THE STATE BANK
OF VIETNAM |
THE SOCIALIST
REPUBLIC OF VIET NAM |
No. 27/2024/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 Law on Cooperatives dated June 20, 2023;
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 promulgates a Circular providing regulations on cooperative bank, contribution to, management and use of fund for maintenance of prudence of the system of people’s credit funds.
This Circular introduces regulations on licensing for, organization, administration, management and operation of the cooperative bank, and contribution to, management and use of the fund for maintenance of prudence of the system of people’s credit funds.
1. Cooperative bank.
2. People’s credit funds.
3. Organizations and individuals involved in the governing scope prescribed in Article 1 of this Circular.
Article 3. Nature and objectives of operation
The cooperative bank shall be considered as a credit institution which is structured in the form of a cooperative operating in banking sector with the main objective of building associations in, and assuring safety for, the network of people's credit funds through financial support and inspection and supervision of operations across this network, carrying out capital trade-off and providing banking services for its members that are people’s credit funds.
For the purposes of this Circular, the terms used herein are construed as follows:
1. “contributed capital” of a member includes capital contributed to establishing membership interest and annual contributed capital.
2. “capital contributed to establishing membership interest” means the amount of capital that is decided by the General Meeting of Members (GMM) and must be contributed to be eligible to become a member of the cooperative bank.
3. “annual contributed capital” means the amount of capital that a member must contribute on an annual basis to maintain its membership interest at the cooperative bank.
4. “fund for maintenance of prudence of the system of people’s credit funds” (hereinafter referred to as "Prudence Maintenance Fund") means a financial fund of the system of credit institutions that are cooperatives (including the cooperative bank and people’s credit funds) that is under the joint ownership of its members, including the cooperative bank and people’s credit funds, on the basis of their contributions, located at the same premises as the cooperative bank, managed by the cooperative bank, and shall be used in accordance with provisions of this Circular.
Article 5. Duration and areas of operation
1. The duration of operation of the cooperative bank is specified in its License for establishment and operation (hereinafter referred to as “License”) and shall not exceed 99 years.
2. The cooperative bank shall operate within the territory of Vietnam.
1. Scope of operations and duration of operation of the cooperative bank are specified in its License. The License shall be issued using the form in Appendix 01 enclosed herewith.
2. Where its License is lost, stolen, torn or otherwise damaged, the cooperative bank must send a written notification of reasons directly or by post to the State Bank of Vietnam (via the Single-Window Section) to request issuance of a copy of the License from its master register in accordance with regulations of law. Within 02 business days from its receipt of the written request, the State Bank of Vietnam (hereinafter referred to as “SBV”) must consider that request and decide to issue a copy of the License from its master register to the cooperative bank.
1. The Chairperson of the Management Board must:
a) Be not subject to clause 1 Article 42 and 43 of the Law on Credit Institutions;
b) Have complied with the code of professional ethics;
c) Have at least 05 years’ experience in the banking sector;
d) Be used to hold a position as the manager or executive in a banking institution for at least 02 years in the past;
dd) Obtain a bachelor’s degree or higher in economics, finance, accounting, audit, banking or law.
2. A member of the Management Board must:
a) Satisfy the eligibility requirements and standards set out in points a, b and dd clause 1 of this Article;
b) Have at least 02 years’ experience in the banking sector;
c) Be used to hold a position as the manager or executive in a banking institution for at least 01 year in the past.
3. The SBV shall appoint a person to manage the funds given by the Government to the cooperative bank. This person is required to meet eligibility requirements and standards set out in this Circular, except provisions of point c clause 1, point c clause 2 of this Article and point c clause 1 Article 9 of this Circular, in order to be considered and elected by the GMM to hold the position as the member or Chairperson of the Management Board, or the member of the Management Board cum General Director of the cooperative bank.
1. The Head of the Board of Controllers must:
a) Satisfy the eligibility requirements and standards set out in clause 2 of this Article;
b) Reside in Vietnam during his/her incumbency.
