, state commercial bank formed as one-member limited liability company, domestic non-bank credit institution as joint stock or limited liability company, joint venture or wholly foreign-owned credit institution as limited liability company, cooperative bank and people’s credit funds as cooperatives, microfinance institution as limited liability company.

Banking and finance sector is a highly regulated area. Vietnam laws require commercial bank on legal capital of VND 3,000 billion at the setting-up.  Further, commercial banks’ operation must comply with decisions of State Bank and other authorities. Each type of credit institution has different conditions on organization, management, operation. Commercial bank, the type allowed to operate in largest scope is permitted to take demand deposits, time deposits, savings deposits; issue deposit certificates, promissory note, treasure bills, bonds to raise capital at home and abroad; open payment accounts for clients, provide payment instruments, domestic and international payment services; extend credit while the others just conduct some of the above activities.

For foreign investor, to engage in banking and finance in Vietnam, they could commercially present in Vietnam in the forms of representative office, joint-venture bank, wholly foreign-owned bank, foreign bank branch, joint-venture finance company, wholly foreign-owned finance company, joint-venture financial leasing company and wholly foreign-owned financial leasing company base on the Law on credit institutions, Circular no.07/2013/TT-NHNN, Circular no. 20/2008/TT-BTC, and Circular no. 18/2018/TT-BTC.

Professionals at ANT Lawyers work on many a variety of banking and financial services cases. Our attorney’s industry knowledge and expertise allow us to effectively support the banking and financial services sector. ANT Lawyers - Law firm in Vietnam that provide relevant industry-focused advice, delivered quickly to ensure that we add value from day one. ANT Lawyers, your lawyers in Vietnam.

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How Payment by Documentary Credit in International Commerce Works?

Documentary Credit (also known as letter of credit or bankers commercial credit, or letter of undertaking) is one of the payment instruments that institutions providing non-cash payment services (banks, foreign bank branches, etc.) deal with to make a valid payment transaction at the request of the account holder. Documentary credit is the most commonly used for payment of international sales of goods.

Banking and Finance Law Firm in Vietnam

The supply of international payment services by institutions providing non-cash payment services shall be conducted in accordance with regulations of the law on foreign exchange management, treaties to which Vietnam is a member and commercial practices (including international commercial practices provided by the International Chamber of Commerce; and other commercial practices which are not contrary to the Vietnamese laws) which agreed upon by the parties.

According to UCP 600, credit means any arrangement, however named or described, that is irrevocable and thereby constitutes a definite undertaking of the issuing bank to honour a complying presentation.  Documentary credit is an independent and separate transaction from the sales and other contracts on which it may be based. The Issuing Banks and Advising Banks are in no way concerned with or bound by contract between the Applicant (purchaser) and the Beneficiary (seller), even if any reference whatsoever to it is included in the credit. Banks deal with documents only. Goods, services or performance to which the documents may relate are not under scope of handling of the Banks. When the issuing bank determines that a presentation of documents is complying, payment shall be made.

The independence between the documentary credit and the sales contract ensures that the seller definitely receives payment if complying presentation, however, does not protect the interests of the purchaser when there is any dispute about the quality of the delivered goods or any other dispute after delivery. When the seller presents complying documents, the issuing bank is obliged to make payment without any doubt whether the goods have actually been delivered according to the specifications as specified in the contract. At the same time, the cancellation or termination of contract does not affect the effectiveness of documentary credit, payment still is made if presentation is complying.

International payment instruments play an important role in commercial transactions between parties residing in different countries. Each payment method reflects the way of receiving and paying for goods amount between the buyer and the seller. The parties participating in international commerce transaction need to understand the characteristics of each payment instrument to protect their rights and obligations, and avoid disputes in international sales of goods, or disputes in financial service using letter of credit or other forms, disputes in performance of contract and should involve lawyers in early stage if possible to avoid mishap.

ANT Lawyers - a Law firm in Vietnam with international standard, local expertise and strong international network. We focus on customers’ needs and provide clients with a high quality legal advice and services. For advice or service request, please contact us via email ant@antlawyers.vn, or call us +84 24 730 86 529

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