Circular No. 24/2005/TT-BTC guiding the implementation of financial management regulations for the Social Policy Bank issued together with Decision No. 180/2002/QĐ-TTg dated December 19, 2002 of the Prime Minister.

CIRCULAR

Guidelines for Implementing the Financial Management Regulation for the Social Policy Bank issued together with Decision No. 180/2002/QĐ-TTg dated December 19, 2002

issued together with Decision No. 180/2002/QĐ-TTg dated December 19, 2002

of the Prime Minister

 

Pursuant to Decree No. 78/2002/NĐ-CP dated October 4, 2002 of the Government on credit for the poor and other policy beneficiaries;

 

Pursuant to Decree No. 77/2003/NĐ-CP dated July 1, 2003 of the Government stipulating functions, tasks, powers, and organizational structure of the Ministry of Finance;

Pursuant to Decision No. 180/2002/QĐ-TTg dated December 19, 2002 of the Prime Minister on the issuance of the Financial Management Regulation for the Social Policy Bank;

To facilitate the operations of the Social Policy Bank, the Ministry of Finance provides guidelines for implementing specific contents as follows:

PART I

GENERAL PROVISIONS

1. The subject of this Circular is the Social Policy Bank established pursuant to Decision No. 131/2002/QĐ-TTg dated October 4, 2002 of the Prime Minister.

2. The Social Policy Bank is a state-owned credit institution operating without profit-making objectives; it is a legal entity with charter capital, balance sheet, seal, and bank accounts at the State Bank, National Treasury, and other credit organizations in Vietnam.

The financial activities of the Social Policy Bank shall be carried out in accordance with the provisions of Decree No. 78/2002/NĐ-CP dated October 4, 2002 of the Government on credit for the poor and other policy beneficiaries, Decision No. 180/2002/QĐ-TTg dated December 19, 2002 of the Prime Minister on the issuance of the Financial Management Regulation for the Social Policy Bank, detailed guidance provided in this Circular, and other relevant financial management regulations.

The Social Policy Bank is a centralized accounting unit within the entire system, responsible for its activities under the law; it implements the preservation and development of capital; compensates for costs and operational risks. The Social Policy Bank is not required to participate in deposit insurance, has a reserve requirement ratio of 0% (zero percent), is exempt from taxes, and other payments to the state budget.

3. The Chairman of the Board of Directors and General Director of the Social Policy Bank are responsible under the law and before state management agencies for compliance with the financial regime of the Social Policy Bank.

Chapter II

SPECIFIC PROVISIONS

I. PROVISIONS ON CAPITAL AND FUNDS

1. Capital and funds:

a) Charter capital is VND 5,000,000,000,000 (five trillion dong) provided by the state budget upon establishment.

The Minister of Finance is the person who allocates capital to the Social Policy Bank. The Chairman of the Board of Directors and the General Director of the Social Policy Bank are the persons who sign to receive capital allocated by the state budget.

b) Supplementary capital reserves, investment and development fund, financial contingency fund, credit risk reserve fund, unemployment assistance fund, reward fund, welfare fund.

c) State budget capital (including central budget and local budget) for lending to eliminate poverty, create employment, and implement other social policies.

d) Unallocated surplus from revenue and expenditure differences (if any).

đ) Non-repayable funding from domestic and foreign organizations and individuals.

e) Other capital (if any).

2. Raised capital:

2.1. Principles of capital mobilization

- Annually, the Social Policy Bank bases on the national program plan for credit to eliminate poverty and create employment to plan capital mobilization sources and report to the Ministry of Finance for review and approval.

- Mobilizing domestic capital at market interest rates for lending to the poor and policy beneficiaries must ensure that such mobilization only occurs after maximizing the use of non-interest-bearing or low-interest capital sources. The interest rate for capital mobilization by the Social Policy Bank shall be implemented according to the following principles:

+ In case the Social Policy Bank issues bonds, deposit certificates, and other securities to mobilize capital, the issue interest rate shall be implemented within the framework set by the Ministry of Finance.

+ In case the Social Policy Bank borrows from Postal Savings and Social Insurance, the borrowing interest rate shall be determined by the Ministry of Finance.

+ In case the Social Policy Bank mobilizes capital through receiving deposits from domestic organizations and individuals; savings from the poor; borrowing from domestic financial institutions and credit organizations, the interest rate for capital mobilization shall not exceed the prevailing deposit interest rate of state commercial banks in the same area and period.

