Circular No. 06/2017/TT-NHNN amending and supplementing certain provisions of Circular No. 03/2014/TT-NHNN dated January 23, 2014 of the Governor of the State Bank of Vietnam on the Fund for Ensuring Safety of the People's Credit Cooperative System and Circular No. 04/2015/TT-NHNN dated March 31, 2015 of the Governor of the State Bank of Vietnam on people's credit cooperatives.

CIRCULAR

Amending and supplementing some articles of Circular No. 03/2014/TT-NHNN dated January 23, 2014, issued by the Governor of the State Bank of Vietnam on the Fund for Ensuring Safety of the People's Credit Cooperative System and Circular No. 04/2015/TT-NHNN dated March 31, 2015, issued by the Governor of the State Bank of Vietnam on people's credit cooperatives.

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

Pursuant to the Law on Credit Organizations dated June 16, 2010;

Pursuant to Government Decree No. 16/2017/NĐ-CP dated February 17, 2017 on 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 amend and supplement some articles of Circular No. 03/2014/TT-NHNN dated January 23, 2014, issued by the Governor of the State Bank of Vietnam on the Fund for Ensuring Safety of the People's Credit Cooperative System and Circular No. 04/2015/TT-NHNN dated March 31, 2015, issued by the Governor of the State Bank of Vietnam on people's credit cooperatives.

Article 1. Amending Article 4 of Circular No. 03/2014/TT-NHNN dated January 23, 2014, issued by the Governor of the State Bank of Vietnam on the Fund for Ensuring Safety of the People's Credit Cooperative System.

Amending Clause 2 of Article 4 as follows:

“2. The contribution to the Preservation Fund as prescribed in Clause 1 of this Article shall be implemented as follows:

a) The annual fee rate for contribution to the Preservation Fund is 0.08% of the average annual outstanding loan balance of the cooperative bank or people's credit cooperative as of December 31 of the preceding year.

The average annual outstanding loan balance is calculated by dividing the total outstanding loans (groups 1 and 2 according to the classification of debts by the State Bank of Vietnam) at the end of each month during the year by the actual number of months. For cooperative banks, the outstanding loan balance at the end of each month must exclude the portion of loans for capital adjustment to member people's credit cooperatives.

b) The payment into the Safety Fund for the fiscal year can only be carried out if the total operating capital of the Safety Fund before payment is lower than 1.5% of the total assets of the system of rural credit cooperatives.

In cases where, after contributing to the Preservation Fund for the fiscal year, the total operating capital of the Preservation Fund exceeds or equals 1.5% of the total assets of the people's credit cooperative system, the cooperative bank or people's credit cooperative shall still contribute to the Preservation Fund for that fiscal year;

c) The amount contributed to the Preservation Fund shall be recorded as operational expenses of the cooperative bank or people's credit cooperative.”

Article 2. Amending and supplementing some articles of Circular No. 04/2015/TT-NHNN dated March 31, 2015, issued by the Governor of the State Bank of Vietnam on people's credit cooperatives.

1. Amending Clause 7 of Article 11 as follows:

“7. A copy of the citizen identification card or passport or identity card (for individual members, representatives of legal entities, and family households). For members who are civil servants, public officials, or employees, an additional certificate of workplace, a copy of the recruitment decision or employment contract from the recruiting agency or unit is required.”

2. Amending Point d of Clause 4 of Article 15 as follows:

“d) Internal regulations in accordance with Clause 2 of Article 93 of the Law on Credit Organizations and regulations on the organization and operation of the Board of Directors and Supervisory Board of people's credit cooperatives.”

3. Amending Clause 1 and Clause 2 of Article 31 as follows:

"1. For individuals:

a) Vietnamese citizens aged 18 years or older, having full capacity for civil conduct, registered as permanent residents within the operational area of the people's credit cooperative;

b) Civil servants, public officials, or employees working at organizations or agencies whose main offices are located within the operational area of the people's credit cooperative. Members of the people's credit cooperative who are civil servants, public officials, or employees may not hold positions as Chairman or member of the Board of Directors; Head or member of the Supervisory Board; Director or Deputy Director; Chief Accountant or other specialized professional positions, except as provided in Point e of Clause 2 of this Circular;

c) Not belonging to any of the following categories:

(i) Currently under criminal investigation, serving a criminal sentence or decision of a court; individuals who have been convicted of serious crimes or worse and have not yet had their criminal records expunged;

(ii) Civil servants, public officials, or employees working in sectors or professions related to state secrets as prescribed by law;

(iii) Officers, non-commissioned officers, or professional military personnel in the People's Armed Forces;

d) Other conditions as stipulated in the Charter of the people's credit cooperative.