2. A member of the Board of Controllers must:
a) Be not subject to clause 1 Article 42 and 43 of the Law on Credit Institutions;
b) Have complied with the code of professional ethics;
c) Have at least 03 years’ experience in the field of accounting, audit, finance or banking;
d) Obtain a bachelor’s degree or higher in economics, finance, accounting, audit or banking.
1. The General Director of the cooperative bank must:
a) Be not subject to clause 1 Article 42 and 43 of the Law on Credit Institutions;
b) Have complied with the code of professional ethics;
c) Be used to hold a position as the manager or executive in a banking institution for at least 03 year in the past;
d) Obtain a bachelor’s degree or higher in economics, finance, accounting, audit, banking, business administration or law;
dd) Reside in Vietnam during his/her incumbency.
2. A Deputy General Director of the cooperative bank must:
a) Be not subject to clause 1 Article 42 and 43 of the Law on Credit Institutions;
b) Obtain a bachelor’s degree, or higher, in finance, banking, economics, business administration, law, accounting, auditing or another major relevant to his/her in-charge tasks, or possess a bachelor’s degree, or higher, in another major and have at least 03 years’ experience of working directly in finance or banking sector or in a field relevant to his/her in-charge tasks;
c) Reside in Vietnam during his/her incumbency.
3. The Chief Accountant of the cooperative bank must:
a) Be not prohibited from holding position as prescribed in clauses 2 and 3 Article 42 of the Law on Credit Institutions;
b) Satisfy the eligibility requirements and standards set out in points b and c clause 2 of this Article;
c) Satisfy relevant eligibility requirements and standards set out in the Law on Accounting.
4. The Director of a branch of the cooperative bank must:
a) Be not subject to clause 2 Article 42 of the Law on Credit Institutions;
b) Satisfy the eligibility requirements and standards set out in points b and c clause 2 of this Article.
Article 10. Membership qualifications
1. For people’s credit funds: A people’s credit fund shall become a member of the cooperative bank from the day on which it is issued with the License.
2. For other juridical persons: they must generate operating profits in the year prior to the application submission year and submit application forms for membership.
3. Those stipulated in clauses 1 and 2 of this Article must contribute the predetermined amount of capital as prescribed by Article 12 of this Circular, and must assign their legal representatives to participate in the cooperative bank.
Article 11. Termination of membership
A member of the cooperative bank shall have its membership terminated if:
1. The member’s juridical person status is terminated.
2. The member that is another juridical person has already transferred all of its contributed capital to other juridical person in accordance with Article 14 of this Circular.
3. The member that is another juridical person has submitted an application for withdrawal from membership of the cooperative bank which has been approved by the Management Board in accordance with regulations of law and the Charter of the cooperative bank.
4. The member that is another juridical person is expelled from the cooperative bank by its GMM in the following cases:
a) It fails to appoint a representative that satisfies requirements set forth in laws and the Charter of the cooperative bank;
b) It fails to make sufficient annual capital contributions as prescribed in Article 12 of this Circular;
c) In other cases as prescribed by laws or the Charter of the cooperative bank.
Article 12. Contributed capital
1. Members cannot use trust or borrowed funds in any form for contributing capital to the cooperative bank, and must undertake and bear responsibility for the legality of sources of their contributed capital.
2. Contributions of capital contributed to establishing membership interest and annual contributed capital must be made in Vietnamese dong (VND).
3. The amount of the capital contributed to establishing membership interest is decided by the GMM and shall not be smaller than VND 10 million.
4. The amount of the annual contributed capital is decided by its GMM and shall not be smaller than VND 01 million. The Management Board of the cooperative bank shall consider and decide to exempt or reduce the amount of annual contributed capital of a member that is a people’s credit fund placed under special control or subject to early intervention. Contribution of annual contributed capital must be completed within 30 days from the end of the GMM.
5. Total maximum amount of capital contributed to establishing membership interest, annual contributed capital and transferred capital of a member shall be prescribed in the Charter of the cooperative bank, but not exceed 30% of the charter capital of the cooperative bank at the date of capital contribution or acquisition of transferred capital, except for the State capital shares invested in the cooperative bank.