+ In case the Social Policy Bank receives deposits from state credit organizations according to Clause 2, Article 8 of Decree No. 78/2002/NĐ-CP dated October 4, 2002 of the Government, the interest rate for capital mobilization shall not exceed the rate specified in Circular No. 04/2003/TT-NHNN dated February 24, 2003 of the State Bank of Vietnam.

+ In case the Social Policy Bank borrows from foreign financial institutions and credit organizations, it must comply strictly with the provisions of the Law on Credit Institutions and current laws. The interest rate for capital mobilization must be approved in writing by the Ministry of Finance.

2.2. Forms of capital mobilization

a) Mobilizing interest-bearing deposits within the annual approved plan; voluntary interest-free deposits from domestic and foreign organizations and individuals; savings from the poor.

b) ODA capital assigned by the Government.

c) Issuing bonds, deposit certificates, and other securities in accordance with the law.

d) Receiving deposits from state credit organizations.

đ) Borrowing from Postal Savings and Social Insurance of Vietnam.

e) Borrowing from the State Bank of Vietnam.

g) Borrowing from domestic and foreign financial and credit organizations.

3. Entrusted capital from domestic and foreign organizations and individuals.

4. Other capital.

II. MANAGEMENT OF CAPITAL AND ASSETS

1. The Social Policy Bank is responsible for monitoring all existing capital and assets, conducting accounting and statistical records in accordance with current regulations; accurately and promptly reflecting the situation of capital and asset usage and changes during operations, clearly defining responsibilities of each department and individual in cases of damage or loss of assets.

2. The Social Policy Bank is permitted to use operating capital to provide loans to poor households and other policy targets as prescribed by law, ensuring safety and capital development.

- Construction, procurement of fixed assets and other assets by the Social Policy Bank shall be carried out according to the standards set by the State for administrative and public service agencies and in accordance with plans approved by the Board of Directors. The Social Policy Bank may invest and procure fixed assets according to the principle that the remaining value of fixed assets does not exceed 15% of its actual paid-in capital and must comply fully with the State's regulations on investment management and construction. The provision of automobiles for work purposes, installation of landline telephones at private residences, and provision of mobile phones for staff within the Social Policy Bank system shall be conducted in accordance with the provisions of the law.

- The Social Policy Bank shall depreciate fixed assets over their average period of use as defined by the State for state-owned enterprises.

3. The Social Policy Bank has the right to change its capital structure and assets within the entire system to carry out its activities in accordance with the law.

4. The Social Policy Bank implements measures to ensure capital safety during operations as stipulated in Article 9 of the Financial Management Regulation issued together with Decision No. 180/2002/QĐ-TTg dated December 19, 2002, by the Prime Minister, and other provisions regarding the assurance of capital safety during operations as prescribed by law.

5. All losses of capital, assets, and loan balances of the Social Policy Bank must be documented to determine the extent, cause, responsibility, and handling according to the following principles:

- If capital, assets, and loan balances suffer losses due to subjective reasons of a collective or individual, the party causing the loss must compensate according to the law. The Board of Directors of the Social Policy Bank decides on the amount of compensation and is responsible for its decision.

- For insured assets, they shall be handled according to the insurance contract.

- For objective risks associated with loan balances, the Social Policy Bank uses the credit risk reserve fund to offset or handle risks according to the Prime Minister's decision.

- The value of losses after recovery and offsetting with the above sources, if insufficient, shall be offset by the financial reserve fund of the Social Policy Bank. In cases where the financial reserve fund is insufficient to cover the losses, the Chairman of the Board of Directors of the Social Policy Bank reports to the Minister of Finance for consideration and decision.

6. Inventory and Revaluation of Assets

6.1. The Social Policy Bank conducts inventory and revaluation of assets in the following situations:

- Conducting asset inventory periodically and at the end of the fiscal year.

- Conducting inventory and revaluation of assets according to the decision of the competent state authority.

- Liquidation and Sale of Assets

6.2. The inventory and revaluation of assets must comply with current regulations applicable to state-owned enterprises. The results of the Social Policy Bank's asset inventory and revaluation must be submitted to the Ministry of Finance. In cases where the results of the inventory and revaluation differ from the book values recorded in accounting records, the Social Policy Bank is responsible for clearly explaining the reasons and proposing measures for handling, reporting to the Ministry of Finance for consideration and decision.

7. The Social Policy Bank has the right to lease assets under its management according to the principles of efficiency, preservation, and development of capital as stipulated by the Civil Code and other laws. The leasing of office space is decided by the Board of Directors based on the proposal of the General Director of the Social Policy Bank.