2. For households:

a) A household with members registered as permanent residents within the operational area of the people's credit cooperative; members of the household share assets for production and service activities of the household;

b) The representative of the household must be authorized in writing by all members of the household in accordance with the law and must meet the conditions set out in Clause 1 of this Article.”

4. Amending Clause 4 and Clause 5 of Article 37 as follows:

“4. The people's credit cooperative may lend to corporate or individual customers who are not members but have deposits at the people's credit cooperative, secured by deposit certificates issued by the people's credit cooperative itself. The total amount lent may not exceed the balance of the deposit certificate at the time of the lending decision, and the term of the loan may not exceed the remaining term of the deposit certificate.

5. The people's credit cooperative may lend to poor household members who are registered as permanent residents within the operational area of the people's credit cooperative when the poor household is not a member of the people's credit cooperative. If multiple members of a poor household borrow funds, all members of the poor household must sign or authorize one member to sign the borrowing agreement with the people's credit cooperative. Poor households must be approved by the People's Committee of the district. Procedures, formalities, and documentation for lending to poor household members follow the current credit regulations applicable to members.”

5. Amending Clause 3 of Article 40 as follows:

“3. Supported by the cooperative bank in internal auditing upon request.”

6. Amending Clause 3 and adding Clause 4 of Article 45 as follows:

“3. The transition process for people's credit cooperatives that do not comply with the provisions on operational areas; maximum capital contribution ratio of a single member; members registered as permanent residents outside the operational area; total amount received from member deposits shall be carried out in accordance with the provisions of Articles 47, 47a, 48, 49, and 50 of this Circular.”

4. Credit cooperatives shall convert the regular capital contributions of members in accordance with Clause 3 of Circular No. 08/2005/TT-NHNN dated December 30, 2005, and Clause 3 of Circular No. 06/2007/TT-NHNN dated November 6, 2007, issued by the State Bank of Vietnam guiding the implementation of certain provisions of Decree No. 48/2001/NĐ-CP dated August 13, 2001, and Decree No. 69/2005/NĐ-CP dated May 26, 2005, of the Government on the organization and operation of credit cooperatives into annual capital contributions of members in accordance with this Circular.

In cases where the capital contribution of a member exceeds the ratio prescribed in Clause 2, Article 28 of this Circular, the member must transfer the capital contribution to another member, legal entity, individual, or household to contribute to the credit cooperative or be refunded the capital contribution in accordance with Article 30 of this Circular before October 1, 2018.

7. Amend Clause 1 of Article 46 as follows:

"1. At the time this Circular takes effect, if credit cooperatives have not met the requirements regarding the operating area, the proportion of capital contributed by one member, members registered for permanent residence outside the operating area, and the total amount of deposits received from members as stipulated in this Circular, they must develop plans to address these issues and proactively implement measures to comply with the regulations."

8. Add Article 47a after Article 47 as follows:

"Article 47a1. Supplementing Point 6a following Article 6 of Circular No. 02/2019/TT-BVHTTDL dated July 5, 2019 of the Minister of Culture, Sports and Tourism on the procedures for legal expertise regarding copyright and related rights as follows: (vi) Agreement on the amount of reserve left behind and the deadline for selling the purchased cash foreign currency to the authorized credit institution. concerning changes in the operating area due to administrative boundary adjustments from June 1, 2015

1. For villages that are not contiguous with the village where the main office is located:

a) Cease operations in villages that are not contiguous with the village where the main office is located as provided in point b of this clause;

b) Within thirty days from the date the Administrative Boundary Adjustment Document of the competent state agency becomes effective or within thirty days from September 1, 2017 (for cases where the Administrative Boundary Adjustment Document becomes effective before September 1, 2017), the credit cooperative must develop a plan to cease operations in villages that are not contiguous with the village where the main office is located, and submit it to the State Bank branch at the provincial or centrally-administered city level where there is no Banking Inspection and Supervision Department or the Banking Inspection and Supervision Department where the credit cooperative's main office is located. The cessation plan must include at least the following contents:

(i) The Administrative Boundary Adjustment Document of the competent state agency;

(ii) The current operational status in non-contiguous villages;

(iii) A plan and measures for handling, including restructuring through division or separation in accordance with the law to cease operations in non-contiguous villages within a maximum period of thirty-six months from the date the Administrative Boundary Adjustment Document becomes effective or from September 1, 2017 (for cases where the Administrative Boundary Adjustment Document becomes effective before September 1, 2017).