Article 13. Change in charter capital
1. The Management Board of the cooperative bank shall decide the increase or decrease in its charter capital and report it to the nearest GMM in the following cases:
a) Receipt of capital contributed by new members or annually contributed by existing members;
b) Return of contributed capital to members that are dissolved or declared bankrupt or upon termination of their membership as prescribed in clause 3 Article 11 of this Circular.
2. The GMM shall decide the increase or decrease in the charter capital in the following cases:
a) Use of the additional reserve fund of charter capital, other funds as prescribed by law and other lawful funding sources for increasing the charter capital;
b) Return of contributed capital to members upon termination of their membership as prescribed in clause 4 Article 11 of this Circular.
3. By the 03rd day of the following month, the cooperative bank shall submit a quarterly report on any change in its charter capital to the SBV.
4. Required documents and procedures for applying for approval of revisions to the cooperative bank’s License regarding its charter capital shall comply with regulations adopted by the SBV’s Governor on changes subject to SBV’s approval of credit institutions that are cooperatives.
Article 14. Transfer and return of contributed capital
1. Transfer of contributed capital by members shall be carried out in accordance with the following provisions:
a) A member that is a people’s credit fund shall be allowed to transfer a part of its contributed capital (but it shall be required to maintain the amount of capital contributed to establishing membership interest and annual contributed capital as prescribed in clauses 3 and 4 Article 12 of this Circular) to other juridical persons that meet requirements set forth in Article 10 of this Circular;
b) A member that is not a people’s credit fund shall be allowed to transfer either all or part of its contributed capital to other juridical persons that meet requirements set forth in Article 10 of this Circular. If a part of its contributed capital is transferred, the member must maintain the amount of capital contributed to establishing membership interest and annual contributed capital as provided for by Article 12 of this Circular.
2. Upon termination of membership as prescribed by Article 11 of this Circular, the cooperative bank’s member may choose to transfer its contributed capital, interests and obligations to other juridical persons, or receive its contributed capital returned and profits earned therefrom (where applicable) and other benefits defined in Clause 3 of this Article.
3. Return of contributed capital and profits earned therefrom (where applicable) to members must take into consideration the financial status of the cooperative bank at the time the return decision is issued, and may be acceptable only if the following requirements are observed:
a) Such return does not result in the cooperative bank’s charter capital lower than the predetermined legal capital;
b) Such return does not result in any violation against the capital adequacy ratio stipulated by the SBV;
c) Sufficient liquidity is maintained at the date on which the return decision is issued;
d) The cooperative bank’s member has fully discharged its financial obligations to the cooperative bank, including:
(i) Have already repaid all of debts owed (including principal and interest, and any fees);
(ii) Have already compensated for losses for which it assumes full or joint liability;
(iii) Have already managed to deal with business losses and risks in proportion with the amount of contributed capital for which it assumes joint liability under the decision made by the GMM.
4. A member’s transfer of its contributed capital to a juridical person that is not the cooperative bank’s member shall be made only after the Management Board ratifies the grant of membership to this juridical person. When carrying out transfer of contributed capital, provisions on total amount of contributed capital in clause 5 Article 12 of this Circular must be observed.
5. Return of all of contributed capital to a member upon termination of their membership as prescribed in clause 4 Article 11 of this Circular is subject to approval of the GMM. Return of all of contributed capital to a member upon termination of their membership as prescribed in clause 1 or 3 Article 11 of this Circular is subject to approval of the Management Board of the cooperative bank.
Section 3. GENERAL MEETING OF MEMBERS (GMM)
1. The cooperative bank’s GMM must be held once a year and convened by its Management Board within 04 months from the end of a given fiscal year.
2. The GMM shall be held in the form of a plenary meeting or delegate meeting. The plenary meeting and the delegate meeting shall have the same duties and powers. Based on current conditions, the Management Board shall decide the method for holding of the GMM, election, number of delegates participating in the GMM in each session.
3. The GMM shall be deemed valid if it is attended by at least two-thirds of the members invited (for a plenary meeting) or the required number of delegates which is defined in the cooperative bank’s Charter but shall not be fewer than 100 delegates (for a delegate meeting).
