Circular No. 03/2018/TT-NHNN on the issuance of licenses, organization, and operation of microfinance organizations

                   

Pursuant to the Law on the State Bank of Vietnam dated June 16, 2010;

Pursuant to the Law on Credit Institutions dated June 16, 2010 and the Law Amending and Supplementing Certain Articles of the Law on Credit Institutions dated November 20, 2017;

Based on the Enterprise Law dated November 26, 2014;

Pursuant to Decree No. 16/2017/NĐ-CP dated February 17, 2017 of the Government stipulating the functions, tasks, powers, and organizational structure of the State Bank of Vietnam;

At the proposal of the Director of Banking Inspection and Supervision;

The Governor of the State Bank of Vietnam issues this Circular to provide provisions on issuing licenses, organization, and operation of microfinance organizations.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Circular provides for the issuance of licenses, organization, and operation of microfinance organizations.

Article 2. Applicability

1. Microfinance organization.

2. Organizations implementing the conversion of microfinance programs and projects in accordance with the Prime Minister's Decision stipulating the activities of microfinance programs and projects of political organizations, socio-political organizations, and non-governmental organizations (hereinafter referred to as organizations converting microfinance programs and projects).

3. Other organizations and individuals related to participating in the establishment, issuance of licenses, organization, and operation of microfinance organizations.

Article 3. Explanation of Terms

In this Circular, the following terms are understood as follows:

1. License is the license for establishment and operation of a microfinance organization issued by the State Bank of Vietnam (hereinafter referred to as the State Bank). Documents of the State Bank amending and supplementing the License are integral parts of the License.

2. Capital contributors is an organization or individual contributing capital to a microfinance organization.

3. Founding Member is a member contributing capital who participates in drafting, approving, and signing the first Charter of the microfinance organization.

4. Founding Members Meeting is a meeting of founding members tasked with:

a) Approving the draft Charter of the microfinance organization, the Project Proposal for establishing the microfinance organization, and the list of candidates proposed for election or appointment as members of the Board of Members, members of the Supervisory Board, and General Director (Director) for the initial term;

b) Electing a preparatory committee and its chairperson from among the founding members who are candidates proposed for election or appointment as members of the Board of Members, members of the Supervisory Board, and General Director (Director) for the initial term, and other members to carry out tasks related to the preliminary approval of the establishment of the microfinance organization;

c) Deciding on other matters related to the establishment of the microfinance organization.

5. First Shareholders' Meeting is a meeting of founding members and other shareholders after receiving the preliminary approval from the State Bank for the establishment, tasked with:

a) Approving the Charter of the microfinance organization;

b) Electing and appointing members of the Board of Members, members of the Supervisory Board, and General Director (Director) for the initial term according to the list approved by the State Bank;

c) Approving regulations on the organization and operation of the Board of Members, Supervisory Board, and General Director (Director) of the microfinance organization;

d) Deciding on other matters related to the establishment of the microfinance organization.

6. Microfinance Customer is an individual belonging to a poor household, near-poor household, an individual representing a poor household or near-poor household, or a very small enterprise as defined by law.

7. Other Customers is an individual belonging to a household that was once a microfinance customer of the microfinance organization but has since escaped poverty or near-poverty.

8. Mandatory Savings is the amount of money that a microfinance customer must deposit in accordance with the regulations of the microfinance organization. The microfinance organization is responsible for setting and publicly announcing the mandatory savings amount and the interest rate for mandatory savings.

9. Voluntary Deposits are are demand deposits, time deposits, and savings deposits (excluding mandatory savings) of microfinance customers, organizations, and individuals at the microfinance organization, excluding deposits for payment purposes.

Article 4. Competence to Decide on Issuing the License

The Governor of the State Bank shall examine and issue the License in accordance with the Law on Credit Institutions, this Circular, and other relevant legal provisions.

Article 5. Fees for Issuing the License

1. The fee level for issuing the License for microfinance organizations shall be implemented in accordance with the laws on fees and charges.

2. Within fifteen (15) working days from the date of issuance of the License, the microfinance organization must pay the fee at the State Bank's branch.

3. The fee stipulated in Clause 1 of this Article shall not be deducted from the charter capital and shall not be refunded under any circumstances.

Article 6. Preparation and Submission of Documents

1. The documents must be prepared in Vietnamese, and copies of papers, certificates, and translations of documents from foreign languages into Vietnamese must be certified in accordance with the law.

2. In cases where the documents in the dossier are unauthenticated copies and not copies issued from original registers, when submitting the dossier, the original must be presented for verification. The verifier must sign to confirm the copy and bear responsibility for its accuracy compared to the original.

3. Each dossier must include a list of documents. The dossier shall be submitted to the State Bank either directly or through postal service.

Chapter II

REGULATIONS ON GRANTING LICENSES

Section 1

Conditions for Issuing the License

Article 7. Conditions for Issuing the License

1. Having a minimum charter capital equal to the statutory capital as prescribed by the Government.

2. Having owners and founding members as prescribed in Article 8 of this Circular.

3. Having managers, directors, and board members who meet the standards and conditions as prescribed in Articles 20, 21, 22, and 23 of this Circular.

4. Having a Charter that complies with the provisions of Article 31 of the Law on Credit Institutions and related legal provisions.

5. Having a feasible establishment project and business plan for the first three (3) years of operation.

Article 8. Owners and Founding Members of Microfinance Organizations

1. The owner of a microfinance organization established in the form of a limited liability company with one member must ensure the following conditions:

a) Being a political organization, political-social organization established and operating legally in Vietnam, or a political organization, political-social organization, association, social fund, charitable fund with a microfinance program or project converted according to the Prime Minister's Decision on the activities of microfinance programs and projects of political organizations, political-social organizations, and non-governmental organizations;

b) Having financial capacity to contribute capital to establish a microfinance organization and committing not to use entrusted funds, raised funds, or borrowed funds from other organizations or individuals to contribute capital; committing to provide financial support to the microfinance organization to address difficulties in case of capital or liquidity problems;

c) It is not a founding shareholder, owner, founding member, or strategic shareholder of another credit organization in Vietnam.

