Decision No. 171/2002/QD-NHNN on the issuance of the Regulation on the Establishment, Management, and Utilization of Risk Reserve Funds of the State Bank.

Pursuant to …;

Regarding the issuance of the Rules on the Establishment, Management, and Utilization of the Risk Reserve Fund of the State Bank.

GOVERNOR OF THE STATE BANK OF VIETNAM

Pursuant to the Law on the State Bank of Vietnam No. 01/1997/QH10 dated December 12, 1997;

Pursuant to Decree No. 15/CP dated March 2, 1993 of the Government stipulating the tasks, powers, and responsibilities for state management of Ministries and ministerial-level agencies;

Pursuant to the Decree No. 100/1998/NĐ-CP dated December 10, 1998 of the Government on the Financial System of the State Bank;

At the proposal of the Director of the Accounting and Finance Department,

Pursuant to …;

Article 1. The Rules on the Establishment, Management, and Utilization of the Risk Reserve Fund of the State Bank are hereby issued together with this Decision.

Article 2. THIS DECISION SHALL TAKE EFFECT 15 DAYS FROM THE DATE OF SIGNATURE.

Article 3. The Head of the Office, Heads of Accounting and Finance Department, Heads of Units under the State Bank, Directors of Branches of the State Bank in provinces and centrally-administered cities are responsible for implementing this Decision.

 

REGULATIONS

The establishment, management, and utilization of the risk reserve fund of

The State Bank
(Issued together with Decision No. 171/2002/QĐ-NHNN dated March 8, 2002 of the Governor of the State Bank)

This technical regulation sets out technical requirements, testing methods, sampling procedures; management requirements; responsibilities of organizations and individuals producing, trading, and importing cigarettes.

Article 1. These Rules stipulate the procedures for the establishment, management, and utilization of the risk reserve fund of the State Bank to offset losses caused by external factors in its credit activities, payment services, and cash reserves, and the difference in losses after collective or individual compensation in accordance with the provisions of the law.

Debts that are currently being written off or extended according to decisions of the Prime Minister are not subject to handling from this risk reserve fund.

Article 2. Annually, the State Bank is entitled to establish a risk reserve fund and record it as an expense equal to 10% of total income minus expenses not including the risk reserve fund expense.

Article 3. The risk reserve fund of the State Bank shall be established, recorded, and managed centrally at the State Bank (Accounting and Finance Department).

Article 4. If the risk reserve fund of the State Bank is not fully utilized in a year, the remaining amount shall be carried over to the next year for continued use.

In cases where the risk reserve fund is insufficient to cover losses as prescribed in these Rules, the State Bank shall coordinate with the Ministry of Finance to submit to the Prime Minister for handling the shortfall.

Article 5. Authority to handle losses using the risk reserve fund:

The Governor of the State Bank decides on the handling of losses of the State Bank.

Article 6. Principles for handling losses using the risk reserve fund:

1. The Governor of the State Bank examines and handles losses that have sufficient legal evidence at the time of handling.

2. For losses handled using the risk reserve fund of the State Bank, units causing such losses must continue to take measures to recover them as they would for regular receivables not yet handled through the risk reserve fund, except for debts that have been written off by the Prime Minister's decision for credit institutions.

3. All funds recovered from losses previously handled using the risk reserve fund must be remitted to the State Bank (Accounting and Finance Department) to be recorded as income of the State Bank.

II. SPECIFIC PROVISIONS

Article 7. Annually, the Accounting and Finance Department shall calculate, allocate, and record in the account "Establishment of Risk Reserve Fund" to create a source for handling losses in accordance with the regulations.

Article 8 - The risk reserve fund shall be used to address losses in the following cases:

Clause 1 - Losses prior to the effective date of the Law on the State Bank, including:

- Write-off of debts owed by enterprises that have been dissolved, declared bankrupt, or are unable to recover debts from the State Bank.

- Payments made on behalf of guarantees and re-guarantees for credit institutions and foreign borrowing enterprises that have been dissolved, declared bankrupt, or are unable to recover debts.

- Debts owed by customers (organizations or individuals) involved in embezzlement or abuse with evidence showing they are unable to repay.

Clause 2 - Debts written off according to the Prime Minister's Decision but not compensated by the Government for the State Bank.