4. If a quorum (including either members or delegates) is not present as prescribed in clause 3 of this Article, the Management Board shall adjourn the GMM and re-convene the GMM within 30 days from the date of adjournment. Regarding an annual GMM, the time limit for adjournment and re-convening of the GMM shall not exceed the time limit for holding the GMM prescribed in clause 1 of this Article.
5. A decision to revise the Charter, resolve and file for bankruptcy of the cooperative bank shall be approved only if more than three-quarters of the members or delegates present at the GMM vote in favor of that decision.
6. Decisions to handle other issues shall be approved only if more than a half of the members or delegates present at the GMM vote in favor of these decisions.
7. Casting votes at the GMM shall not be subject to the amount of capital contributed, or titles held, by members of the cooperative bank. Each member shall be given only one vote. A delegate’s vote shall represent the number of members of which that delegate acts on behalf.
Article 16. Notice of convening of GMM
The body convening the GMM must send an invitation to each member or delegate within a period of not later than 07 business days before opening of the meeting if another time limit is not specified in the Charter of the cooperative bank. The invitation must specify the meeting time, venue, contents, agenda and discussion materials.
Section 4. OPERATIONS OF THE COOPERATIVE BANK
Article 17. Transactions with member people's credit funds
1. Receive deposits from and offer loans for trade-off purposes to member people’s credit funds under capital trade-off regulations. Formulation and contents of capital trade-off regulations must conform to the following principles:
a) People's credit funds deposit their money (either indefinite or definite term) in the cooperative bank for capital trade-off purposes. In case of premature withdrawal, people’s credit funds must inform the cooperative bank in advance;
b) Member people's credit funds are granted loans from the cooperative bank for capital trade-off purposes when demands for capital used for credit expansion arise;
c) Subsidization regulations on the deposit facility interest rate must be applied, and the lending facility interest rate on loans for trade-off purposes must be explicit, unprofitable and promote association between the cooperative bank and its member people’s credit funds;
d) Specific regulations on applicable subjects, limits, processes, dossiers and evidence documents relating to acceptance of deposits and grant of loans on a trade-off basis must be made;
dd) The cooperative bank must establish, collect opinions from all of the member people’s credit funds on, and approve capital trade-off regulations at the GMM of the cooperative bank. After introducing the capital trade-off regulations, the cooperative bank shall provide training for, and disseminate information about these regulations to member people's credit funds. Amendments to capital trade-off regulations must be approved by the GMM of the cooperative bank.
Within 07 business days from the date on which its capital trade-off regulations are promulgated or emended, the cooperative bank shall send these regulations and their amendments (if any) to the SBV (via the SBV Banking Supervision Agency) to perform its inspection and supervision tasks.
2. Open checking accounts, and provide payment facilities to member people's credit funds. Provide domestic checking account-based payment services to member people’s credit funds, including: cheque, payment order, collection order, money remittance, collection and payment services.
3. Offer loans to member people's credit funds to deal with temporary difficulties in liquidity. Grant special loans to member people's credit funds according to regulations adopted by the SBV's Governor on grant of special loans to credit institutions placed under special control.
4. Design, develop and use new products and services in activities of member people’s credit funds to meet these members’ demands and serve the purpose of multiplying community benefits throughout its area.
5. Inspect and supervise member people’s credit funds upon request by the SBV regarding contents, scope and time limit for inspection according to the following provisions:
a) The cooperative bank shall develop regulations on inspection of its member people’s credit funds as prescribed in this clause and send them to the SBV (via the SBV Banking Supervision Agency) for its opinions before these regulations are promulgated or amended. Within 07 business days from the date on which its regulations on inspection of member people’s credit funds are promulgated or emended, the cooperative bank shall send these regulations and their amendments (if any) to the SBV (via the SBV Banking Supervision Agency) to perform its inspection and supervision tasks.
b) Such regulations on inspection of member people’s credit funds must be approved by the Management Board, and shall, inter alia, include:
(i) Subjects of inspection;
(ii) Scope, contents, purposes and rules of inspection;
(iii) Inspection procedures;
(iv) Time limit for inspection;
(v) Rights and responsibilities of relevant parties.
