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THE STATE BANK
OF VIETNAM |
THE SOCIALIST
REPUBLIC OF VIET NAM |
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No. 13/2024/TT-NHNN |
Hanoi, June 28, 2024 |
Pursuant to the Law on the State Bank of Vietnam dated June 16, 2010;
Pursuant to the Law on Credit Institutions dated January 18, 2024;
Pursuant to the Government's Decree No. 102/2022/ND-CP dated December 12, 2022 prescribing functions, tasks, powers and organizational structure of the State Bank of Vietnam (SBV);
At the request of the Head of the SBV Banking Supervision Agency;
The Governor of the State Bank of Vietnam (SBV) promulgates a Circular providing amendments to Circular No. 32/2015/TT-NHNN dated December 31, 2015 of the Governor of State Bank of Vietnam prescribing prudential ratios and limits for operations of people’s credit funds.
1. Article 1 is amended as follows:
“Article 1. Scope and regulated entities
1. This Circular provides for restrictions, limits and prudential ratios for operations of people’s credit funds, including:
a) Capital adequacy ratio (CAR);
b) Solvency ratio;
c) Maximum ratio of short-term capital used for granting medium- and long-term loans;
d) Restrictions and limits on lending operations;
dd) Ratio of total received deposits to equity.
2. Based on the results of supervision and inspection of people’s credit funds, and depending on the nature and level of risks, the SBV’s provincial branches may, where necessary, request people’s credit funds to maintain one or some limits and prudential ratios which are lower or stricter than those specified in this Circular.
3. People’s credit funds placed under special control shall not apply the limits and prudential ratios prescribed in this Circular.”.
2. Clause 1 Article 2 is amended as follows:
“1. Borrowers of a people’s credit fund include its members; juridical persons or individuals other than members making deposits to the people’s credit fund; members of poor households as prescribed by SBV’s regulations on people’s credit funds.”.
3. Article 3 is amended as follows:
“Article 3. Information technology (IT) system
People’s credit funds are required to have IT systems to implement provisions of this Circular. Such an IT system must be able to:
1. Store, access and add data about clients in a manner that ensures management of risks in accordance with SBV’s regulations and internal regulations of the people’s credit fund.
2. List and monitor capital, assets and liabilities; calculate, manage and supervise the restrictions, limits and prudential ratios specified in this Circular.
3. Prepare statistical reports according to SBV’s regulations, and as requested by SBV’s provincial branches.”.
4. Article 4 is amended as follows:
“Article 4. Internal regulations
1. People’s credit funds must issue their own internal regulations on minimum CAR management and liquidity management (solvency ratio, maximum ratio of short-term capital used for granting medium- and long-term loans, and ratio of total received deposits to equity) in accordance with provisions of this Circular and relevant laws. Written internal regulations and amendments thereto must be issued or ratified by the Management Board of the people’s credit fund.
2. Internal regulations on minimum CAR shall include the following as a minimum:
a) Procedures and methods for monitoring CAR;
b) Methods for early warning of risks that lead to decrease in CAR;
c) Plan for dealing with failure to meet minimum CAR requirement which shall, inter alia, include: measures for increasing CAR; responsibilities, entitlements of and cooperation among relevant departments and individuals in implementation of the plan.
3. Internal regulations on liquidity management shall include the following as a minimum:
a) Regulations on decentralization, authorization, functions and tasks of relevant individuals and departments regarding monitoring and implementation of measures for maintaining the solvency ratio, maximum ratio of short-term capital used for granting medium- and long-term loans, and ratio of total received deposits to equity;
b) Procedures and limits for liquidity management and contingency plan for maintenance of the solvency ratio, maximum ratio of short-term capital used for granting medium- and long-term loans, and ratio of total received deposits to equity as prescribed in this Circular;
c) Regulations on management of budget, daily revenues, expenses and funding source;
d) Criteria for early warning of risks associated with inadequate solvency and liquidity, and response plans;
dd) Solutions for maintaining highly liquid assets such as increasing charter capital, establishing funds, and reducing risk weight for assets;
e) Instructions, inspection, control and internal audit of maintenance of the solvency ratio, ratio of total received deposits to equity, maximum ratio of short-term capital used for granting medium- and long-term loans, and ratio of total deposits to equity.