2. Founding members of a microfinance organization that is a limited liability company with two or more members must ensure the following conditions:

a) Having at least one founding member being a political organization or political-social organization;

b) Having at least one founding member being an organization that has directly participated in managing or operating a safe and sustainable microfinance program or project for at least three (3) consecutive years prior to the date of submitting the application for the License;

c) Founding members being individuals:

(i) Having Vietnamese nationality, fully capable of civil acts according to the law;

(ii) Not belonging to the prohibited categories for establishing and managing enterprises as prescribed by the Enterprise Law; not having been administratively punished in the highest fine range for violations concerning licenses, management, operation, shares, stocks, capital contribution, purchasing shares, granting credit, purchasing corporate bonds, safety ratios as prescribed by the law on administrative sanctions in the field of currency and banking within twenty-four (24) months immediately preceding the date of submitting the application for the License;

(iii) Not being a founding shareholder or founding member of another credit institution in Vietnam;

(iv) Having financial capacity to contribute capital to establish a microfinance organization and committing not to use entrusted funds, raised funds, or borrowed funds from other organizations or individuals to contribute capital; committing to provide financial support to the microfinance organization to address difficulties in case of capital or liquidity problems;

d) Founding members being Vietnamese organizations:

(i) Established according to Vietnamese law;

(ii) Not being a founding shareholder, owner, founding member, or strategic shareholder of another credit institution in Vietnam;

(iii) Having financial capacity to contribute capital to establish a microfinance organization and committing not to use entrusted funds, raised funds, or borrowed funds from other organizations or individuals to contribute capital; committing to provide financial support to the microfinance organization to address difficulties in case of capital or liquidity problems;

(iv) Fulfilling all tax and social insurance obligations as prescribed up to the date of submitting the application for the License;

(v) Not having been administratively punished in the highest fine range for violations concerning licenses, management, operation, shares, stocks, capital contribution, purchasing shares, granting credit, purchasing corporate bonds, safety ratios as prescribed by the law on administrative sanctions in the field of currency and banking within twenty-four (24) months immediately preceding the date of submitting the application for the License;

(vi) In the case of founding members being enterprises, they must have made profits in the last three (3) consecutive years before the year of submitting the application for the License;

(vii) In the case of founding members being enterprises operating in industries requiring statutory capital, they must ensure that the net worth minus the statutory capital is at least equal to the committed capital contribution based on the audited financial statements of the year immediately preceding the submission of the application for the License;

(viii) In the case of founding members being enterprises licensed to operate in the banking, securities, or insurance sectors, they must comply with the capital contribution regulations as prescribed by the law;

đ) Founding members being foreign organizations:

(i) Being a foreign bank;

(ii) Not seriously violating the laws on banking activities of the home country for five consecutive years immediately preceding the year of submitting the application for the License and up to the time of issuing the License.

(iii) Not being a founding shareholder, owner, founding member, strategic shareholder of another credit organization in Vietnam;

(iv) Having financial capability to contribute capital to establish a microfinance organization and committing not to use entrusted funds, raised funds, or borrowed funds from other organizations or individuals to contribute capital; committing to provide financial support to the microfinance organization to address difficulties in case of capital or liquidity shortages.

Section 2

The dossier and procedure for issuing the License for a microfinance organization that is a limited liability company with one member

Article 9. Dossier for Application for License

1. Dossier for Approval of Principle:

a) An application for License signed by the legal representative of the owner according to the form at Appendix No. 01a issued together with this Circular;

b) Draft Charter of the microfinance organization;

c) Project for establishing the microfinance organization signed by the Head of the Preparatory Board, including at least the following contents:

(i) The necessity of establishment, objectives of operation of the microfinance organization; expected social impact of the microfinance organization in the area;

(ii) Name of the microfinance organization, proposed operating area, proposed main office location, charter capital upon establishment, content of operations;

(iii) Proposed products and services to be provided to customers;

(iv) Organizational structure;

(v) List of personnel proposed, detailing the professional qualifications and work experience meeting the requirements of each position and title:

- Chairman, member of the Board of Members; Head of Committees under the Board of Members;

- Head, member, specialized member of the Supervisory Board;

- General Director (Director), Deputy General Directors (Deputy Directors), Chief Accountant and heads of units within the organizational structure;

(vi) Proposed financial investment for the information technology system and the application of information technology;

(vii) Proposed internal control and audit system in compliance with the Law on Credit Institutions, at least including principles of operation, draft internal regulations stipulated in Clause 2, Article 93 of the Law on Credit Institutions, draft regulations on the organization and operation of the Board of Members, Supervisory Board, General Director (Director);

(viii) Proposed business plan for the first three years, including at least the following contents: Market analysis, business strategy and plan; projected financial statements for each year (balance sheet, income statement, cash flow statement, minimum capital adequacy ratio, performance indicators and explanation of the ability to achieve financial targets in each year);

d) Dossier of those proposed to be elected or appointed as members of the Board of Members, members of the Supervisory Board, General Director (Director) of the microfinance organization, including:

(i) Curriculum vitae according to the form at Appendix No. 02 issued together with this Circular;

(ii) Criminal record certificate of the personnel proposed to be elected or appointed, which must include complete information about criminal records (including expunged and unexpunged criminal records) and information about prohibition from holding positions, establishing, and managing enterprises, cooperatives;

For personnel without Vietnamese nationality: Criminal record certificate or equivalent document (including expunged and unexpunged criminal records and information about prohibition from holding positions, establishing, and managing enterprises, cooperatives) must be issued by the competent authority of the country where the foreigner resided before coming to Vietnam. In cases where the foreigner has been residing in Vietnam for six months or more, the criminal record certificate shall be issued by the competent authority responsible for issuing criminal record certificates at the place where the foreigner is temporarily residing.

The criminal record certificate or equivalent document must be issued by the competent authority no later than six months prior to the submission of the dossier by the microfinance organization for approval of the proposed list of personnel;

(iii) Declaration of related persons to the personnel proposed to be elected or appointed according to the form at Appendix No. 04 issued together with this Circular;

(iv) Copy of Identity Card or Citizen Identification Card or Passport;

(v) Copy of professional and vocational certificates;

(vi) Other documents proving compliance with the conditions and standards prescribed in Articles 20, 21, and 22 of this Circular;

(vii) In cases where the person proposed to be elected or appointed as a member of the Board of Members, member of the Supervisory Board, General Director (Director) of the microfinance organization does not have Vietnamese nationality, in addition to the above documents, there must be a commitment letter stating full compliance with the conditions for residence and work in Vietnam;

đ) Certificate of establishment of the owner or equivalent document;

e) Charter of the owner;

g) Document of the owner committing to contribute capital to the microfinance organization according to schedule, amount, and bearing responsibility for the legality of the contributed capital;

h) Document of the owner regarding the establishment of the Preparatory Board, election, designation of the Head of the Preparatory Board, approval of the draft Charter, Project for Establishing the Microfinance Organization, and list of proposed management and supervisory positions.

2. Dossier for Application for License:

a) Charter of the microfinance organization approved by the Board of Members;

b) Decision of the owner appointing the Chairman of the Board of Members, members of the Board of Members, members of the Supervisory Board, General Director (Director), Deputy General Directors (Deputy Directors), Chief Accountant;

c) Minutes of the Supervisory Board meeting electing the Head of the Supervisory Board.