6. Carry out internal audit of its member people’s credit funds according to the following provisions:
a) Subjects of the internal audit:
The cooperative bank shall carry out the internal audit of its member people’s credit fund whose total assets are worth less than VND 50 billion, except people’s credit funds subject to early intervention or placed under special control;
b) Scope and contents of the internal audit:
(i) Some contents of the financial statements, including: business losses/profits, actual value of the charter capital, reserve fund;
(ii) Procedures for granting loans and receiving deposits;
c) On an annual basis, the cooperative bank shall develop an internal audit plan, and send it to the SBV at the same time when its annual business plan is submitted for the SBV’s approval before that plan is implemented;
d) The cooperative bank shall formulate regulations on internal audit of its member people’s credit funds as prescribed in this clause, and send them to the SBV (via the SBV Banking Supervision Agency) within 07 business days from the date on which these regulations are promulgated or amended to perform its inspection and supervision tasks.
dd) Regulations on internal audit of member people’s credit funds must be approved by the Management Board of the cooperative bank and must ensure support for operations of its member people’s credit funds. Regulations on internal audit of member people’s credit funds shall, inter alia, include:
(i) Subjects of the internal audit;
(ii) Contents, purposes, rules and scope of the internal audit;
(iii) Internal audit procedures which must ensure confidentiality of information on operations of member people’s credit funds;
(iv) Composition of the internal audit team;
(v) Time limit for an internal audit;
(vi) Rights and responsibilities of relevant parties.
7. Appoint its personnel to hold the position of Chairperson of the Management Board, Director and Deputy Director of the people’s credit fund that is subject to early intervention or placed under special control at the request of the SBV's branch of province or city where that people’s credit fund is located.
Appointed personnel must meet relevant eligibility requirements and standards to be satisfied by Chairperson of the Management Board, Director and Deputy Director of the people’s credit fund, except the requirement that the title holder must be a member of the people’s credit fund.
8. Issue and publish the blank passbook form, and provide blank passbooks to people’s credit funds to serve their receipt of saving deposits from customers, provided that the following requirements and provisions must be satisfied and observed:
a) Blank passports must have anti-counterfeit features and serial number to serve statistical and management requirements;
b) There is a focal point in charge of printing, managing and providing blank passports to people’s credit funds, and assuring safety of this Circular;
c) Regulations on provision of blank passbooks to people’s credit funds must be adopted for ensuring consistent implementation. Regulations on provision of blank passbooks shall, inter alia, include:
(i) Selling prices which must be sufficient to offset costs of printing and transport of blank passbooks, unprofitable, explicit and transparent;
(ii) Procedures for registration of demands for blank passbooks and provision of blank passbooks to people’s credit funds, which must ensure timely and sufficient provision of blank passbooks to meet registered demands of people’s credit funds, and facilitate supervision by relevant SBV’s provincial branches;
(iii) Regulations on receipt, use, storage, inventory and management of blank passbooks in accordance with regulations of law;
d) By the 10th of each month or upon request, the cooperative bank must provide the SBV’s provincial branch with a report on provision of blank passbooks to the people’s credit fund located in that province or city in the previous month using the form in Appendix 02 enclosed herewith.
9. Perform other business activities as prescribed in Article 21 of this Circular.
Article 18. Transactions with customers other than member people's credit funds
1. Receive demand deposits, term deposits, saving deposits, and issue certificates of deposit.
2. Extend credit in the following forms:
a) Loans.
The cooperative bank shall offer loans to customers other than member people's credit funds after meeting capital trade-off demands of member people's credit funds. As the case may be, the SBV may decide to impose restrictions on credit extended by the cooperative bank to customers other than member people's credit funds.
b) Letter of credit;
c) Discounting and rediscounting of negotiable instruments and other valuable papers;
d) Bank guarantee;
dd) Issuance of credit cards.
3. Open checking accounts for customers.
4. Provide payment facilities.
5. Provide domestic checking account-based payment services, including: cheque, payment order, collection order, money remittance, bank card, collection and payment services.