8. The Social Policy Bank can liquidate and sell assets that are obsolete, deteriorated, irreparable, technologically outdated, or unused or inefficiently used.

- When selling or liquidating assets, the Social Policy Bank must establish a committee to assess the technical condition and appraise the value of the assets or hire an appraisal. Assets that the law requires to be sold through public auction when sold or liquidated, the Social Policy Bank must organize a public auction and announce publicly in accordance with the law. If the liquidation is in the form of dismantling or destruction, a liquidation committee must be organized, decided by the General Director of the Social Policy Bank.

- The difference between the proceeds from the sale or liquidation of assets and the remaining value of the assets being sold or liquidated and the costs of sale or liquidation shall be accounted for in the results of the Social Policy Bank's operations as stipulated in Section V Chapter II of this Circular.

9. For assets leased, pledged, mortgaged, or held in custody by customers, the Social Policy Bank is responsible for managing, preserving, or using them in accordance with agreements with customers and in compliance with the law.

III. ESTABLISHING RESERVE FUNDS FOR RISK AND HANDLING RISKS

1. The Social Policy Bank is allowed to account for foreign currency exchange risk reserves for foreign currency funds raised for lending to poor households and policy targets as prescribed by the Government. The establishment of foreign currency exchange risk reserves can only be implemented when the average interbank transaction rate published by the State Bank of Vietnam (SBV) at the time of establishing the foreign currency exchange risk reserve is higher than the rate currently recorded in the Social Policy Bank's accounting books.

 

Amount to be Set Aside Establish Reserve Foreign Exchange Risk

=

Original Balance of Foreign Currency foreign

x

Exchange Rate Published by SBV

-

Current Recorded in Accounting Books

 

 

 

Amount to be Set Aside Foreign Exchange Risk

=

Amount to be Set Aside Set Aside Foreign Exchange Risk

-

Existing Reserve Foreign Exchange Risk Balance

 

Time for setting aside provisions for foreign exchange risk: The setting aside of provisions for foreign exchange risk shall be carried out separately for each type of mobilized capital in each type of foreign currency and consolidated into a detailed list of provisions for foreign exchange risk as the basis for accounting operational costs of the Social Policy Bank. The setting aside of provisions for foreign exchange risk shall be conducted at the year-end closing date (December 31) to prepare the annual financial report.

In cases where the amount required to set aside for foreign exchange risk provisions exceeds the existing foreign exchange risk provisions, the Social Policy Bank shall set aside foreign exchange risk provisions according to the amount specified above.

In cases where the amount required to set aside for foreign exchange risk provisions is less than or equal to the current balance of foreign exchange risk provisions, the Social Policy Bank shall transfer the current balance of provisions to the following year for continued use.

The purpose of setting aside provisions for foreign exchange risk is to offset risks arising from fluctuations in foreign exchange rates on the market leading to increased costs for the Social Policy Bank when purchasing foreign currencies to repay foreign debts. The Social Policy Bank may use existing foreign exchange risk provisions to offset actual foreign exchange rate differences that occur when purchasing foreign currencies to repay foreign debts. In cases where the foreign exchange risk provisions are insufficient to cover the foreign exchange rate differences occurring in the year, the Chairman of the Board of Management of the Social Policy Bank shall report to the Minister of Finance for consideration and decision.

2. Credit Risk Reserve Fund

2.1. The Social Policy Bank is entitled to set aside a credit risk reserve fund to offset losses due to external causes arising during the process of lending to poor households and policy beneficiaries.

The credit risk reserve fund shall be used to offset risks due to external causes such as natural disasters, fires, epidemics, changes in state policies, or market price fluctuations... occurring individually and locally after using insurance compensation (if available).

2.2. The annual level of setting aside the credit risk reserve fund shall be calculated at 0.02% of the average annual loan balance.

The average annual loan balance shall be calculated based on the arithmetic mean of the monthly loan balances throughout the year as stipulated in Point 3, Section IV of this Circular.

2.3. The setting aside of the credit risk reserve fund shall be conducted on December 31 each year.

2.4. At the end of the year, if the credit risk reserve fund is not fully utilized, the remaining balance shall be transferred to the credit risk reserve fund of the following year. In cases where the credit risk reserve fund balance is insufficient to offset losses incurred in the year, the Chairman of the Board of Management of the Social Policy Bank shall report to the Minister of Finance for consideration and decision.

The Chairman of the Board of Management of the Social Policy Bank shall be responsible for establishing and implementing the use of the credit risk reserve fund to handle risks in the operations of the Social Policy Bank.