Article 10. Procedure for Issuing the License

1. The preparatory board shall prepare one (1) set of documents to request approval of the principle in accordance with Clause 1 of Article 9 of this Circular and submit it to the State Bank.

2. Within ten (10) days from the date of receipt of the documents requesting approval of the principle, the State Bank shall send a document to the preparatory board confirming receipt of complete and valid documents; in case the documents are incomplete, the State Bank shall send a document requesting supplementation and completion.

3. Within five (5) working days from the date of receipt of the document confirming receipt of complete and valid documents, the State Bank shall send a document to seek opinions from:

a) The People's Committee of the province or centrally governed city where the microfinance organization intends to establish its main office regarding the establishment of the microfinance organization;

b) The People's Committee of the province or centrally governed city where the founding member has implemented microfinance programs or projects regarding the effectiveness of such programs or projects on local development;

c) The State Bank branch in the province or centrally governed city where the microfinance organization intends to establish its main office regarding the establishment of the microfinance organization, the list of personnel proposed to be elected or appointed as Chairman and members of the Board of Members, Head and members of the Supervisory Board, General Director (Director) of the microfinance organization (if necessary);

d) The Ministry of Foreign Affairs and the Ministry of Public Security regarding the participation of foreign banks in the capital contribution to establish the microfinance organization.

4. Within fifteen (15) days from the date of receipt of the document requesting opinions from the State Bank, the units requested to provide opinions shall submit their opinions in writing.

5. Within eighty (80) days from the date of receipt of complete and valid documents, the State Bank shall issue a document approving the principle for establishing the microfinance organization and approving the list of proposed personnel to be elected or appointed as Chairman and members of the Board of Members, Head and members of the Supervisory Board, General Director (Director) of the microfinance organization; in case of non-approval, the State Bank shall send a document to the preparatory board specifying the reasons.

6. Within sixty (60) days from the date of receipt of the document approving the principle for establishing the microfinance organization, the preparatory board shall prepare the documents to request issuance of the license in accordance with Clause 2 of Article 9 of this Circular and submit them to the State Bank. If the State Bank does not receive or receives incomplete documents within this period, the document approving the principle will lose its validity.

Within two (2) working days from the date of receipt of complete documents requesting issuance of the license, the State Bank shall confirm in writing that it has received complete documents.

7. Within thirty (30) days from the date of receipt of complete documents requesting issuance of the license as stipulated in Clause 6 of this Article, the State Bank shall issue the license; in case of non-issuance of the license, the State Bank shall specify the reasons in writing.

8. After receiving the license, the microfinance organization shall proceed with the necessary procedures to commence operations in accordance with Article 15 of this Circular.

Section 3

Documents and procedure for issuing the license for a microfinance organization that is a limited liability company with two or more shareholders

Article 11. Application Documents for Granting the License

1. Dossier for Approval of Principle:

a) An application form for granting the License signed by the founding members according to the model attached as Appendix No. 01a issued along with this Circular;

b) The documents specified in points b, c, d of Clause 1, Article 9 of this Circular;

c) A list of founding members signed by the Chairman of the Preparatory Board, including the following contents: full name (for individual founding members), organization name, capital contribution amount (stating clearly the capital in Vietnamese dong, other assets, and the proportion of each member's capital contribution), and the capital contribution plan (specifying the method and progress of capital contribution);

d) Documents of founding members that are organizations:

(i) Certificate of establishment or business registration certificate or equivalent document;

(ii) Commitment letters from shareholders agreeing to contribute capital to the microfinance organization according to the schedule, amount, and assuming responsibility for the legality of the contributed capital;

(iii) Charter of the organization participating in the capital contribution to establish the microfinance organization;

(iv) Authorization document for the representative of the capital contribution at the microfinance organization in accordance with the law;

(v) Copies of Identity Card or Citizen Identification Card or Passport of the legitimate representative of the organization participating in the capital contribution to establish the microfinance organization and the representative of the organization's capital contribution at the microfinance organization;

(vi) Audited financial reports of the year immediately preceding the year of submitting the application for granting the License and the most recent financial report (interim financial report or un-audited annual report) up to the time of submitting the application for granting the License;

(vii) Activity reports of the two years immediately preceding the year of submitting the application for granting the License of non-business contributing members;

(viii) Documentation proving participation in managing microfinance programs/projects and the effectiveness of such programs/projects;

(ix) In addition to the above documents, foreign banks must provide additional documents from the competent authority of the home country providing information about the foreign bank as follows:

- Activities permitted in the home country at the time of submitting the application for granting the License;

- Compliance with banking laws in the five years immediately preceding the year of submitting the application for granting the License and up to the time of submitting the application for granting the License;

d) Documents of founding members that are individuals:

(i) Curriculum vitae according to the form at Appendix No. 02 issued together with this Circular;

(ii) Criminal record containing complete information on criminal records (including expunged and unexpunged criminal records) and information on prohibition from holding positions, establishing, and managing businesses, cooperatives;

The criminal record certificate or equivalent document must be issued by the competent authority no later than six months prior to the submission of the dossier by the microfinance organization for approval of the proposed list of personnel;

(iii) Copies of Identity Card or Citizen Identification Card;

(iv) Commitment letter agreeing to contribute capital to the microfinance organization according to the schedule and assuming responsibility for the legality of the contributed capital;

e) Minutes of the Founding Members' Meeting regarding the establishment of the Preparatory Board, the Chairman of the Preparatory Board, approval of the draft Charter, the establishment project of the microfinance organization, and the list of proposed management and supervisory positions.

2. Application Documents for Granting the License:

a) Charter of the microfinance organization approved by the Board of Members;

b) Minutes of the first Shareholders' Meeting;

c) Minutes of the Board of Directors' Meeting approving the election of the Chairman of the Board of Directors; Minutes of the Supervisory Board's Meeting approving the election of the Chairman of the Supervisory Board;

d) Decision of the Board of Directors appointing the General Director (Director), Deputy General Director (Deputy Director), Chief Accountant.

Article 12. Procedure for Issuing the License

1. The preparatory board shall prepare one (1) set of documents to request approval of the principle in accordance with Clause 1, Article 11 of this Circular and submit it to the State Bank.

2. Within ten (10) days from the date of receipt of the documents as stipulated in Clause 1 of this Article, the State Bank shall send a letter to the preparatory board confirming that the documents are complete and valid; in case the documents are incomplete, the State Bank shall send a letter requesting supplementation and completion.