6. Provide other letter of credit-related services.
7. Perform other business activities as prescribed in Article 21 of this Circular.
Article 19. Getting loans, making deposits and trading valuable papers
The cooperative bank may:
1. get loans from the SBV in the form of refinancing in accordance with Law on the State Bank of Vietnam.
2. buy/sell valuable papers from/to the SBV in accordance with Law on the State Bank of Vietnam.
3. grant/get loans, make/receive deposits, buy/sell forward valuable papers with credit institutions and foreign bank branches in accordance with regulations adopted by the SBV’s Governor.
4. get foreign loans in accordance with regulations of law.
Article 20. Opening accounts, organizing payment and participating in payment system
The cooperative bank may:
1. open checking accounts at the SBV.
2. open accounts at credit institutions that are licensed to provide account-based payment services.
3. organize internal payment activities, and participate in the national interbank payment system.
Article 21. Other business activities
1. The cooperative bank is allowed to perform other business activities in accordance with regulations adopted by the SBV’s Governor, including:
a) Provide cash management services; treasury services for credit institutions and foreign bank branches; safe custody services, safe deposit boxes or cabinets for lease;
b) Provide payment services without using checking accounts, including: money transfer services, collection and payment services, and other payment services rendered without using checking accounts;
c) Provide consulting on banking operations and other business activities as prescribed in the License.
d) Offer and accept trusteeship, provide agent services in banking sector, and appoint payment agents.
2. The cooperative bank is allowed to perform the following business activities in accordance with relevant laws:
a) Trading in government bonds;
b) Bond issuance.
3. The cooperative bank may act as an insurance agent according to the following provisions:
a) If the License issued by the SBV to the cooperative bank includes activities of insurance agent, the cooperative bank may act as an insurance agent for different types of insurance as prescribed by the Law on Insurance Business;
b) When acting as an insurance agent, the cooperative bank must strictly comply with regulations of the Law on Insurance Business and relevant laws.
Section 5. RIGHTS AND RESPONSIBILITIES OF COOPERATIVE BANK
1. Obtain information about operations of people’s credit funds from the SBV.
2. Request people’s credit funds to provide information and reports used for capital trade-off and system safety inspection purposes.
3. Perform other rights and powers as prescribed by its Charter and this Circular.
1. Provide member people’s credit funds with guidance on and training in banking and information technology practices.
2. Assist member people’s credit funds in banking activities as prescribed by laws and regulations.
3. Promulgate capital trade-off regulations, regulations on inspection of people’s credit funds, and regulations on internal audit of people’s credit funds as prescribed in clauses 1, 5 and 6 Article 17 of this Circular.
4. Appoint qualified personnel to the hold the positions of Chairpersons of Management Boards, Directors and Deputy Directors of people’s credit funds as prescribed in clause 7 Article 17 of this Circular.
5. Participate in implementation of remedial measures in the event that member people’s credit funds are faced with difficulties or incur risks of safety in their activities in accordance with regulations of law.
6. Perform other responsibilities as prescribed by its Charter and this Circular.
Section 6. CONTRIBUTIONS TO, MANAGEMENT AND USE OF PRUDENCE MAINTENANCE FUND
Article 24. Rules for management of Prudence Maintenance Fund
1. The Prudence Maintenance Fund is used for offering conventional loans, operates for unprofitable purposes, and is granted autonomy.
2. Operating expenses of the Prudence Maintenance Fund shall be covered by interests earned from its grant of loans and investments.
3. Idle capital amount of the Prudence Maintenance Fund shall be used following capital preservation principles, and used for granting loans to support people’s credit funds.
Article 25. Contributions to Prudence Maintenance Fund
1. The cooperative bank and people’s credit funds shall assume responsibility to make contributions in full and on schedule to the Prudence Maintenance Fund on the basis of once a year by January 31 of the following year.