3. Handling risks arising from widespread external causes shall be carried out according to the Prime Minister's decision.

IV. INTEREST RATE DIFFERENTIAL SUBSIDY AND MANAGEMENT FEE

1. Scope and principles for subsidizing interest rate differentials and management fees for the Social Policy Bank:

- The State budget shall only subsidize interest rate differentials and management fees for loans made to the target groups as prescribed in Decree No. 78/2002/NĐ-CP dated October 4, 2002 of the Government. The State budget shall not subsidize interest rate differentials and management fees for:

+ Loan balances that are not extended to the correct target groups

+ Programs entrusted to the Social Policy Bank by organizations and individuals both within and outside the country

+ Loan balances that have been exempted, written off, or otherwise handled by the Government with corresponding sources of resolution for the Social Policy Bank.

- The level of subsidy for interest rate differentials shall be determined based on the difference between the interest rates of the funds mobilized, including those without interest payments, and the average lending interest rate.

- The subsidy shall be implemented through temporary quarterly allocations according to plans and adjusted according to the implementation of previous quarters within the annual State budget allocation for this purpose; the official annual subsidy amount will be determined after the end of the fiscal year.

- The Social Policy Bank shall be responsible for preparing plans to request subsidies for interest rate differentials and management fees and report to the Ministry of Finance and the Ministry of Planning and Investment in accordance with the provisions of this Circular.

2. Building plans for interest rate differential subsidies and management fees.

- Based on the national program to eliminate poverty, reduce poverty, and create jobs, the Social Policy Bank shall build plans for interest rate differential subsidies and management fees for the planning year and submit them to the Ministry of Finance and the Ministry of Planning and Investment during the time of building the annual State budget revenue and expenditure plan in accordance with the State Budget Law and related guiding documents.

- The construction of plans for interest rate differential subsidies and management fees for the planning year of the Social Policy Bank shall be carried out according to the formulas stipulated below in Point 3.

- Based on the Social Policy Bank's plan for interest rate differential subsidies and management fees, taking into account the national program to eliminate poverty and create jobs and the State budget balancing capacity, the Ministry of Finance shall determine the planned subsidy amount for interest rate differentials and management fees and notify the Social Policy Bank.

- Based on the annual interest rate differential subsidy and management fee targets announced by the Ministry of Finance, the Social Policy Bank shall be responsible for preparing and reporting to the Ministry of Finance a quarterly temporary subsidy plan as the basis for implementing the subsidy.

3. Determining the actual amount of interest rate differential subsidies and management fees.

The Social Policy Bank shall determine the actual amount of interest rate differential subsidies and management fees according to the following formulas.

Amount of subsidy = actual interest rate differential plus (+) the management fee level enjoyed by the Social Policy Bank. The management fee level enjoyed by the Social Policy Bank in 2005 was 0.55% per month on the average loan balance. The management fee level enjoyed by the Social Policy Bank in subsequent years shall be announced by the Ministry of Finance.

 

Interest rate differential interest rate

=

Loan Balance the actual shortest distance of each position receiving the allocation.

x

Interest rate the actual shortest distance of each position receiving the allocation. sources of capital

-

Interest rate the actual shortest distance of each position receiving the allocation. loans

 

Where:

a) Average loan balance is the total average loan balance for the target group, determined according to the following formula:

 

Loan Balance quarterly average

=

Total end-of-month loan balances of all months in the quarter -------------------------------------------------------- 3

 

 

 

Loan Balance annual average

=

End-of-month loan balance of January + ... + End-of-month loan balance of December -------------------------------------------------------- 12

 

b) Average interest rate on sources of capital

 

Average interest rate sources of capital

=

Total interest payable for raising sources of capital -------------------------------------------------------- Average source of capital balance

 

- The total interest payable for raising capital is the amount of interest payable for raising all sources of capital of the Social Policy Bank from all months in the quarter, year.

 

Source of capital balance quarterly average

=

Total end-of-month source of capital balances of all months in the quarter --------------------------------------------------------------------- 3

 

 

Source of capital balance annual average

=

End-of-month source of capital balance of January + ... + End-of-month source of capital balance of December -------------------------------------------------------------- 12

 

- The average source of capital balance of the Social Policy Bank is calculated for all non-interest-bearing capital, interest-bearing capital, and capital received for deposit to provide payment services. When calculating the average source of capital balance, the Social Policy Bank may exclude:

+ Actual capital actually used for investment and purchase of fixed assets (original value of fixed assets minus depreciation)

+ Capital entrusted from organizations and individuals both domestically and internationally, and state capital transferred to write off debts for customers according to the Prime Minister's decision.