3. Within five (5) working days from the date of receipt of the document confirming receipt of complete and valid documents, the State Bank shall send a document to seek opinions from:

a) The People's Committee of the province or centrally governed city where the microfinance organization intends to establish its main office regarding the establishment of the microfinance organization;

b) The People's Committee of the province or centrally governed city where the founding member implements the microfinance program/project shall evaluate the effectiveness of the microfinance program/project on local development;

c) The State Bank branch where the microfinance organization plans to establish its headquarters shall review the establishment of the microfinance organization, the list of proposed personnel to be elected or appointed as Chairman and members of the Board of Members, Head and members of the Supervisory Board, General Director (Director) of the microfinance organization (if necessary);

d) The Ministry of Foreign Affairs and the Ministry of Public Security regarding the participation of foreign banks in the capital contribution to establish the microfinance organization.

4. Within fifteen (15) days from the date of receipt of the document requesting opinions from the State Bank, the units requested to provide opinions shall submit their opinions in writing.

5. Within eighty (80) days from the date of receiving complete and valid documents, the State Bank shall issue a letter approving the principle of establishing the microfinance organization and approving the list of proposed personnel to be elected or appointed as Chairman and members of the Board of Members, Head and members of the Supervisory Board, General Director (Director) of the microfinance organization. In case of non-approval, the State Bank shall send a letter to the preparatory board specifying the reasons.

6. Within sixty (60) days from the date of receipt of the letter approving the principle of establishing the microfinance organization, the preparatory board shall prepare a set of documents to request issuance of the license in accordance with Clause 2, Article 11 of this Circular and submit it to the State Bank. If the State Bank does not receive or receives incomplete documents beyond this period, the letter approving the principle will lose its validity.

Within two (2) working days from the date of receipt of complete documents requesting issuance of the license, the State Bank shall confirm in writing that it has received complete documents.

7. Within thirty (30) days from the date of receipt of complete documents requesting issuance of the license as stipulated in Clause 6 of this Article, the State Bank shall issue the license; in case of non-issuance of the license, the State Bank shall specify the reasons in writing.

8. After receiving the license, the microfinance organization shall proceed with the necessary procedures to commence operations in accordance with Article 15 of this Circular.

Section 4

Documents and procedure for issuing the license in the case of conversion

microfinance program/project

Article 13. Documents for Requesting Issuance of the License

1. A request for issuance of the license according to Model 01b issued together with this Circular, signed by the legal representative of the political organization, political-social organization, association, social fund, charitable fund implementing the microfinance program/project (in the case of converting the microfinance program/project into a single-member limited liability company microfinance organization) or by the shareholders (in the case of converting the microfinance program/project into a microfinance organization which is a limited liability company with two or more shareholders), committing that the microfinance organization formed through the conversion will inherit all related rights and obligations of the converted microfinance program/project.

2. Documents and papers proving the transfer of capital to the organization implementing the microfinance program/project.

3. Commitment of the legal representative of the organization implementing the microfinance program/project regarding the capital of the microfinance program/project. The microfinance program/project must notify the State Bank about any changes affecting the value of this capital until the license is issued.

4. Written commitment of the shareholders to contribute capital to the microfinance organization in accordance with the schedule, amount of contribution, and responsibility for the legality of the contributed capital.

5. Proposed business plan for the first three (3) years, including at least the following contents: Market analysis, business strategy and plan, projected financial reports for each year (balance sheet, income statement, cash flow statement, minimum capital adequacy ratio, performance indicators and explanation of the ability to achieve financial targets in each year).

6. Documents and materials proving compliance with the regulations on the network of operations as stipulated by the State Bank concerning the network of operations of microfinance organizations in cases where the microfinance program/project operates in two (2) provinces/cities or more.

7. Draft internal regulations as stipulated in Clause 2, Article 93 of the Law on Credit Institutions, regulations on the organization and operation of the Board of Members, Supervisory Board, General Director (Director) of the microfinance organization.

8. List of proposed personnel detailing the professional qualifications and work experience meeting the requirements of each position and title:

a) Chairman, members of the Board of Members, Heads of Committees under the Board of Members;

b) Heads, members, specialized members of the Supervisory Board;

c) General Director (Director), Deputy General Directors (Deputy Directors), Chief Accountant and heads of units directly under the organizational structure.

9. The components of the documents specified in Point b, d of Clause 1, Article 9 of this Circular.

10. For microfinance programs/projects converted into a single-member limited liability company microfinance organization, in addition to the components of the documents specified in Clauses 1, 2, 3, 4, 5, 6, 7, 8, 9 of this Article, the following additional components must be submitted:

a) Report of an independent auditor determining the assets and liabilities of the microfinance program/project;

b) Report on the operating situation of the year immediately preceding the year of submitting the application for issuance of the license of the microfinance program/project, including a summary report on organizational structure, financial status, and services currently provided to customers;

c) The components of the documents specified in Points c, d, g, h of Clause 1, Article 9 of this Circular.

11. For microfinance programs/projects converted into a microfinance organization which is a limited liability company with two or more shareholders, in addition to the components of the documents specified in Clauses 1, 2, 3, 4, 5, 6, 7, 8, 9 of this Article, the following additional components must be submitted as specified in Points c, d, f of Clause 1, Article 11 of this Circular.

Article 14. Procedure for Issuing the License

1. The organization converting the microfinance program/project shall prepare one (1) set of documents to request issuance of the license in accordance with Article 13 of this Circular and submit it to the State Bank.

2. Within ten (10) days from the date of receiving the application file for the License, the State Bank shall send a document to the organization converting the microfinance program/project confirming receipt of complete and valid files; in case the file is incomplete, the State Bank shall request supplementation and completion.

3. Within five (5) working days from the date of confirming receipt of complete and valid files, the State Bank shall send a document to seek opinions of:

a) The People's Committee of the province/city directly under the central government where the organization converting the microfinance program/project plans to establish its main office regarding the conversion into a microfinance organization;

b) The People's Committee of the province/city directly under the central government where the organization converting the microfinance program/project is currently implementing the microfinance program/project on the effectiveness of the microfinance program/project in promoting local development;

c) The State Bank branch where the organization converting the microfinance program/project plans to establish its main office regarding the establishment of the microfinance organization, the list of proposed personnel to be elected/appointed as members of the Board of Members, Supervisory Council, General Director (Director) of the microfinance organization (if necessary);

d) The State Bank branch where the microfinance program/project requesting conversion has subordinate units operating regarding compliance with the regulations on the network operation;

đ) The Ministry of Foreign Affairs and the Ministry of Public Security regarding participation in capital contribution to establish a microfinance organization by foreign banks.