2. Contributions made to the Prudence Maintenance Fund as prescribed in clause 1 of this Article shall be subject to the following provisions:
a) The annual amount of contribution equals 0,05% of the average annual outstanding balance of loans granted in the previous year ending on December 31 of the cooperative bank or people’s credit fund. The average annual outstanding balance of loans is calculated by dividing the sum of outstanding balances of loans granted (including group-1 and group-2 loan debts as defined by regulations on classification of debts of the cooperative bank and people’s credit funds adopted by the SBV’s Governor) as at the end of each month by the actual number of months in the year. The outstanding balance of loans granted as at the end of each month of the cooperative bank may exclude the outstanding balance of loans granted to its member people’s credit funds for capital trade-off purpose.
b) Contributions to the Prudence Maintenance Fund in a fiscal year shall be made only when its total working capital before contributions is lower than 1,5% of total assets of the system of people’s credit funds. If, after contributions are made to the Prudence Maintenance Fund in a fiscal year, its total working capital is higher than or equal to 1,5% of total assets of the system of people’s credit funds, the cooperative bank and people’s credit funds shall still make contributions to the Prudence Maintenance Fund in that fiscal year;
c) Contributions made to the Prudence Maintenance Fund are recorded as operating expenses of the cooperative bank and people’s credit funds.
3. Positive difference between profits and expenses in operations of the Prudence Maintenance Fund shall also be paid to the Prudence Maintenance Fund.
Article 26. Management of Prudence Maintenance Fund
1. The Prudence Maintenance Fund is managed and used throughout the system of people’s credit funds according to regulations on management and use of Prudence Maintenance Fund developed and promulgated by the cooperative bank after they are ratified by its GMM. Any amendments to regulations on management and use of Prudence Maintenance Fund must be approved by the GMM of the cooperative bank.
Within 07 business days from the date on which its regulations on management and use of Prudence Maintenance Fund are promulgated or amended, the cooperative bank shall send these regulations and their amendments (if any) to the SBV (via the SBV Banking Supervision Agency) to perform its inspection and supervision tasks.
2. Regulations on management and use of Prudence Maintenance Fund shall, inter alia, include:
a) Rules for management and use of the Prudence Maintenance Fund laid down in Articles 24 and 27 of this Circular;
b) Specific provisions on use of the Prudence Maintenance Fund, including:
(i) Cases in which support loans are granted as prescribed in clause 1 Article 27 of this Circular;
(ii) Documentation requirements and procedures for granting support loans;
(iii) Lending amount; term of a support loan; lending interest rate; commitments to use borrowed funds (including loans granted as prescribed in point c clause 2 Article 159 and point c clause 2 Article 171 of the Law on Credit Institutions);
c) Mechanisms for disbursement of support loans;
d) Monitoring measures; mechanisms for inspecting the use of borrowed funds by people’s credit funds;
dd) Cases of exemption or reduction of contributions made to the Prudence Maintenance Fund;
e) Rules, conditions and authority to settle risks associated with non-performing loans;
g) Use of idle capital amount of the Prudence Maintenance Fund;
h) Mechanisms regulating financial revenues and expenses in operation of the Prudence Maintenance Fund as prescribed in relevant laws;
i) Reporting by people’s credit funds getting support loans.
Article 27. Use of Prudence Maintenance Fund
1. The Prudence Maintenance Fund is used for granting loans to people’s credit funds in the following cases:
a) Loans are granted to help the people’s credit funds that are facing financial distress or solvency problems restore their business back to normal operating levels;
b) Loans are granted to people’s credit funds as prescribed in point c clause 2 Article 159 of the Law on Credit Institutions;
c) Loans are granted to people's credit funds as prescribed in point c clause 2 Article 171 of the Law on Credit Institutions and regulations adopted by the SBV's Governor on grant of special loans to credit institutions placed under special control.
2. On the basis of capital preservation and after borrowing demands of people’s credit funds are met, the idle capital amount of the Prudence Maintenance Fund shall be used for:
a) making deposits at the cooperative bank/commercial bank(s) as prescribed by regulations on management and use of the Prudence Maintenance Fund;
b) purchasing government bonds, treasury bills and SBV bills.
Documentation requirements, lending interest rate, term and procedures for grant of support loans shall comply with regulations on management and use of the Prudence Maintenance Fund adopted by the cooperative bank.
Article 29. Reporting on the Prudence Maintenance Fund
1. By July 15 of each year, the cooperative bank shall provide the SBV with a report on operation of the Prudence Maintenance Fund in the first 6 months which is made using the form in Appendix 03 enclosed herewith.
