Circular No. 13/2024/TT-NHNN amending and supplementing certain Articles of Circular No. 32/2015/TT-NHNN dated December 31, 2015, issued by the Governor of the State Bank of Vietnam on the limits and ratios ensuring safety in the operations of people's credit funds.

CIRCULAR

Amending and supplementing certain Articles of Circular No. 32/2015/TT-NHNN dated December 31, 2015 of the Governor of the State Bank of Vietnam

regarding the limits and ratios for ensuring safety in the operations of people's credit funds

Pursuant to Resolution No. 102/2022/NQ-CP dated December 12, 2022 of the Government on the functions, tasks, powers, and organizational structure of the State Bank of Vietnam;

The Governor of the State Bank of Vietnam issues this Circular amending and supplementing certain Articles of Circular No. 32/2015/TT-NHNN dated December 31, 2015 of the Governor of the State Bank of Vietnam regarding the limits and ratios for ensuring safety in the operations of people's credit funds.

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;

Decree No. Article 1. Amending and supplementing certain Articles of Circular No. 32/2015/TT-NHNN dated December 31, 2015 of the Governor of the State Bank of Vietnam regarding the limits and ratios for ensuring safety in the operations of people's credit funds:

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

1. This Circular stipulates the restrictions, limits, and safety ratios in the operations of people's credit funds, including:

a) Capital adequacy ratio;

1. Amend and supplement Article 1 as follows:

“Article 1. Scope of Regulation and Applicability

b) Liquidity coverage ratio;

c) Maximum proportion of short-term capital used for medium- and long-term loans;

d) Loan limitations;

đ) Total deposit amount ratio compared to equity capital.

2. Based on the results of supervision and inspection of people's credit funds, in cases where it is necessary to ensure safety in their operations, depending on the nature and degree of risk, the State Bank branch at provincial or municipal level may require people's credit funds to maintain one or more lower limits and stricter safety ratios than those specified in this Circular.

3. People's credit funds under special control are not required to comply with the limits and safety ratios prescribed in this Circular.”

2. Amending and supplementing Clause 1 of Article 2 as follows:

“1. Borrowers from people's credit funds include members of people's credit funds; legal entities and individuals who are not members but have deposits with people's credit funds; poor household members as defined by the State Bank of Vietnam’s regulations on people's credit funds.”

Article 3. Information Technology System

People's credit funds must have an information technology system to implement the provisions of this Circular, ensuring the following minimum requirements:

3. Amend and supplement Article 3 as follows:

“1. Storing, accessing, and updating customer databases to ensure risk management as prescribed by the State Bank of Vietnam and internal regulations of the people's credit funds.

2. Statistics and monitoring of capital items, assets, liabilities; calculating, managing, and supervising the restrictions, limits, and safety ratios in operations as prescribed in this Circular.

3. Implementing statistical reporting systems as prescribed by the State Bank of Vietnam and the requirements of the State Bank branch at provincial or municipal level.”

Article 4. Internal Regulations

1. People's credit funds must have internal regulations on managing the minimum capital adequacy ratio, liquidity management (liquidity coverage ratio, maximum proportion of short-term capital used for medium- and long-term loans, total deposit amount ratio compared to equity capital) as prescribed in this Circular and relevant laws. Internal regulation documents and amendments to such regulations must be issued or approved by the Board of Directors of the people's credit funds.

4. Amending and supplementing Article 4 as follows:

“2. Internal regulations on the minimum capital adequacy ratio shall include the following main contents:

a) Procedures and methods for monitoring the capital adequacy ratio;

b) Methods for early warning of risks that may reduce the capital adequacy ratio;

c) Measures to address situations where the capital adequacy ratio falls below the minimum level, including at least measures to increase the capital adequacy ratio; responsibilities, authorities, and coordination among departments and individuals in implementing these measures.

3. Internal regulations on minimum liquidity management shall include the following contents:

a) Provisions on分级任务的原因是确保翻译的准确性和专业性，每个部分都涉及特定的法律术语和结构。这种分割有助于逐段精确翻译，避免遗漏或误解原文内容。继续完成剩余部分的翻译：

3. Internal regulations on the management of minimum liquidity include the following contents:

a) Regulations on the分级、授权、职能和任务分配给相关个人和部门，以监督并实施确保维持清偿能力比率、短期资金用于中期和长期贷款的最大比例、存款总额与自有资本的比率的各项措施；

b) Procedures, formalities, limits on liquidity management, and contingency plans to ensure the maintenance of the solvency ratio, the maximum proportion of short-term funds used for medium and long-term loans, and the ratio of total deposits to own capital as stipulated in this Circular;

c) Regulations on cash management, income and expenditure, daily sources of funds;

d) Early warning criteria for risks of insufficient solvency and liquidity, and handling measures;

e) Measures to maintain immediately payable assets such as increasing the registered capital, increasing the establishment of various reserves, reducing the risk weight of assets;

f) Guidance, inspection, supervision, and internal audit regarding the maintenance of the solvency ratio, the ratio of total deposits to own capital, the maximum proportion of short-term funds used for medium and long-term loans, and the ratio of total deposits to own capital;