4. Within fifteen (15) days from the date of receipt of the document requesting opinions from the State Bank, the units requested to provide opinions shall submit their opinions in writing.

5. Within eighty (80) days from the date of receiving complete and valid files, the State Bank shall issue the License; approve the list of proposed personnel to be elected/appointed as members of the Board of Members, Supervisory Council, General Director (Director); approve the network operation (in case of compliance with the regulations on the network operation of the microfinance organization); in case of not issuing the License, the State Bank shall provide a document stating the reasons.

6. After being issued the License, the microfinance organization shall notify creditors and depositors at the microfinance program/project about the issuance of the License; promulgate internal regulations in accordance with Clause 2, Article 93 of the Law on Credit Institutions and regulations on the organization and operation of the Board of Members, Supervisory Council, General Director (Director) of the microfinance organization; elect/appoint the Chairman and members of the Board of Members, Head and members of the Supervisory Council, General Director (Director) according to the approved list of proposed personnel and proceed with necessary procedures to commence operations in accordance with Article 15 of this Circular.

Article 15. Commencement of Operations

1. Microfinance organizations issued the License must register the business in accordance with the provisions of the law.

2. Microfinance organizations must commence operations within twelve (12) months from the date of issuance of the License. Microfinance organizations may only commence operations from the date of commencement of operations (except in cases where the microfinance organization is issued the License based on the conversion of a microfinance program/project).

Beyond twelve (12) months from the date of issuance of the License, if the microfinance organization does not commence operations, the State Bank shall revoke the License.

3. Microfinance organizations issued the License based on the conversion of a microfinance program/project must complete the notification to creditors and depositors at the microfinance program/project about the issuance of the License and submit a report on the completion of this matter to the State Bank branch where the microfinance organization is located before commencing operations.

4. Conditions for commencement of operations:

Microfinance organizations issued the License can only commence operations when they meet the following conditions:

a) Issuing and submitting the Charter to the State Bank;

b) Having a Business Registration Certificate;

c) Having sufficient charter capital as stipulated in Clause 1, Article 7 of this Circular. The charter capital in Vietnamese dong must be fully deposited into a frozen account without interest at the State Bank's Trading Department at least thirty (30) days prior to the date of commencement of operations, except for the portion of the contributed capital equivalent to the actual value of the converted microfinance program/project. The charter capital will be released when the microfinance organization has commenced operations;

d) Having a headquarters that meets the requirements for asset safety and is suitable for the operational needs of the microfinance organization;

đ) Having an organizational structure, management machinery, internal audit, risk management system, internal control system in compliance with the legal regulations for microfinance organizations;

e) Having internal regulations in accordance with Clause 2, Article 93 of the Law on Credit Institutions and regulations on the organization and operation of the Board of Members, Supervisory Council, General Director (Director) of the microfinance organization;

g) Having published information in accordance with Article 25 of the Law on Credit Institutions.

5. Microfinance organizations issued the License must notify the State Bank branch where the microfinance organization is located about the conditions for commencement of operations stipulated in Clause 4 of this Article at least fifteen (15) days before the expected date of commencement of operations; the State Bank shall suspend the commencement of operations if the conditions stipulated in Clause 4 of this Article are not met.

Chapter III

ORGANIZATION, MANAGEMENT, OPERATIONS, AND SUPERVISION

Section 1

Name, Capital Contributors, Organizational Structure

Article 16. Name and main office of microfinance organization

1. The name of a microfinance organization must comply with the provisions of the Enterprise Law and related laws. The name of a microfinance organization shall be set in accordance with its legal form and corresponding type as follows:

a) Limited liability microfinance organization with one member and a specific name;

b) Limited liability microfinance organization and a specific name.

2. The main office of a microfinance organization must meet the regulations on the main office of enterprises under the Enterprise Law and the following conditions:

a) It is the place of work of the Board of Members, Management Board, recorded in the License and enterprise registration in accordance with the law;

b) It must be within the territory of Vietnam, having a defined address including building name, house number, alley, lane, street, village, commune, ward, town, district, city, province, centrally governed city, province, centrally governed municipality; telephone number, fax number, and email address (if any);

c) Ensuring asset safety and suitability for the operational requirements of the microfinance organization.

Article 17. Capital contributors

1. The capital contributors of a microfinance organization are limited liability companies with two or more members, including domestic organizations, domestic individuals, and foreign banks.

2. The total number of capital contributors shall not exceed five (5) members, of which at least one member must be a political organization or a socio-political organization.

Article 18. Management organizational structure

1. A microfinance organization must have an organizational structure, management machinery, internal audit, risk management, internal control system suitable to its type of operation as prescribed by the Law on Credit Institutions and other relevant laws.

2. The management organizational structure of a microfinance organization includes the Board of Members, Supervisory Board, General Director (Director).

Article 19. Risk Management Committee and Human Resources Committee

1. The Board of Members must establish a Risk Management Committee, Human Resources Committee and issue regulations on the organization and operation of these two committees. Within ten (10) days from the date of issuance, the microfinance organization must submit these internal regulations to the State Bank (Bank Inspection and Supervision Department).

2. The organizational structure of the two Committees is decided by the Board of Members but each Committee must have at least two members, the Chairperson being a member of the Board of Members. One member of the Board of Members can only be the Chairperson of one Committee. The Chairperson and other members of the two Committees are appointed and dismissed by the Board of Members according to the Charter of the microfinance organization.

3. The regulations on the organization and operation of the Committees must include at least the following contents:

a) Working regulations:

(i) Number of members of the Committee and responsibilities of each member;

(ii) Regular meetings of the Committee;

(iii) Extraordinary meetings of the Committee;

(iv) Decision-making process of the Committee;

b) Duties and functions of the Committees:

(i) For the Risk Management Committee:

- Advising the Board of Members on issuing procedures and policies within the Committee's authority related to risk governance in microfinance operations as stipulated by law and the Charter of the microfinance organization;

- Analyzing and issuing warnings about the level of safety of the microfinance organization against potential risks that may affect it and preventive measures for such risks in the short and long term;

- Reviewing and evaluating the appropriateness and effectiveness of current risk governance procedures and policies of the microfinance organization to make recommendations and proposals to the Board of Members regarding changes needed in current procedures and policies, operational strategies;

(ii) For the Human Resources Committee:

- Advising the Board of Members on the size and composition of the Board of Members, General Director (Director) appropriate to the scale of operations and development strategy of the microfinance organization;

- Advising the Board of Members on handling personnel issues arising from election, appointment, removal, dismissal procedures for members of the Board of Members, members of the Supervisory Board, and General Director (Director) of the microfinance organization in accordance with the law and the Charter of the microfinance organization;

- Studying and advising the Board of Members on issuing internal regulations of the microfinance organization within the Board of Members' authority concerning salary, remuneration, bonuses, recruitment and selection regulations, training, and other incentive policies for managers, staff of the microfinance organization.