2. Within 45 days from the end of each fiscal year, the cooperative bank shall provide the SBV with the following reports:
a) A report on operations and financial status in the previous year of the Prudence Maintenance Fund which is made using the form in Appendix 03 enclosed herewith;
b) A report on internal audit and inspection of operations and financial status in the previous year of the Prudence Maintenance Fund which is made by the Board of Controllers of the cooperative bank using the form in Appendix 04 enclosed herewith.
3. Ad hoc reports may be submitted at the SBV’s request.
4. The reports prescribed in clauses 1 and 2 of this Article shall be made in electronic format and sent through the SBV’s reporting system. The report prescribed in clause 3 of this Article shall be made in physical format and sent directly or by post to the SBV (via the SBV Banking Supervision Agency).
5. By January 31 of each year, the cooperative bank shall send the annual report on operations and financial status of the Prudence Maintenance Fund to the Fund’s participants, and assume responsibility to provide clarification of this report at the request of such recipients.
Article 30. Cooperative bank’s responsibility to manage and use Prudence Maintenance Fund
1. Establish the Prudence Maintenance Fund as prescribed in this Circular.
2. Calculate and make contributions to the Prudence Maintenance Fund in full and on schedule.
3. Inspect the calculation and making of contributions to the Prudence Maintenance Fund by people’s credit funds, and expedite them to make contributions in full and on schedule.
4. Manage, use and assume responsibility for the use of the Prudence Maintenance Fund.
5. Formulate regulations on management and use of the Prudence Maintenance Fund, submit them to the cooperative bank’s GMM for ratification and promulgation, and apply these regulations throughout the system of people’s credit funds in accordance with provisions of this Circular and relevant laws.
6. Submit reports on operations and financial status of the Prudence Maintenance Fund to the cooperative bank’s GMM.
Article 31. Responsibilities of people’s credit funds participating in the Prudence Maintenance Fund
1. Calculate and make contributions to the Prudence Maintenance Fund in full and on schedule.
2. Strictly comply with regulations on management and use of the Prudence Maintenance Fund and regulations of relevant laws.
3. Properly use support loans received from the Prudence Maintenance Fund for predetermined purposes.
Article 32. Responsibilities of SBV Banking Supervision Agency
1. Carry out inspection of the cooperative bank’s implementation of this Circular within the ambit of its assigned powers.
2. Inspect and monitor the cooperative bank’s establishment, management and use of the Prudence Maintenance Fund as prescribed in this Circular.
1. This Circular comes into force from July 01, 2024.
2. This Circular nullifies:
a) The Circular No. 31/2012/TT-NHNN dated November 26, 2012 of the Governor of the State Bank of Vietnam on cooperative bank;
b) The Circular No. 09/2016/TT-NHNN dated June 17, 2016 providing amendments to the Circular No. 31/2012/TT-NHNN dated November 26, 2012 of the Governor of the State Bank of Vietnam on cooperative bank;
c) The Circular No. 03/2014/TT-NHNN dated January 23, 2014 of the Governor of the State Bank of Vietnam on Fund for maintenance of prudence of the system of people’s credit funds;
d) Article 1 and Article 5 of the Circular No. 21/2019/TT-NHNN dated November 14, 2019 providing amendments to Circulars on cooperative bank, people’s credit funds and fund for maintenance of prudence of the system of people's credit funds;
dd) Article 1 of the Circular No. 24/2023/TT-NHNN dated December 30, 2023 of the Governor of the State Bank of Vietnam providing amendments to Circulars on submission, presentation and provision of information and documents on population upon carrying out administrative procedures related to establishment and operation of banks.
dd) Article 2 of the Circular No. 21/2023/TT-NHNN providing amendments to Circulars prescribing business operations falling under management of the State Bank of Vietnam.
Article 34. Responsibility for implementation
The Chief of Office, Head of SBV Banking Supervision Agency, heads of units affiliated to the SBV, the cooperative bank and people’s credit funds are responsible for the implementation of this Circular./.
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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