+ Cash reserves and deposits at other Credit Institutions to ensure liquidity and payment capacity in actual amounts but not exceeding 7% of the average capital used for lending. In cases where cash reserves and deposits at other Credit Institutions exceed 7% of the average capital used for lending, the Social Policy Bank shall only exclude 7% when calculating the average interest rate on sources of capital. (The capital used for lending is the total capital after deducting actual investment capital, entrusted capital, and state capital transferred for debt write-off)

c) Average lending interest rate

 

Interest Rate for Loans the actual shortest distance of each position receiving the allocation.

=

Total interest receivable on loans -------------------------------------- Average loan balance

 

- The total interest receivable on loans is calculated as 90% of the due interest receivable on on-time and overdue loans of the loan balance calculated monthly in the quarter, year, and interest receivable on deposits.

- The Social Policy Bank's loan balance for interest subsidy calculation is the actual loan balance not less than 93% of the capital used for lending. In cases where the actual loan balance is lower than 93% of the capital used for lending, the Social Policy Bank must calculate the interest receivable based on a loan balance equal to 93% of the capital.

d) For programs implemented by the Social Policy Bank under the Prime Minister's decision that stipulate management fee levels, the Social Policy Bank shall enjoy the fees as prescribed in these decisions.

4. Procedure for subsidizing interest rate differential and management costs.

4.1. Quarterly provisional subsidy.

- The quarterly provisional subsidy is carried out according to the principle:

+ Quarter I provisionally subsidizes 75% of Quarter I plan.

+ Quarter II provisionally subsidizes 75% of Quarter II plan ± adjustment for the first three months of the year.

+ Quarter III provisionally subsidizes 75% of Quarter III plan ± adjustment for the first six months of the year.

+ Quarter IV provisionally subsidizes 75% of Quarter IV plan ± adjustment for the first nine months of the year.

- On the 15th day of the first month of each quarter, based on consolidated data from branches of the Social Policy Bank, the Social Policy Bank prepares a quarterly subsidy plan with explanations and sends it to the Ministry of Finance.

- Based on the subsidy plan allocated in the State budget expenditure plan; based on the Social Policy Bank's quarterly subsidy plan, on the 25th day of the first month of each quarter, the Ministry of Finance provisionally subsidizes the Social Policy Bank according to regulations.

- Adjust quarterly subsidy amount

+ On the 15th day of the first month of the next quarter, based on consolidated data from branches, the Social Policy Bank calculates the actual quarterly subsidy amount, the difference with the previously provisionally subsidized amount, along with explanations and sends them to the Ministry of Finance.

+ Based on the allocation plan in the State budget expenditure forecast, based on the Social Policy Bank's subsidy request, the Ministry of Finance determines the actual quarterly subsidy amount:

a) If the actual quarterly subsidy amount is higher than the previously provisionally subsidized amount, the Ministry of Finance will supplement the shortfall together with the next quarter's provisional subsidy.

b) If the actual quarterly subsidy amount is lower than the previously provisionally subsidized amount, the Ministry of Finance will deduct the excess amount from the next quarter's provisional subsidy.

4.2. Annual adjustment of subsidy amount based on final settlement.

- At the end of the fiscal year, based on officially approved settlement data by the Board of Directors, the Social Policy Bank recalculates the full-year subsidy amount with explanations and sends them to the Ministry of Finance and the Ministry of Planning and Investment.

- Based on the full-year subsidy allocation plan in the State budget; based on settlement data and actual operational conditions of the Social Policy Bank during the year, the Ministry of Finance re-determines the official full-year subsidy amount for the Social Policy Bank and implements adjustments. Specifically, the management fee to be enjoyed will be determined based on the actual average loan balance and the corresponding management fee ratio approved by the Ministry of Finance in the notice of the subsidy differential interest rate budget plan.

The adjustment of the subsidy amount based on final settlement is carried out as follows:

+ If the officially approved full-year subsidy amount is higher than the provisional subsidy amount during the year (quarterly), the Ministry of Finance will supplement the shortfall within the scope of the announced plan. Any excess between the officially approved full-year subsidy amount and the announced plan (if any) will be allocated in the next year's subsidy plan.

+ If the officially approved full-year subsidy amount is lower than the provisional subsidy amount during the year (quarterly), the excess will be retained to subsidize Quarter I of the following year (in case the following year still incurs subsidies); or must be returned to the State budget (in case the following year does not incur subsidies).