Section 2

Standards and conditions for managers, executives,

members of the Supervisory Board

Article 20. Standards and Conditions for the Chairman and Members of the Board of Directors

1. Members of the Board of Directors of microfinance organizations must meet the following standards and conditions:

a) Not falling under the objects specified in Clause 1 of Article 33 of the Law on Credit Institutions (as amended and supplemented);

b) Having at least two years of work experience in one of the fields of economics, finance, accounting, auditing, banking, or law, and holding a bachelor's degree or higher;

c) Not having been administratively punished in the field of currency and banking at the highest fine level for violations related to licenses, management, operation, shares, capital contribution, purchasing shares, granting credit, purchasing corporate bonds, safety ratios as prescribed by laws on administrative violation handling in the field of currency and banking within the twenty-four months immediately preceding the date of election.

2. The Chairman of the Board of Directors must meet the following standards and conditions:

a) Meeting the conditions stipulated in Clause 1 of this Article;

b) Having held a managerial or operational position in an entity in one of the fields of banking or finance according to the Charter or equivalent documents of that entity, or having served as a department head or equivalent position for at least two years as prescribed by state agencies, economic organizations, political organizations, or socio-political organizations, or having at least three years of experience managing or operating a microfinance organization.

Article 21. Standards and Conditions for Members of the Supervisory Board

1. Not falling under the objects specified in Clause 1 of Article 33 of the Law on Credit Institutions (as amended and supplemented).

2. Holding a bachelor's degree or higher in one of the fields of economics, finance, accounting, auditing, banking, business administration, or law, and having at least one year of work experience in a relevant field, or holding a diploma from a secondary specialized school or higher in one of the fields of economics, finance, accounting, auditing, banking, or law, and having at least three years of work experience in a position related to the microfinance sector.

3. Not having been administratively punished in the field of currency and banking at the highest fine level for violations related to licenses, management, operation, shares, capital contribution, purchasing shares, granting credit, purchasing corporate bonds, safety ratios as prescribed by laws on administrative violation handling in the field of currency and banking within the twenty-four months immediately preceding the date of election.

4. Members of the dedicated Supervisory Board must reside in Vietnam during their term of office.

Article 22. Standards and Conditions for the General Director (Director)

The General Director (Director) of microfinance organizations must meet the following standards and conditions:

1. Not falling under the objects specified in Clause 1 of Article 33 of the Law on Credit Institutions (as amended and supplemented).

2. Holding a bachelor's degree or higher in one of the fields of economics, finance, accounting, auditing, banking, business administration, or law.

3. Having at least two years of experience as a manager of a credit institution or at least two years as a General Director (Director) of a company with a minimum equity capital equal to the statutory capital requirement of a microfinance organization as prescribed by law, or at least three years of work experience in a management position in the microfinance sector, or at least five years of direct work experience in the fields of finance, banking, accounting, or auditing.

4. Not having been administratively punished in the field of currency and banking at the highest fine level for violations related to licenses, management, operation, shares, capital contribution, purchasing shares, granting credit, purchasing corporate bonds, safety ratios as prescribed by laws on administrative violation handling in the field of currency and banking within the twenty-four months immediately preceding the date of appointment.

5. Residing in Vietnam during the term of office.

Article 23. Standards and conditions for Deputy General Directors (Deputy Directors), Chief Accountants, Branch Managers

1. Deputy General Directors (Deputy Directors) are not subject to the provisions of Clause 1, Article 33 of the Law on Credit Institutions (as amended and supplemented); Chief Accountants, Branch Managers are not subject to the provisions of Clause 2, Article 33 of the Law on Credit Institutions.

2. Hold a bachelor's degree or higher in one of the following fields: economics, finance, accounting, auditing, banking, business administration, law, or a specialized field they will be responsible for, or hold a bachelor's degree or higher in other fields and have at least two years of direct work experience in the banking, financial sector, or the specialized field they will be responsible for.

3. Not having been administratively punished in the field of currency and banking at the highest fine level for violations related to licenses, management, operation, shares, capital contribution, purchasing shares, granting credit, purchasing corporate bonds, safety ratios as prescribed by laws on administrative violation handling in the field of currency and banking within the twenty-four months immediately preceding the date of election.

4. Reside in Vietnam during their term of office.

Section 3

Approval of the list of proposed personnel for microfinance organizations

Article 24. Documents for requesting approval of the list of proposed personnel for microfinance organizations

1. A document from the microfinance organization requesting the State Bank of Vietnam to approve the list of proposed personnel, which must include at least the following contents:

a) Reasons for electing or appointing personnel;

b) The list of proposed personnel, specifying: full name, current position (at the microfinance organization and/or other enterprises or organizations - if applicable) and the proposed position to be elected or appointed at the microfinance organization;

c) The structure of the Board of Members, Supervisory Board currently in place and expected after the election and appointment of the microfinance organization (for cases requesting approval of the list of proposed personnel for the positions of member of the Board of Members, member of the Supervisory Board). Specify the number of members of the Board of Members; the number of members of the Supervisory Board; the number of dedicated members of the Supervisory Board;

d) Commitment that the proposed personnel to be elected or appointed meet the required qualifications and standards as stipulated in the Law on Credit Institutions, relevant laws, and the Charter of the microfinance organization.

2. A document approving the list of proposed personnel of the microfinance organization (for personnel of the Board of Members, Supervisory Board, specify the term of office), specifically:

a) For a microfinance organization that is a limited liability company with one member: a document from the lawful representative of the owner;

b) For a microfinance organization that is a limited liability company with two or more members:

(i) In the case of proposing to appoint members of the Board of Members, members of the Supervisory Board: A document from the lawful representatives of the contributing members;

(ii) In case of proposing to appoint General Director (Director): Resolution of the Board of Members;

3. Curriculum vitae of the proposed personnel to be elected or appointed according to Model 02 issued together with this Circular.

4. Criminal record certificate of the proposed personnel for election or appointment:

a) For personnel with Vietnamese citizenship: Judicial record form of the proposed personnel to be elected or appointed, which must contain complete information about criminal records (including expunged and unexpunged criminal records) and information about prohibition from holding positions, establishing, and managing enterprises, cooperatives;

b) For personnel without Vietnamese citizenship: Judicial record form or equivalent document (including expunged and unexpunged criminal records and information about prohibition from holding positions, establishing, and managing enterprises, cooperatives) must be issued by the competent authority of the country where the foreigner resided before coming to Vietnam. In the case of foreigners residing in Vietnam for six months or more, the judicial record form shall be issued by the competent authority issuing judicial records at the place where the foreigner is temporarily residing.