Clause 3 - Write-off of debts owed by credit institutions that have been declared bankrupt, dissolved, or are unable to recover debts from the State Bank.

Clause 4 - Losses due to objective reasons while performing settlement operations.

Clause 5 - Losses due to objective reasons in managing foreign exchange reserves, gold reserves, and foreign currency deposits at foreign banks caused by force majeure such as:

- War, terrorism, bankruptcy, or natural disasters in the country where the State Bank has deposited funds.

Clause 6 - Losses due to objective reasons in cash inspection and vault management, including:

- Cases where special goods are damaged during transportation due to destruction, natural disasters, or enemy attacks.

- Damage to the cash vault due to destruction, natural disasters, or enemy attacks.

Clause 7 - Other unrecoverable losses such as: Individuals or organizations required to compensate according to the conclusions of legal agencies or the Governor of the State Bank, but still unable to fully compensate after implementing the compensation decision.

Clause 8 - Other cases as decided by the Governor of the State Bank.

Article 9 - The Loss Handling Council of the State Bank consists of the following members:

- A Deputy Governor of the State Bank - Chairman of the Council

Members of the Council:

- Director of the Financial Settlement Department - Permanent Member.

- Director of the Credit Department.

- Director of the General Supervision Department.

- Chief Inspector of the State Bank.

- Director of the Issuance and Vault Operations Department.

- Director of the Legal Affairs Department.

- Director of the Organization and Training Department.

- Head of the unit where the loss occurred.

Article 10 - Tasks of the Loss Handling Council.

Immediately after the occurrence of losses requiring handling from the risk reserve fund, based on reports and recommendations from the Head of the unit where the loss occurred, the Loss Handling Council develops a plan to analyze and assess debts and losses.

- Submit to the Governor for review and send to the Ministry of Finance for comments and submit to the Prime Minister for items 1, 2, and 3 of Article 8 of this Regulation.

- Submit to the Governor for handling for items 4, 5, 6, 7, and 8 of Article 8 of this Regulation.

- Inspect the implementation of loss handling after the competent authority has issued a decision.

Article 11 - Legal documents serving as the basis for loss handling.

Legal documents serving as the basis for loss handling at the State Bank must ensure legality, including:

Clause 1 - For cases specified in Clauses 1, 2, and 3 of Article 8 of this Regulation, the following documents must be included:

- Decision of the Prime Minister regarding the write-off of specific debts and borrowers.

- Copy of documents resolving debts and asset distribution plans for insolvent or dissolved credit institutions.

- Copy of the decision declaring bankruptcy or dissolution by the competent authority as stipulated by law.

- Summary table of debts written off along with the file and opinions of the competent authority confirming objective reasons for non-payment.

- Petition and minutes of the Loss Handling Council.

Clause 2 - For cases specified in Clauses 4, 5, 6, 7, and 8 of Article 8 of this Regulation, the following documents must be included:

- Reports and recommendations from the unit where the loss occurred.

- Relevant files and documents related to losses due to objective reasons.

- Decisions of the competent authority assigning responsibility for compensation to individuals or groups accompanied by lists and amounts to be compensated for each individual or group.

- Petition and minutes of the Loss Handling Council.

Article 12 - Procedure for handling losses.

All cases of handling losses shall be carried out at the State Bank (Head Office) according to the following procedure:

- The heads of units where losses occur must coordinate with the Chairman of the Trade Union and direct relevant departments including the Head of the Accounting and Settlement Department, the Chief Inspector or inspector (where there is no Chief Inspector), the Head of the Organization and Administration Department, and the Head or department where the loss occurred to explain, examine, clarify, prepare minutes along with the files of the losses reported and recommended to the Loss Handling Council.

- The Loss Handling Council examines, proposes, and submits to the Governor for decision.

III. IMPLEMENTATION

Article 13 - Members of the Loss Handling Council of the State Bank are responsible to the Governor of the State Bank for organizing and implementing the handling of losses in accordance with the provisions of this Regulation.

Article 14 - The accounting treatment for handling losses shall be guided by the Director of the Accounting and Finance Department on how to use the risk reserve account to handle losses according to the decisions made by the Governor of the State Bank.

Article 15. Amendments and supplements to the provisions of this Regulation shall be decided by the Governor of the State Bank./.