V. MANAGEMENT OF INCOME AND EXPENSES

1. Income of the Social Policy Bank includes all actual receipts generated from business operations and other activities, including:

1.1. Income from business operations:

- Interest income from loans to poor households and policy beneficiaries

- Receiving interest on deposits of the Social Policy Bank at the State Bank, the State Treasury, and commercial banks;

- Receiving fees for handling entrusted loans according to the entrustment contracts;

- Receiving subsidies for interest rate differences and management fees provided by the State Budget;

- Receiving from payment services and cash reserves;

- Receiving from other business operations and services;

1.2. Income from other activities:

- Proceeds from liquidation and sale of assets of the Social Policy Bank (after deducting residual value and liquidation and sale expenses);

- Proceeds from debts resolved from the risk reserve fund, resolved according to the Prime Minister's decision;

- Other income.

2. Expenses of the Social Policy Bank are reasonable costs during the period, including:

2.1. Operational activity expenses:

- Interest expense on funds raised;

- Payment service and cash reserve expenses including expenses for payment services; postal and telecommunications charges; transportation and handling of money; counting, sorting, and packaging of money; security of money and other expenses related to payment services and cash reserves.

- Fees paid for services to organizations implementing entrusted lending to the poor and policy targets;

+ Fees paid for entrusted services to political-social organizations according to agreed rates between the Social Policy Bank and political-social organizations, with the expenditure not exceeding 0.1%/month based on the outstanding loan balance that earns interest;

+ Commission fees for borrowers not exceeding 0.1%/month based on the outstanding loan balance that earns interest;

- Expenses for participating in the money market;

- Other operational activity expenses.

2.2. Taxes, fees, and levies paid according to regulations.

2.3. Risk reserve provisions for exchange rate risks and credit risk reserve funds;

2.4. Expenses for staff of the Social Policy Bank

- Salaries and allowances for staff according to the regime decided by the Prime Minister;

- Contributions to social insurance, health insurance, and trade union fees according to state regulations;

- Midday meal expenses: the expense per person must not exceed the minimum wage stipulated by the State for workers and staff;

- Uniform expenses, with maximum expenditure not exceeding 500,000 VND/person/year;

- Protective equipment expenses for individuals required to be equipped with protective gear according to regulations;

- Allowances for members of the part-time Management Board Central Committee according to legal provisions;

- Allowances for members of the Advisory Board of the Management Board, members concurrently serving on the Supervisory Board, and members of the Management Board at various levels, with monthly allowance for each member being 0.2 times the basic salary prescribed by the state for civil servants;

- Remuneration for village and ward cadres at a rate of 80,000 VND/village/ward/month;

- Severance pay for employees implemented according to Decree No. 198/CP dated December 31, 1994 of the Government detailing and guiding the implementation of certain provisions of the Labor Code and current state documents;

- Expenses for female workers according to the prescribed regime;

- Provisions for unemployment assistance fund equal to 1% of the payroll basis for social insurance contributions of the Bank;

2.5. Expenses related to the assets of the Social Policy Bank

- Depreciation expenses for fixed assets according to the current management, use, and depreciation rules for enterprises;

- Repair expenses for fixed assets aimed at restoring the capacity of the asset, recorded directly or allocated gradually to operating expenses in the year. For special fixed assets where repair expenses occur unevenly between periods and years, if the Social Policy Bank wants to pre-record repair expenses into operating expenses, it must prepare a plan for pre-recording repair expenses and report to the Ministry of Finance for consideration and decision. The Social Policy Bank must settle actual repair expenses with pre-recorded repair expenses; if actual repair expenses exceed the pre-recorded amount, the difference is recorded directly or allocated gradually to expenses in the period; if actual repair expenses are less than the pre-recorded amount, the difference is recorded as income in the period;

- Rental expenses for assets recorded as operating expenses based on actual payments in the year according to the asset rental contract; in cases where rental payments are made in advance for multiple years, rental expenses are allocated gradually to operating expenses over the years of asset usage;

- Repair, renovation, and upgrade expenses for rented or borrowed headquarters of the Social Policy Bank, with a maximum expenditure not exceeding 5% of the average original cost of fixed assets in the year;

- Purchase expenses for labor tools of the Social Policy Bank, with an average expenditure not exceeding 4.4 million VND/person/year. The average number of employees in the year is calculated based on the arithmetic mean of the number of employees in all months of the year;

- Insurance expenses for assets that must be insured according to the law, based on the asset insurance contract signed with the insurance agency;

2.6. Expenses for management and public service activities:

These expenses are implemented according to the principle:

- The level of expenditure for each type of expenditure is carried out according to the state-regulated regime;

- The total annual management and public service expenditure of the Social Policy Bank, calculated per average employee of the Social Policy Bank in a year, shall not exceed 21 million VND/person/year;

- Expenses for management and public service activities include:

+ Expenses for purchasing office materials and printing paper including expenses for purchasing office supplies, printing paper, stationery, fuel, and other materials;

+ Travel expenses for staff traveling domestically and internationally according to the current regulations of the Ministry of Finance for administrative and public service agencies. For monthly travel expense allocations for credit officers, the General Director of the Social Policy Bank shall consider and stipulate in accordance with the actual conditions of each locality but not exceeding twice the national standard;

+ Training and professional training expenses for staff of the Social Policy Bank. The expenditure level follows the state regulations for administrative and public service agencies.

+ Expenses for scientific research, technological innovation; initiatives and improvements aimed at enhancing the operational efficiency of the Social Policy Bank. Research topics and the budgeted research costs for each topic must be approved by the Board of Directors of the Social Policy Bank and they shall bear responsibility for the effectiveness of these research projects.

+ Postal and telephone expenses include expenditures on postal fees, telecommunications, telegrams, telephone calls, leased line rentals, telex, fax, etc., paid according to invoices from postal authorities. The expenditure for fixed-line telephone payments installed at private residences and mobile phone expenses for individuals equipped by the General Director of the Social Policy Bank shall be decided based on financial capacity and work requirements.

+ Expenses supporting activities of the Party and mass organizations of the Social Policy Bank as prescribed by the State (excluding expenses supporting trade unions at the sectoral, local, social organization, and other agency levels).

+ Expenses for purchasing materials, books, and newspapers.

+ Expenses for electricity, water, health care, and office sanitation.

+ Transaction, external relations, conference, reception, ceremonial, and other expenses must be directly linked to operational efficiency, not exceeding 7% of total expenses in 2005 and not more than 5% in subsequent years.

+ Expenses for inspection, audit, and auditing activities of the Social Policy Bank as regulated.

+ Expenses for fire prevention and firefighting activities within the bank as prescribed.

+ Expenses for environmental protection activities.

+ Other management expenses as prescribed.

2.7. Other Expenses

- Expenses for selling off and liquidating assets (including the residual value of fixed assets when sold off or transferred)

- Expenses for printing savings loan books, loan application files, and lists of poor households

- Other expenses incurred in actual practice and supported by reasonable documentation.

3. The Social Policy Bank shall not account for the following items as expenses:

- Losses that have been supported by the Government or compensated by insurance agencies or the party causing the loss;

- Penalties for administrative violations, environmental violations, overdue loans, and financial system violations due to subjective reasons;

- Investment construction, procurement, upgrading, and renovation expenses for fixed assets from investment construction funds;

- Expenses for repairing, maintaining, and equipping welfare facilities such as housing and rest houses for employees of the Social Policy Bank, and expenses for other welfare projects;

- Expenses for supporting localities, social organizations, and other agencies;

- Work-related expenses inside and outside the country exceeding the limits set by the State;

- Expenses covered by other funding sources.

VI. MANAGEMENT OF INCOME AND EXPENSE DIFFERENCES AND THE PURPOSES OF FUNDS

1. The handling of income and expense differences of the Social Policy Bank shall be carried out in accordance with Article 18 of Decision No. 180/2002/QĐ-TTg dated December 19, 2002 issued by the Prime Minister.

2. Purposes of Funds

2.1. The Additional Capital Reserve Fund is used to supplement the registered capital.

2.2. The Financial Reserve Fund is used to cover remaining losses and damages to capital, assets, and loan balances occurring during the operation of the Social Policy Bank after compensation from organizations, individuals responsible for the damage, and the use of risk reserve funds.

2.3. The Development Investment Fund is used to expand the scale of operations and modernize equipment and working conditions of the Social Policy Bank. Based on investment needs and fund availability, the Board of Directors of the Social Policy Bank decides on the form and methods of investment according to safety and efficiency principles.

2.4. The Unemployment Assistance Reserve Fund is used to pay unemployment benefits to employees of the Social Policy Bank who have worked there for at least one year and temporarily lost their jobs as prescribed by the State; training costs for employees due to changes in technology or new job assignments; vocational training for female employees of the Social Policy Bank; and professional development for employees of the Social Policy Bank. This fund is only used to assist employees who lose their jobs due to objective reasons such as surplus labor due to technological changes, organizational restructuring without alternative job assignments, or timely termination procedures.