The judicial record form or equivalent document must be issued by the competent authority prior to the submission of the application documents by the microfinance organization for approval of the list of proposed personnel within a maximum of six months.

5. Declaration of related persons to the proposed personnel to be elected or appointed according to Model 04 issued together with this Circular.

6. Other documents proving compliance with personnel standards and conditions as stipulated in Articles 20, 21, and 22 of this Circular, which may include one or several of the following documents:

a) Certificates and diplomas proving the professional qualifications of the proposed personnel to be elected or appointed, wherein certificates issued by educational institutions abroad for Vietnamese citizens must be recognized by the competent authority of Vietnam in accordance with relevant laws;

b) A document from the competent authority assigning them as representatives managing the state capital contribution at the microfinance organization in accordance with the law, in cases where the proposed personnel to be elected or appointed are civil servants, officials at the department level or above in enterprises where the state holds 50% or more of the charter capital, or officers, non-commissioned officers, professional soldiers, defense workers in agencies and units under the Vietnam People's Army; professional officers, non-commissioned officers in agencies and units under the Vietnam People's Public Security Force;

c) Certificate of enterprise registration and audited financial statements by an independent auditing company of the enterprise where the proposed personnel held the position of General Director (Director) of the microfinance organization (if applicable and the minimum equity capital meets the legal requirement for microfinance organizations).

Article 25. Procedure for Approving the List of Proposed Personnel of Microfinance Organizations

1. Not later than 30 (thirty) days before the proposed appointment date of members of the Board of Directors, members of the Supervisory Board, General Director (Director), microfinance organizations shall prepare one (one) set of documents in accordance with Article 24 of this Circular to submit to the State Bank of Vietnam (Supervisory Authority) requesting approval of the list of proposed personnel.

2. Within twenty (twenty) days from the date of receiving all documents from the microfinance organization, the State Bank of Vietnam shall issue a document approving the list of proposed personnel of the microfinance organization. In case of disapproval, the State Bank of Vietnam must issue a reply document stating the reasons.

3. The microfinance organization must notify the State Bank of Vietnam of the list of individuals elected or appointed as members of the Board of Directors, members of the Supervisory Board, General Director (Director) within ten (ten) working days from the date of election or appointment.

Article 26. Validity Period of the Approval Document for the List of Proposed Personnel

The approval document issued by the Governor of the State Bank of Vietnam for the list of proposed personnel of the microfinance organization shall be valid for six (six) months from the date of issuance. If the microfinance organization fails to complete the election or appointment of personnel beyond this period, the approval document for the list of proposed personnel issued by the State Bank of Vietnam for the microfinance organization shall become invalid.

Chapter IV

REGULATED CAPITAL, EQUITY CONTRIBUTION RATIO AND TRANSFER OF EQUITY CONTRIBUTION, PURCHASE AND REDEMPTION OF EQUITY CONTRIBUTION

Article 27. Regulated Capital

1. The regulated capital of the microfinance organization is the capital that has been actually contributed by the owner or by the contributing members and recorded in the Charter.

2. Any change in the regulated capital must comply with the regulations of the State Bank of Vietnam regarding changes that require the approval of the State Bank of Vietnam.

3. The owner and contributing members may not use entrusted capital, raised capital, borrowed capital under any form to contribute to the microfinance organization and must commit to and bear responsibility for the legality of the source of the contributed capital.

Article 28. Form of Contributed Regulated Capital

1. The regulated capital of the microfinance organization shall be contributed in Vietnamese Dong by the contributing members, the actual value of the assigned capital, and the allocated capital of microfinance programs and projects converted according to Clause 2 of this Article.

2. The actual value of the assigned capital and allocated capital of microfinance programs and projects is the difference between assets and liabilities of the microfinance program or project on the independent audit report within a period not exceeding six (six) months from the submission date of the application for the License and is confirmed by the competent authority and the organization owning the assigned or allocated capital through a document transferring the capital to political organizations, political-social organizations, or non-governmental organizations to participate in contributing to establish the microfinance organization.

Article 29. Equity Contribution Ratio

1. The equity contribution ratio of all contributing members being political organizations or political-social organizations must reach at least 25% of the regulated capital of the microfinance organization.

2. The equity contribution ratio of domestic contributing members who are not political organizations or political-social organizations shall not exceed the equity contribution ratio of political organizations or political-social organizations.

3. The equity contribution ratio of foreign contributing members shall not exceed the equity contribution ratio of political organizations or political-social organizations.

4. The maximum equity contribution ratio of a single individual contributing member shall not exceed 5% of the regulated capital of the microfinance organization.

5. The maximum equity contribution ratio of a single contributing member and related parties shall not exceed 50% of the regulated capital of the microfinance organization.

Article 30. Repurchasing Microfinance Organization Share Capital1. The requirements for repurchasing share capital from shareholders, payment conditions, and handling of share capital shall be carried out in accordance with the provisions on repurchasing share capital under the Enterprise Law.

2. Conditions for a microfinance organization to repurchase share capital from shareholders include:

a) Continuous profitable operation for five (5) consecutive years prior to the year of requesting to repurchase share capital and without accumulated losses;

b) Compliance with all risk management regulations and adequate provision for risks at the time of requesting the State Bank's approval for the repurchase of share capital;

c) No administrative penalties in the monetary and banking sectors for five (5) consecutive years prior to the year of requesting to repurchase share capital and up to the time of requesting the State Bank's approval for the repurchase of share capital;

d) After paying off the repurchased share capital, the microfinance organization must ensure sufficient payment of all debts and other financial obligations, maintain safe ratios in banking operations, and the actual value of the registered capital must not be lower than the statutory capital requirement.

Article 31. Transfer of Share Capital

1. The transfer of share capital must comply with the provisions of Article 29 of this Circular, the Enterprise Law, and related laws.

2. Within five (5) years from the date of issuance of the License, founding members may only transfer their share capital to other founding members under the condition of ensuring the ownership ratio of share capital as stipulated in Article 29 of this Circular.

3. For microfinance organizations that are limited liability companies with two or more members, shareholders can transfer part or all of their share capital to other shareholders, organizations, or individuals. The transfer of share capital by shareholders must ensure:

a) Not changing the legal form of the microfinance organization;

b) Prioritizing the transfer of share capital to remaining shareholders in proportion to their share capital with the same conditions;

c) The transfer of share capital to other organizations or individuals can only be carried out when the remaining shareholders do not purchase or do not fully purchase within thirty (30) days from the date of offering, and it must be conducted under non-favorable conditions compared to those offered to remaining shareholders in the microfinance organization;

d) Organizations or individuals receiving the transfer of share capital from shareholders must meet the conditions set forth in Clause 2 of Article 8 of this Circular.