4. Internal regulations on lending and loan management as prescribed in this Circular and related documents, which must at least include the following contents:

a) Criteria for identifying customers and associated parties of credit cooperatives, including cases specified in Points b, c, đ, and g Clause 24 Article 4 Law on Credit Organizations 2024; individual customers with their spouse; biological or adopted parents, step-parents, foster parents, parents-in-law, and parents of the spouse; biological or adopted children, stepchildren, daughters-in-law, sons-in-law; siblings from the same father and mother; siblings from the same father but different mothers; siblings from the same mother but different fathers; brothers-in-law, sisters-in-law, sisters-in-law, brothers-in-law, sisters-in-law, brothers-in-law, brothers-in-law, sisters-in-law, and sisters-in-law of the customer's same father and mother or same father but different mothers, or same mother but different fathers;

b) Restrictions and limits on lending applicable to customers and associated parties, mechanisms and principles for分级、授权贷款给客户及其关联方；

c) The maximum limit for loans granted to each type of member customers, non-member customers, and member customers who are poor households of the people's credit funds in total outstanding loan balance;

d) The monitoring process for loans exceeding 5% of the people's credit fund's own capital;

đ) Regulations on reporting to the State Bank branch at provincial and municipal levels and the General Assembly of members regarding loans to objects specified in Clause 1, Article 135 of the Law on Credit Organizations 2024;

5. At least once every one year and when necessary, the people's credit fund must review, re-evaluate, amend, and supplement internal regulations to ensure safety requirements in the operation of the people's credit fund;

6. Within ten working days from the date of issuance, amendment, supplementation, or replacement of internal regulatory documents, the people's credit fund shall send (directly or through postal service) the issued, amended, supplemented, or replaced internal regulations to the State Bank branch at provincial and municipal levels. In cases where internal regulations are amended, supplemented, or replaced, the people's credit fund shall send a report on the contents of the amendments and supplements along with the internal regulations;

7. The people's credit fund must amend and supplement internal regulations to comply with the provisions of this Circular before December 31, 2024.";

5. Amend and supplement Clause 3 and Point d, Clause 4, Article 5 as follows:

a) To amend and supplement Clause 3 as follows:

"3. Own capital includes the total Tier 1 Capital and Tier 2 Capital minus the amount that must be deducted from own capital at the time of determining own capital, specifically:

a) Tier 1 Capital

Tier 1 Capital consists of:

(i) Charter Capital;

(ii) Investment in basic construction and fixed asset purchases;

(iii) Supplementary Capital Reserve Fund;

(iv) Business Development Investment Fund;

(v) Financial Provision Fund;

(vi) Non-repayable capital contributions from organizations and individuals to the people's credit fund;

(vii) Undistributed profits;

Tier 1 Capital must deduct the following amounts:

(i) Accumulated losses (if any);

(ii) Amounts invested in cooperative banks;

b) Tier 2 Capital is calculated at a maximum of 100% of the value of Tier 1 Capital, including: General Provisions, at a maximum of 1.25% of the total risk-weighted assets;

c) The amount that must be deducted from own capital: 100% of the decrease due to revaluation of assets according to the provisions of the law.

The specific determination of own capital for calculating the minimum capital adequacy ratio is stipulated in Appendix 1 attached to this Circular.";

b) Amend Point d (i), Clause 4 as follows:

"(i). The original cost value of Fixed Assets of the people's credit fund;";

6. Amend and supplement Point a, Clause 4, Article 7 as follows:

"a) Charter Capital, Supplementary Capital Reserve Fund, Business Development Investment Fund, and remaining Financial Provision Fund after deducting accumulated losses (determined on the accounting balance sheet at the time of calculating the maximum ratio of short-term sources used for medium- and long-term loans), the original cost value of fixed asset purchases and investments, and contributions to cooperative banks as prescribed by law;";

7. Add Article 7a after Article 7 as follows:

“Article 7a: Ratio of Total Deposit Receipts to Shareholders' Equity

1. The people's credit fund must maintain the ratio of total deposit receipts to shareholders' equity not exceeding twenty times;

2. The ratio of total deposit receipts to shareholders' equity is determined according to the following formula:

 

Where:

- A: the ratio of total deposit receipts to shareholders' equity;

- B: total deposit receipts as specified in Clause 3 of this Article;

- C: shareholders' equity as specified in Clause 4 of this Article;