2. For villages contiguous with the village where the main office is located:

a) Credit cooperatives may operate in contiguous villages, except as provided in point b of this clause;

b) If at the time the Administrative Boundary Adjustment Document of the competent state agency becomes effective or from September 1, 2017 (for cases where the Administrative Boundary Adjustment Document becomes effective before September 1, 2017), the credit cooperative is implementing a plan according to Clause 2, Clause 3 of Article 47 of this Circular, it shall continue to implement the handling plan already reported."

9. Amend Article 52 as follows:

‟Article 52. Responsibilities of Relevant Units

1. The Banking Inspection and Supervision Authority:

a) Serve as the point of contact for receiving reports from the State Bank branch as stipulated in points b and d, Clause 2 of this Article and in accordance with the law;

b) Inspect, supervise, and handle violations by people's credit funds within the province or city where the Banking Inspection and Supervision Department is located in implementing the provisions of this Circular and related laws;

c) Direct, guide, supervise, and inspect people's credit funds whose main office is located in the province or city where the Banking Inspection and Supervision Department is situated in implementing the provisions on transition and post-transition handling as set forth in Articles 46, 47, 47a, and 51 of this Circular;

d) Take the lead in coordinating with Departments and Bureaus under the State Bank to submit matters related to the establishment, organization, and operation of people's credit funds to the Governor of the State Bank for consideration;

2. State Bank Branches at provincial and centrally governed municipal levels:

a) Manage, inspect, supervise, and handle violations by people's credit funds within the province or city where there is no Banking Inspection and Supervision Department in implementing the provisions of this Circular and related laws;

b) Review and issue Licenses, approve lists of individuals proposed to be elected or appointed as Chairpersons and other members of the Board of Directors, Heads and other members of the Supervisory Board, and Directors of people's credit funds; confirm registration of the Charter of people's credit funds according to this Circular; report to the Governor of the State Bank (through the Banking Inspection and Supervision Department) the results of issuing licenses for people's credit funds within fifteen days from the date of issuance;

c) Drafts documents to seek opinions:

(i) People's Committee of communes regarding the establishment of people's credit funds within their area, lists of personnel proposed to be elected or appointed as Chairpersons and other members of the Board of Directors, Heads and other members of the Supervisory Board, and Directors of people's credit funds;

(ii) Vietnam Rural Credit Bank concerning lists of personnel proposed to be elected or appointed as Chairpersons and other members of the Board of Directors, Heads and other members of the Supervisory Board, and Directors of people's credit funds (if deemed necessary);

(iii) Banking Inspection and Supervision Department as stipulated in point c(iii), Clause 1, Article 12 of this Circular;

d) Direct, guide, supervise, and inspect people's credit funds in implementing the provisions on transition and post-transition handling as set forth in Articles 46, 47, 47a, and 51 of this Circular. Quarterly, within the first fifteen days of the first month of each quarter, submit a written report to the State Bank (Banking Inspection and Supervision Department) on the implementation of transition provisions by people's credit funds within their area;

3. Vietnam Rural Credit Bank:

a) Uniformly guide the design and printing of Member Cards in the system of people's credit funds according to Clause 5, Article 28 of this Circular;

b) Provide written comments on lists of personnel proposed to be elected or appointed as Chairpersons and other members of the Board of Directors, Heads and other members of the Supervisory Board, and Directors of people's credit funds when requested by the State Bank branch or the people's credit fund;

Article 3. Repeal Clause 16, Clause 22 of Article 11 and Clause 3 of Article 16 of Circular No. 04/2015/TT-NHNN dated March 31, 2015 issued by the Governor of the State Bank regarding people's credit funds;

Article 4. Implementation provisions

1. This Circular takes effect from September 1, 2017;

2. The Director of the Office, the Director of Banking Inspection and Supervision, Heads of units under the State Bank, Governors of State Bank branches at provincial and centrally governed municipal levels, Chairpersons of the Board of Directors, General Managers of Vietnam Rural Credit Bank, Chairpersons of the Board of Directors, and Directors of people's credit funds are responsible for organizing the implementation of this Circular./.