4. The transfer of share capital must be approved in writing by the State Bank before implementation. The procedures and conditions for approving the transfer of share capital are carried out according to the regulations of the State Bank.

ACTIVITIES OF MICROFINANCE ORGANIZATIONS

Article 32. Content of Activities

Chapter V

1. Microfinance organizations are allowed to carry out activities as recorded in the License issued by the State Bank.

2. Microfinance organizations are allowed to carry out the following capital-raising activities:

(i) Compulsory savings;

(ii) Voluntary deposits;

a) Accepting deposits in Vietnamese dong in the following forms:

b) Borrowing from credit institutions, financial organizations, and domestic and foreign individuals and organizations in accordance with the law.

3. Microfinance organizations are only allowed to provide loans in Vietnamese dong to microfinance customers and other customers for income-generating activities and improving living conditions. Loans from microfinance organizations can be secured by compulsory savings, group guarantees of savings and borrowing customers as stipulated by the microfinance organization.

4. Microfinance organizations must maintain a minimum total loan balance to microfinance customers of ninety percent (90%) of the total loan balance.

5. The total loan balance of a microfinance organization to a single microfinance customer must not exceed fifty million (50,000,000) Vietnamese dong.

The total loan balance of a microfinance organization to another customer must not exceed one hundred million (100,000,000) Vietnamese dong.

6. Microfinance organizations are allowed to open deposit accounts at the State Bank and commercial banks. Microfinance organizations are not allowed to open settlement accounts for customers.

7. Microfinance organizations are allowed to carry out the following additional business activities:

a) Entrusting and accepting entrustment for lending;

b) Providing financial advisory services related to microfinance;

c) Providing collection, disbursement, and money transfer services for microfinance customers;

d) Acting as an agent for providing insurance services.

c) Provide collection, disbursement, and money transfer services for microfinance customers;

d) Act as an agent for the provision of insurance services.

Article 33. Term of Operation

1. The term of operation of microfinance organizations shall be recorded in the License, with a maximum duration not exceeding fifty (50) years.

2. Microfinance organizations shall implement changes to their term of operation in accordance with the regulations of the State Bank.

Article 34. Operating Area

1. The operating area of microfinance organizations shall be specified in the License.

2. The conversion of the network of operations of microfinance organizations licensed on the basis of converting microfinance programs and projects shall be carried out in accordance with the regulations of the State Bank regarding the network of operations of microfinance organizations.

3. Microfinance organizations shall expand their network of operations outside the province or centrally-administered city where their headquarters is located in accordance with the regulations of the State Bank regarding the network of operations of microfinance organizations.

Article 35. Classification of Debts, Provisioning for Risk Management in Lending Activities of Microfinance Organizations

Microfinance organizations shall classify debts, establish provisions, and utilize such provisions for risk management in lending activities in accordance with the guidelines of the State Bank on debt classification, provisioning, and utilization of provisions for risk management in lending activities of small-scale financial organizations as stipulated in Circular No. 15/2010/TT-NHNN dated June 16, 2010, until the State Bank issues guidelines on debt classification, provisioning, and utilization of provisions for risk management in lending activities of microfinance organizations.

Chapter VI

RESPONSIBILITIES OF UNITS

Article 36. Banking Inspection and Supervision Authority

1. Serve as the focal point for reviewing applications for Licenses; submit to the Governor for consideration and decision on issuing Licenses, approving lists of individuals proposed to be elected or appointed as Chairpersons and other members of the Board of Members, Chairpersons and other members of the Supervisory Board, General Directors (Directors) of microfinance organizations, and approving the conversion of units under microfinance programs and projects.

2. Inspect, supervise, and handle violations by microfinance organizations within the provinces or cities where banking inspection and supervision bureaus are located in implementing this Circular and related laws.

3. Take the lead in coordinating with departments and bureaus under the State Bank to submit to the Governor of the State Bank for consideration matters related to the establishment, organization, and operation of microfinance organizations.

4. Resolve issues arising during the implementation of this Circular.

Article 37. Branches of the State Bank

1. Inspect, supervise, and handle violations by microfinance organizations within the provinces or cities where there are no banking inspection and supervision bureaus in implementing this Circular and related laws.

2. Provide opinions to the State Bank (Inspection and Supervision Authority) in accordance with this Circular.

3. Inspect, direct, and supervise microfinance organizations to ensure compliance with legal requirements and State Bank regulations before commencing operations and report to the State Bank (Inspection and Supervision Authority) on the conditions and progress of the commencement of operations of microfinance organizations.

4. Direct, guide, supervise, and inspect microfinance organizations operating within their jurisdiction in implementing this Circular.

Chapter VII

IMPLEMENTING PROVISIONS

Article 38. Transitional Provisions

1. For microfinance organizations established and operating under Licenses issued by the State Bank prior to the effective date of this Circular but which do not meet the requirements for founding members as stipulated in Clause 2, Article 8 of this Circular, they may continue to operate without having to adjust their founding members.

2. Within one hundred eighty (180) days from the effective date of this Circular, microfinance organizations established and operating under Licenses issued by the State Bank prior to the effective date of this Circular must complete the establishment of the Risk Management Committee and Human Resources Committee in accordance with Article 19 of this Circular.

3. For loan contracts signed before the effective date of this Circular and in compliance with applicable laws at the time of signing, microfinance organizations and customers may continue to perform according to the agreements already signed until the end of the loan contract period or amend and supplement them in accordance with this Circular.

Article 39. Effective date

1. This Circular takes effect from April 15, 2018.

2. From the date this Circular takes effect, the provisions on licensing, organization, and operation in Circular No. 02/2008/TT-NHNN dated April 2, 2008, guiding the implementation of Decree No. 28/2005/NĐ-CP dated March 9, 2005, of the Government on the organization and operation of small-scale financial organizations in Vietnam, and Decree No. 165/2007/NĐ-CP dated November 15, 2007, amending and supplementing, abolishing certain articles of Decree No. 28/2005/NĐ-CP dated March 9, 2005, of the Government on the organization and operation of small-scale financial organizations in Vietnam, shall cease to be effective.

Article 40. Implementation organization

The Director of the Office, the Head of the Banking Supervision Department, the Heads of units under the State Bank, the Governors of the State Bank branches, the Chairmen of the Board of Members, and the General Directors (Directors) of microfinance organizations are responsible for organizing the implementation of this Circular./.