Circular No. 20/2020/TT-BTC amends and supplements certain provisions of Circular No. 312/2016/TT-BTC dated November 24, 2016 of the Ministry of Finance on financial regulations for the Vietnam Deposit Insurance Corporation.

CIRCULAR

Amending and supplementing some articles of Circular No. 312/2016/TT-BTC dated November 24, 2016 of the Ministry of Finance on financial regulations for the Deposit Insurance Corporation of Vietnam
Pursuant to the Law on Credit Institutions dated June 16, 2010 and the Law Amending and Supplementing Certain Provisions of the Law on Credit Institutions dated November 20, 2017;
Pursuant to Decree No. 68/2013/NĐ-CP dated June 28, 2013 of the Government detailing and guiding the implementation of the Law on Deposit Insurance;

Pursuant to Decree No. 91/2015/NĐ-CP dated October 13, 2015 of the Government on State Capital Investment in Enterprises and Management and Use of Capital and Assets at Enterprises and Decree No. 32/2018/NĐ-CP dated March 8, 2018 of the Government amending and supplementing certain provisions of Decree No. 91/2015/NĐ-CP dated October 13, 2015 of the Government on State Capital Investment in Enterprises and Management and Use of Capital and Assets at Enterprises;

Based on the Deposit Insurance Law dated June 18, 2012;

Pursuant to the Law on Management and Use of State Capital for Investment in Production and Business at Enterprises dated November 26, 2014;

Pursuant to Decree No. 87/2015/NĐ-CP dated October 6, 2015 of the Government on Supervision of State Capital Investment in Enterprises; Financial Supervision, Evaluation of Operational Efficiency, and Public Disclosure of Financial Information of State-Owned Enterprises and Enterprises with State Capital;

On the basis of Decree No. 87/2017/NĐ-CP dated July 26, 2017 of the Government on the functions, tasks, powers, and organizational structure of the Ministry of Finance;

Implementing Decision No. 1394/QĐ-TTg dated August 13, 2013 of the Prime Minister on the establishment of the Deposit Insurance Corporation of Vietnam;

Implementing Decision No. 1395/QĐ-TTg dated August 13, 2013 of the Prime Minister on approving the charter regarding organization and operation of the Deposit Insurance Corporation of Vietnam;

Implementing Decision No. 527/QĐ-TTg dated April 1, 2016 of the Prime Minister on amending and supplementing certain provisions of the Charter regarding organization and operation of the Deposit Insurance Corporation of Vietnam issued together with Decision No. 1395/QĐ-TTg dated August 13, 2013 of the Prime Minister;

The Minister of Finance issues this Circular amending and supplementing some articles of Circular No. 312/2016/TT-BTC dated November 24, 2016 of the Ministry of Finance on financial regulations for the Deposit Insurance Corporation of Vietnam.

Article 1. Amending and supplementing some articles of Circular No. 312/2016/TT-BTC dated November 24, 2016 of the Ministry of Finance on financial regulations for the Deposit Insurance Corporation of Vietnam

At the proposal of the Director of the Department of Financial Affairs of Banks and Financial Institutions,

"e) Income from special loans to credit institutions under special control. The Deposit Insurance Corporation of Vietnam shall separately track this income in the business reserve fund."

2. Amending and supplementing Clause 4 and Clause 5 of Article 5 as follows:

1. Supplement Point e of Clause 2, Article 4 as follows:

"4. The Deposit Insurance Corporation of Vietnam may use operating capital to purchase government bonds, long-term bonds of credit institutions supported according to the decision of the State Bank of Vietnam, purchase central bank bills of the State Bank of Vietnam, and deposit money at the State Bank of Vietnam. The business reserve fund may be used for: Paying insurance money to depositors according to the law on deposit insurance. In case the business reserve fund is insufficient to pay insurance money to depositors, the Deposit Insurance Corporation of Vietnam may: Accept support or borrow from credit institutions according to the Law on Deposit Insurance and other relevant legal documents. Sell government bonds, long-term bonds of credit institutions supported, central bank bills of the State Bank of Vietnam. The difference between the selling price and the cost price (positive or negative difference after risk reserve has been processed according to regulations) of government bonds, long-term bonds of credit institutions supported, central bank bills of the State Bank of Vietnam shall be recorded in the business reserve fund. Provide special loans to credit institutions under special control according to the law. The use of the business reserve fund to provide special loans to credit institutions under special control must ensure that it does not affect the ability to pay deposit insurance to depositors. The Deposit Insurance Corporation of Vietnam must closely monitor the loan amount, urge debt recovery to minimize the risk of capital loss. Compensate for unrecoverable losses from special loans to credit institutions under special control according to Article 7a of this Circular."

3. Amending and supplementing Point a and Point b of Clause 2 of Article 6 as follows:

"a) Annually, the Deposit Insurance Corporation of Vietnam shall build the level of extraction from operating investment income to record as revenue and submit to the Ministry of Finance before January 15 of the planning year, along with the plan for using capital, expected revenue, expenses, and other related documents.

b) Within 60 days from receiving all documents, the Ministry of Finance shall lead and coordinate with the State Bank of Vietnam to determine the specific amount to be extracted for the planning year for the Deposit Insurance Corporation of Vietnam. The amount to be extracted shall be determined according to the principle of ensuring that the Deposit Insurance Corporation of Vietnam can cover operational costs and establish reserves as prescribed."

4. Amending and supplementing Point c of Clause 2 of Article 7 as follows:

"c) Timely process the value of lost assets, uncollectible debts, and establish risk reserves according to Point 1.9 of Clause 1 of Article 19 of this Circular."