2.5. The Reward Fund is used for:

- Year-end or regular bonuses for employees of the Social Policy Bank. The bonus amount is determined by the General Director based on the recommendation of the Chairman of the Social Policy Bank's Competition and Reward Council, based on productivity and achievements of each employee.

- Special bonuses for individuals or groups of the Social Policy Bank with technical innovations or process improvements that yield significant results. The bonus amount is determined by the General Director of the Social Policy Bank.

- Bonuses for individuals or units outside the Social Policy Bank that have good relationships and make effective contributions to the activities of the Social Policy Bank. The bonus amount is determined by the Chairman of the Board of Directors of the Social Policy Bank.

2.6. The Welfare Fund is used for:

- Investing in building or repairing welfare facilities of the Social Policy Bank, contributing capital to joint construction projects within the industry or with other units under agreed contracts.

- Expenses for sports, cultural, and public welfare activities for the collective of employees of the Social Policy Bank.

- Contributions to the Social Welfare Fund.

- Regular and emergency hardship assistance for employees of the Social Policy Bank.

- Other welfare activities.

The General Director of the Social Policy Bank will coordinate with the Trade Union Executive Committee to manage and utilize this fund.

VII. ACCOUNTING SYSTEM, STATISTICAL REPORTING, AUDITING, FINANCIAL REPORTING, AND PUBLIC DISCLOSURE

VII. ACCOUNTING REGIME, STATISTICAL RECORDING, AUDITING, REPORTING AND FINANCIAL DISCLOSURE

1. The Social Policy Bank shall implement accounting, auditing, and statistical systems in accordance with the provisions of the law, record all original vouchers fully, update accounting ledgers, and accurately, timely, truthfully, and objectively reflect all business activities.

2. The fiscal year of the Social Policy Bank begins on January 1 and ends on December 31 of the Gregorian calendar.

3. The Social Policy Bank is responsible for preparing and submitting to the Ministry of Finance financial plans including:

a) Capital sources and capital utilization plans.

b) Income and expense plans.

c) Interest rate differential subsidy and management fee plans from the State Budget (according to Form 01-KH).

The financial plan serves as the basis for the Social Policy Bank to organize and implement its operations during the year and must be approved by the Board of Directors of the Social Policy Bank and submitted to the Ministry of Finance.

4. The Social Policy Bank is responsible for preparing and submitting periodic quarterly, annual, and extraordinary financial reports to the Ministry of Finance as stipulated in this Circular.

a) Contents of the financial report include: (according to the form attached to this Circular)

- Level III account balance sheet (including off-balance sheet accounts)

- Summary of assets of the Social Policy Bank

- Report on income and expense implementation (according to Form 01-BC)

- Report on capital mobilization and utilization (according to Form 02-BC)

- Report on overdue debt situation of the Bank (according to Form 03-BC)

- Report on income situation of staff members (according to Form 04-BC)

- Report on provision establishment and utilization (according to Form 05-BC)

- Report on interest rate differential and management fee settlement for subsidy application (according to Form 06-BC)

b) The General Director of the Social Policy Bank is responsible for the accuracy and truthfulness of the financial reports.

5. Financial inspection and settlement.

- The annual financial settlement report is approved by the Chairman of the Board of Directors of the Social Policy Bank and submitted to the Ministry of Finance. The State Audit Agency conducts the audit and confirms the annual financial settlement report of the Social Policy Bank. The results of the audit of the Social Policy Bank's financial statements must be sent to the Ministry of Finance and the State Bank.

- The Social Policy Bank is responsible for the accuracy and truthfulness of the financial reports. The Ministry of Finance will conduct inspections on compliance with financial regulations and settlement of interest rate differential subsidies and management fees for the Social Policy Bank.

6. The Social Policy Bank implements internal audit systems and publicly discloses its annual financial performance in accordance with the Law on Credit Organizations and the scope and scale of its operations.

Chapter III

IMPLEMENTATION

- This Circular takes effect 15 days after its publication in the Official Gazette and replaces Circulars No. 56/2003/TT-BTC dated June 9, 2003, and Circular No. 72/2003/TT-BTC dated July 31, 2003, issued by the Ministry of Finance.

- Based on the guidelines set forth in this Circular, and in accordance with state financial regulations, the Social Policy Bank shall develop financial regulations applicable to its units, submit them for approval by the Board of Directors, and use them as a basis for implementation.

- During the implementation process, if there are any difficulties, they should be reported to the Ministry of Finance for consideration and resolution./.