4. Internal regulations on lending operations and management of loans granted shall comply with provisions of this Circular and relevant documents, and include the following as a minimum:
a) Criteria for identifying a client of the people’s credit fund and his/her related persons, including the cases prescribed in Points b, c, dd and g Clause 24 Article 4 of the Law on Credit Institutions 2024; an individual client and his/her spouse; natural parent, adoptive parent, stepparent, parent-in-law; natural child, adopted child, stepchild, daughter-in-law, son-in-law; natural sibling; half-sibling; spouse of his/her natural sibling or half-sibling;
b) Restrictions and limits on grant of loans to clients, clients and their related persons, mechanisms and principles for decentralization and authorization to grant loans to clients, clients and their related persons;
c) Maximum limit on loans, included in total outstanding amount of loans, granted to each of the following client groups: members of the people’s credit fund, clients that are not members of the people’s credit fund, and clients that are members of poor households of the people’s credit fund;
d) Procedures for monitoring loans with loan amount exceeding 5% of equity of the people’s credit fund;
dd) Regulations on reporting to SBV’s provincial branches and General Members’ Meeting on loans granted to the entities prescribed in clause 1 Article 135 of the Law on Credit Institutions 2024.
5. On a periodical basis of at least once a year and when necessary, people’s credit funds shall review, assess and revise their internal regulations to ensure their conformity with requirements for safe operations of people’s credit funds.
6. Within 10 (ten) working days from the date of issue, revision or substitution of its internal regulations, the people’s credit fund shall send their issued, revised or substitute internal regulations either directly or by post to the relevant SBV's provincial branch. In case of revision or substitution, the people’s credit fund shall send a written report on revised contents enclosed with its internal regulations.
7. People’s credit funds shall revise their internal regulations in conformity with provisions of this Circular by December 31, 2024.”.
5. Clause 3 and Point d Clause 4 Article 5 are amended as follows:
a) Clause 3 is amended as follows:
“3. Equity equals Tier 1 capital plus (+) Tier 2 capital minus (-) the amount deducted from equity at the time of equity determination. To be specific:
a) Tier 1 capital
Tier 1 capital includes:
(i) Charter capital;
(ii) Funding for fundamental construction and purchase of fixed assets;
(iii) Additional reserve fund of charter capital;
(iv) Operational development investment fund;
(v) Financial reserve fund;
(vi) Grants offered by sponsors to the people’s credit fund;
(vii) Undivided profits;
The following amounts must be deducted from Tier 1 capital:
(i) Accumulated losses (if any); and
(ii) Capital amount contributed to the cooperative bank;
b) Tier 2 capital may not exceed 100% of Tier 1 capital, including: general provision which shall not exceed 1,25% of total risk-weighted assets;
c) Amount deducted from equity: 100% of decrease resulted from revaluation of assets as prescribed by law.
Determination of equity used for calculating the minimum CAR shall comply with Appendix 1 enclosed herewith.”.
b) Point d(i) Clause 4 is amended as follows:
“(i) Costs of fixed assets of the people’s credit fund;”.
6. Point a Clause 4 Article 7 is amended as follows:
“a) Charter capital, additional reserve fund of charter capital, development investment funds and financial reserve funds that remain after deduction of accumulated losses (according to the balance sheet which is made when calculating the maximum ratio of short-term capital used for granting medium- and long-term loans), costs of purchase or investment in fixed assets, and capital contributed to the cooperative bank as prescribed by law;”.
7. Article 7a is added following Article 7 as follows:
“Article 7a: Ratio of total received deposits to equity
1. Each people’s credit fund is required to keep the ratio of total received deposits to equity from exceeding 20.
2. The ratio of total received deposits to equity is determined adopting the following formula:
|
A |
= |
B |
|
C |
Where:
- A: Ratio of total received deposits to equity.
- B: Total received deposits as prescribed in Clause 3 of this Article.
- C: Equity as prescribed in Clause 4 of this Article.
3. Total received deposits include: demand deposits, term deposits, and saving deposits in VND of members of the people’s credit fund, and other organizations and individuals.
4. Equity is recognized according to financial policies for people’s credit funds.”.
8. Article 8 is amended as follows:
“Article 8. Restrictions and limits on lending operations
1. Based on its equity determined according to Clause 3 Article 5 of this Circular at the end of the last working day, each people’s credit fund shall determine:
a) Its restrictions on grant of loans to organizations and individuals as prescribed in Article 135 of the Law on Credit Institutions 2024;
b) Its limit on loans granted to a client or a client and their related persons as prescribed in Article 136 of the Law on Credit Institutions 2024.