5. Amending and supplementing Point b of Clause 4 of Article 7 as follows:

"b) The business reserve fund of the Deposit Insurance Corporation of Vietnam decreases due to payment of insurance money to depositors at participating institutions; used to compensate for losses from special loans to credit institutions under special control."

6. Supplementing Point d and Point đ of Clause 4 of Article 7 as follows:

"d) Using operating capital to purchase long-term bonds of credit institutions supported according to regulations affecting annual income of the Deposit Insurance Corporation of Vietnam. đ) Selling government bonds, selling long-term bonds of credit institutions supported, selling central bank bills of the State Bank of Vietnam to pay insurance for depositors when the business reserve fund is insufficient to pay deposit insurance."

7. Supplementing Article 7a as follows:

"d) Using operating capital to purchase long-term bonds of credit institutions supporting according to regulations affecting the income of the Deposit Insurance Corporation of Vietnam in the year. đ) Selling government bonds, selling long-term bonds of credit institutions supporting, selling central bank bills of the State Bank of Vietnam to pay insurance to depositors when the business reserve fund is insufficient to cover deposit insurance payments."

7. Supplement Article 7a as follows:

"Article 7a. Handling losses in the case of special loans to credit institutions under special control The Vietnam Deposit Insurance Corporation shall use the balance of income from special loans to credit institutions under special control, which is separately tracked in the business reserve fund as stipulated in Point e, Clause 2, Article 4 of this Circular, to offset unrecoverable losses from such special loans. In cases where the balance of income from special loans is insufficient to cover the losses, the Vietnam Deposit Insurance Corporation shall report to the State Bank of Vietnam for consideration and decision on using the business reserve fund to offset the losses in accordance with the law. The Vietnam Deposit Insurance Corporation shall not establish provisions for doubtful debts related to special loans."

8. Amend and supplement Point 1.9, Clause 1, Article 19 as follows:

"1.9. Expense for risk provisions (including expense for provisions for long-term bonds of credit institutions providing support) shall be implemented in accordance with the legal regulations on establishing and handling provisions for inventory write-downs, investment losses, non-performing receivables, and product, goods, service, and construction project warranties at enterprises."

9. Amend and supplement Point 1.10, Clause 1, Article 19 as follows:

"g) Expense for remaining asset losses (including long-term bond losses of credit institutions providing support) after being offset by risk provisions and other sources (if any) as prescribed."

10. Amend and supplement Clause 3 of Article 21 as follows:

"3. The assessment of operational effectiveness and classification of enterprises shall serve as the basis for the Vietnam Deposit Insurance Corporation to establish reward and welfare funds, and management bonus funds in accordance with the legal regulations applicable to state-owned joint-stock companies with 100% state capital."

11. Amend and supplement Clause 2 and Clause 3 of Article 24 as follows:

"2. The State Bank of Vietnam shall take the lead and coordinate with the Ministry of Finance to review financial plans. Based on the comments from the Ministry of Finance, the State Bank of Vietnam shall assign financial plan indicators and operational effectiveness evaluation indicators to the Vietnam Deposit Insurance Corporation before April 30 of the planning year and shall be responsible for its decisions. Financial plan indicators include: Total income minus total expenses excluding salaries; Travel expenses for staff traveling abroad; Research and development expenses; Training and staff development expenses; Expenses for hiring domestic and foreign experts. During the implementation of the financial plan, if the assigned financial indicators cannot be met, the Vietnam Deposit Insurance Corporation must submit a written request for adjustment to the State Bank of Vietnam and can only implement it after receiving written approval from the State Bank of Vietnam (after obtaining comments from the Ministry of Finance). The State Bank of Vietnam shall be responsible for adjusting the financial plan of the Vietnam Deposit Insurance Corporation. Operational effectiveness evaluation indicators for the Vietnam Deposit Insurance Corporation shall be implemented in accordance with Decree No. 87/2015/ND-CP dated October 6, 2015 of the Government on supervising state capital investment in enterprises; financial statements, operational effectiveness evaluations, and public disclosure of enterprise information; and any subsequent amendments, supplements, replacements, or guiding documents (if any). These evaluation indicators shall not be adjusted throughout the implementation period (except for major force majeure cases). Based on the assigned financial indicators under Point a, Clause 2 of this Article, the Board of Directors of the Vietnam Deposit Insurance Corporation shall approve detailed financial plans for implementation."

12. Supplement Clause 4 of Article 25 as follows:

"4. Reporting method: The Vietnam Deposit Insurance Corporation shall submit reports in paper form and send them to the Ministry of Finance and the State Bank of Vietnam through one of the following methods: Direct submission; Submission via postal service."

13. Supplement Article 25a as follows:

"Article 25a. Disclosure of Enterprise Information The Vietnam Deposit Insurance Corporation shall disclose information in accordance with the legal regulations on deposit insurance and the legal regulations on the disclosure of information of state-owned enterprises."

14. Amend and supplement Clause 3 of Article 29 as follows:

"3. Based on the provisions of this Circular and relevant laws, within 120 days from the date of issuance of this Circular, the Board of Management of the Vietnam Deposit Insurance Corporation must issue internal financial regulations as a basis for implementation and submit one copy to the State Bank of Vietnam for monitoring and supervision."

Article 2. Implementation clause

1. This Circular takes effect from May 20, 2020.

2. Any difficulties encountered during implementation should be reported to the Ministry of Finance for study, consideration, and resolution./.