3. Total deposit receipts include: demand deposits, term deposits, savings deposits of members, organizations, and other individuals in Vietnamese dong;

4. Shareholders' equity is recorded according to the financial system applicable to the people's credit fund.";

8. Amend and supplement Article 8 as follows:

“Article 8. Limitations and restrictions on lending

1. The People's Credit Fund bases its own capital determined according to the provisions of Clause 3, Article 5 of this Circular at the end of the nearest working day to determine:

a) The limitation on lending to organizations and individuals as prescribed in Article 135 of the Law on Credit Institutions 2024;

b) The restriction on lending to one customer and related parties of that customer as prescribed in Article 136 of the Law on Credit Institutions 2024.

2. The Board of Directors decides on loans to appraisers and loan approvers at the People's Credit Fund with a value of 100 million dong or more, or other values lower than this as stipulated in the internal regulations of the People's Credit Fund. Other cases shall be handled according to the internal regulations of the People's Credit Fund.

3. For loans to the objects specified in point a, Clause 1 of this Article, the People's Credit Fund must:

a) Report to the State Bank branch of the province/city in accordance with the regulations of the State Bank;

b) Publicize before the General Meeting of Members for loans arising up to the time of data collection for the General Meeting of Members.

4. The total outstanding loan balance to one member who is a legal entity may not exceed the total contributed capital and deposit balance of that legal entity at the People's Credit Fund at all times.

The total outstanding loan balance to customers who are legal entities and individuals who are not members may not exceed the balance of the deposit contract or savings book.

5. The limitations prescribed in point b, Clause 1 of this Article do not apply to:

a) Loans from entrusted funds of organizations and individuals where the People's Credit Fund does not bear the risk;

b) Loans fully guaranteed by deposits at the same People's Credit Fund.”

9. Supplement Article 8a after Article 8 as follows:

“Article 8a. Risk of inability to pay of the People's Credit Fund

1. The People's Credit Fund is at risk of inability to pay when the immediate payable assets are insufficient by 20% or more at the calculation point of the ability to pay ratio, leading to failure to maintain the ability to pay ratio as prescribed in this Circular for a continuous period of 30 days.

2. The People's Credit Fund is unable to pay when it cannot fulfill payment obligations within one month from the due date.

3. When there is a risk of inability to pay or inability to pay, the People's Credit Fund must promptly report to the State Bank branch of the province/city and notify the Cooperative Bank branch about the current situation, causes, measures already applied, proposed measures to address the issue, and any recommendations to the State Bank branch of the province/city (if any).”

10. Amend and supplement Article 15 as follows:

“Article 15. Responsibilities of units under the State Bank

1. The Banking Inspection and Supervision Agency has the responsibility to lead and coordinate with Departments and Bureaus under the State Bank to submit to the Governor of the State Bank for handling difficulties and obstacles during the implementation of this Circular.

2. The State Bank branch of the province/city has the responsibility:

a) To decide that the People's Credit Fund must maintain the limits and safety ratios as prescribed in Clause 2, Article 1 of this Circular;

b) To inspect, supervise, and handle violations by the People's Credit Fund in the area in implementing the provisions of this Circular;

c) To guide the People's Credit Funds in the area in implementing the provisions of this Circular;

d) To accept internal regulations of the People's Credit Fund as prescribed in this Circular.”.

Article 2. Replacing and abolishing certain points, clauses, and articles of Circular No. 32/2015/TT-NHNN dated December 31, 2015, issued by the Governor of the State Bank of Vietnam on limits and ratios to ensure safety in the operations of people's credit funds:

1. Replace Appendix 01, Appendix 02, and Appendix 03 of Circular No. 32/2015/TT-NHNN with Appendix 01, Appendix 02, and Appendix 03 promulgated together with this Circular.

2. Abolish Clause 2, Article 2, Point a (vi) Clause 4, Article 5, Section 2 Chapter II, Chapter III of Circular No. 32/2015/TT-NHNN.

Article 3. Responsibility for implementation organization:

The Director of the Office, the Director of Banking Inspection and Supervision, the Heads of units under the State Bank of Vietnam, the Provincial Branches of the State Bank, and the people's credit funds shall be responsible for organizing the implementation of this Circular.

Article 4. Implementation provisions:

1. This Circular takes effect from August 12, 2024.

2. This Circular abolishes the clause "2. People's credit funds must ensure that the total amount of deposits received does not exceed 20 times the paid-in capital" at Clause 3, Clause 27, Article 2, Article 4, Clause 4, Article 6 of Circular No. 21/2019/TT-NHNN dated November 14, 2019, issued by the Governor of the State Bank of Vietnam amending and supplementing certain articles of Circulars regulating cooperative banks and people's credit funds.