2. The Management Board of the people’s credit fund shall decide loans granted to its personnel in charge of appraisal or approval of loan applications in case the loan amount is at least VND 100 million or a smaller value as prescribed in internal regulations of the people’s credit fund. Grant of loans in other cases shall comply with internal regulations of the people’s credit fund.
3. Regarding the loans granted to the entities specified in Point a Clause 1 of this Article, the people’s credit fund shall:
a) submit a report on the grant of loan to the relevant SBV’s provincial branch according to SBV's regulations;
b) publicly disclose at the General Members’ Meeting information on loans granted by the ending date of data collection which is conducted to serve the General Members’ Meeting.
4. Total outstanding balance on loans granted to a member that is a juridical person shall not exceed the sum of contributed capital and balance on deposits of that juridical person at the people’s credit fund at all times.
Total outstanding balance on loans granted to a client that is a juridical person or individual other than a member of the people’s credit fund shall not exceed the balance on deposit contract or passbook savings account of that client.
5. Limits prescribed in Point b Clause 1 of this Article shall not apply to:
a) Loans granted using trust capital the risks of which are not taken by the people’s credit fund;
b) A loan granted to a client which is secured by total deposits of that client at the people’s credit fund.”.
9. Article 8a is added following Article 8 as follows:
“Article 8a. People’s credit funds at risk of becoming insolvent or considered insolvent
1. A people’s credit fund is at risk of becoming insolvent when it lacks 20% or more of highly liquid assets at the time of calculation of the solvency ratio, and thus it has failed to maintain the required solvency ratio as prescribed in this Circular for a period of 30 consecutive days.
2. A people’s credit fund is considered insolvent when it is unable to meet its debt obligations within 01 months as they become due.
3. The people’s credit fund that is at risk of becoming insolvency or has become insolvent must promptly submit reports to the relevant SBV’s provincial branch and the cooperative bank’s branch on its actual status, causes and remedial measures that have been or will be adopted, and suggested solutions (if any).”.
10. Article 15 is amended as follows:
“Article 15. Responsibilities of SBV’s affiliated units
1. SBV Banking Supervision Agency shall play the leading role and cooperate with relevant Departments/Agencies of SBV in requesting the SBV’s Governor to consider the difficulties that arise during the implementation of this Circular.
2. Each SBV’s provincial branch shall:
a) Decide the compulsory maintenance by people’s credit funds of limits and prudential ratios as prescribed in Clause 2 Article 1 of this Circular;
b) Inspect, supervise and take actions against violations committed by local people’s credit funds against provisions of this Circular;
c) Instruct local people’s credit funds to comply with provisions of this Circular;
d) Receive internal regulations of people’s credit funds as prescribed in this Circular.”.
1. Appendixes 01, 02 and 03 enclosed with the Circular No. 32/2015/TT-NHNN are replaced with corresponding Appendixes 01, 02 and 03 enclosed herewith.
2. Clause 2 Article 2, Point a (vi) Clause 4 Article 5, Section 2 Chapter II, Chapter III of the Circular No. 32/2015/TT-NHNN are abrogated.
Article 3. Responsibility for implementation
The Chief of Office, Head of SBV Banking Supervision Agency, heads of units affiliated to the SBV, SBV’s provincial branches, and people’s credit funds are responsible for the implementation of this Circular.
1. This Circular comes into force from August 12, 2024.
2. This Circular nullifies the phrase “2. Quỹ tín dụng nhân dân phải đảm bảo tổng mức nhận tiền gửi không được vượt quá 20 lần vốn chủ sở hữu” (“2. A people’s credit fund must ensure that total received deposits do not exceed 20 times its equity”) in clause 3, clause 27 Article 2, Article 4, clause 4 Article 6 of the Circular No. 21/2019/TT-NHNN dated November 14, 2019 of the Governor of the State Bank of Vietnam.
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PP. GOVERNOR |
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This translation is made by THƯ VIỆN PHÁP LUẬT, Ho Chi Minh City, Vietnam and
for reference purposes only. Its copyright is owned by THƯ VIỆN PHÁP LUẬT
and protected under Clause 2, Article 14 of the Law on Intellectual Property.Your comments are always welcomed
