The State Bank of Vietnam (SBV) has issued strict regulations on the establishment and operation of remittance companies under commercial banks in order to better manage money transfer services.

Under the newly issued regulations, only commercial banks with overdue debts of less than 3 percent can set up remittance companies.

In addition to obeying legal regulations, especially in the monetary field, the banks must also have a healthy financial status, with profits being registered in the previous two years.

They are also required to be allowed to trade in foreign currencies by the central bank, besides having an effective internal governance and supervision system.

Banks must have feasible projects for setting up remittance companies, with focus on human resources and business performance plans in the first three years.

If they get approval for setting up remittance companies, banks are required to strictly control their remittance companies to make the subsidiaries operate safely and effectively.

According to a recent World Bank report entitled "Migration and remittances fact book 2016," Vietnam received nearly 12.3 billion USD in remittances in 2015.

The nation is the 11th largest recipient of remittances worldwide, and ranks third in the Asia-Pacific region after China and the Philippines, according to the report.

About 7 billion USD of Vietnam's remittances last year came from the United States, with the nation ranking ninth among those receiving dollar remittances from the North American nation.

Remittances continue to underpin economic growth by supporting private consumption and housing markets in Vietnam.

Vo Tri Thanh, deputy director of the Central Institute for Economic Management, said remittances played an important role in the nation's economic development and macroeconomic stability.

Statistics from the State Committee for Overseas Vietnamese Affairs under the Ministry of Foreign Affairs showed that nearly five million Vietnamese are residing in 103 countries and territories around the world. Remittances to Vietnam amounted to 9 billion USD in 2011, 10 billion USD in 2012, 11 billion USD in 2013 and 12 billion USD in 2014.

Between 1993 and 2014, Vietnam received total remittances of about 96.7 billion USD, accounting for 6.8 percent of the country's gross domestic product (GDP) over the period. Remittances to Vietnam have increased by about 22.4 percent annually in the past two decades, with 1997 and 2009 being the exceptions when global economy faced a financial crisis.

VNA