Decree No. 46/2021/NĐ-CP on financial management systems and assessment of operational efficiency for the Vietnam Development Bank

Decree
On Financial Management Regime and Evaluation of Operational Efficiency for the Vietnam Development Bank

Pursuant to the Law on Organization of the Government dated June 19, 2015; the Law Amending and Supplementing Certain Provisions of the Law on Organization of the Government and the Law on Organization of Local Administration dated November 22, 2019;

Pursuant to the State Budget Law dated June 25, 2015;

Pursuant to the Law on State Capital Investment and Business Management dated November 26, 2014;

Pursuant to the Law on Credit Institutions dated June 16, 2010; the Law Amending and Supplementing Certain Articles of the Law on Credit Institutions dated November 20, 2017;

Pursuant to the Law on Public Investment dated September 13, 2019;

Pursuant to the Law on Enterprises dated June 17, 2020;

At the proposal of the Minister of Finance,

The Government issues this Decree on the financial management regime and evaluation of operational efficiency for the Vietnam Development Bank.

PART I
GENERAL PROVISIONS

Article 1. Scope of Regulation

This Decree stipulates the financial management regime and evaluation of operational efficiency for the Vietnam Development Bank (hereinafter referred to as the Vietnam Development Bank).

Article 2. Applicability

1. The Vietnam Development Bank.

2. The agency representing the state ownership interest at the Vietnam Development Bank.

3. Organizations and individuals related thereto.

Article 3. Explanation of Terms

In this Decree, the following terms are understood as follows:

1. "State investment credit and export credit" includes:

a) Loans made in accordance with the Government's regulations on state investment credit policy;

b) The outstanding balance of state export credit loans under contracts signed before the effective date of the Government's Decree No. 32/2017/NĐ-CP dated March 31, 2017 on state investment credit (hereinafter referred to as Decree No. 32/2017/NĐ-CP);

c) Loans made under programs and projects assigned by the Government and Prime Minister, which are subsidized by the state budget for interest rates and/or management fees;

d) Debts assumed by the Vietnam Development Bank from predecessor organizations.

2. "Compulsory guarantee debt" refers to debts that the Vietnam Development Bank must assume after performing its guarantee obligations for small and medium-sized enterprises borrowing from commercial banks pursuant to the Prime Minister's decision on the guarantee mechanism for small and medium-sized enterprises.

3. "Other debts" refer to loans made by the Vietnam Development Bank to refinance foreign government loans where the Vietnam Development Bank bears the credit risk, and other loans made by the Vietnam Development Bank at agreed interest rates, not subsidized by the state budget for interest rates and management fees.

Article 4. Principles of Financial Management

3. The Vietnam Development Bank may borrow rediscount funds from the State Bank of Vietnam in accordance with the law; it may participate in the interbank market, open market operations, internal settlement, provide payment services, and other banking services to customers, conduct foreign exchange activities; it may participate in the domestic and international payment systems in accordance with the law.

Article 5. Liability System

The Board of Directors, Supervisory Board, and General Director of the Development Bank shall be responsible under the law and before state management agencies for the management of the Development Bank's capital and assets to ensure their safekeeping, proper use for intended purposes, economy, efficiency, and compliance with the financial, accounting, and auditing systems of the Development Bank.

Chapter II

CAPITAL, FUNDS, AND ASSETS

1. Shareholders' equity:

Any change in the charter capital level shall be decided by the Prime Minister based on the Development Bank's proposal and the Ministry of Finance's opinion, ensuring consistency with the requirements, tasks, and capital safety ratio of the Development Bank during each period;

c) Funds: Additional capital reserve fund, development investment fund, financial contingency fund;

e) Non-repayable funding from domestic and foreign organizations;

g) Other capital belonging to the Development Bank.

2. Capital raised in accordance with the law, including:

a) Issuing government-guaranteed bonds;

d) Borrowing from the State Bank of Vietnam;

đ) Raising funds from other organizations both domestically and internationally;

e) Accepting entrusted deposits from organizations and individuals both domestically and internationally;

g) Mobilizing other sources of capital in accordance with the law.

3. Other capital includes:

a) State budget subsidies for interest rates to implement post-investment support contracts arising prior to the effective date of Decree No. 32/2017/NĐ-CP;

b) Foreign loans of the Government authorized by the Ministry of Finance to re-lend;

c) Entrusted capital from the Ministry of Finance, local authorities, local financial funds, domestic and foreign organizations (entrusting parties) to implement according to the request documents of the entrusting parties;

Article 7. Own Capital

Own capital is determined and calculated based on the figures in the individual financial statements, including:

1. Registered Capital.

2. Funds:

a) Additional capital reserve fund;

b) Development Investment Fund;

5. The Vietnam Development Bank must maintain a maximum ratio of outstanding loans to total capital available for lending of 95%."

3. Positive asset revaluation differences (including fixed assets, long-term investment contributions).

4. Accumulated positive income and expenditure differences not yet distributed.

5. Amounts to be deducted when determining own capital include:

a) Contributions to subsidiaries and associated companies as prescribed by law;

b) Accumulated negative income and expenditure differences;

c) Negative asset revaluation differences.

Article 8. Use of Capital and Assets

1. The Development Bank may use its operating capital for:

a) Implementing credit policies as prescribed by law;

c) Providing post-investment support as prescribed by law for contracts arising prior to the effective date of Decree No. 32/2017/NĐ-CP;

d) Fulfilling the obligation to guarantee credit for small and medium-sized enterprises borrowing from commercial banks as prescribed by law;

đ) Entrusting financial institutions to carry out certain activities of the Development Bank as prescribed by law;

e) Lending under delegation/trust, disbursing capital under delegation/trust; guaranteeing under delegation/trust;

g) Entrusting, accepting entrustment to provide financial and banking services to customers as prescribed by law;

k) Investing in basic construction and purchasing assets to serve the operations of the Development Bank as prescribed by this Decree;

l) Using idle capital to deposit at financial institutions, branches of foreign banks. The Development Bank selects financial institutions, branches of foreign banks to deposit money safely, without losing capital;

The Development Bank may proactively adjust its capital and asset structure within the system to serve its operations as stipulated in the Charter of Organization and Operation of the Development Bank.

The mobilization of capital and assets between units under and directly under the Development Bank shall be carried out in accordance with the Charter of Organization and Operation of the Development Bank.

Article 9. Safeguarding Capital Safety

The Development Bank shall be responsible for implementing regulations on safeguarding capital operation safety, including:

1. Managing, using capital and assets, distributing financial results, implementing financial management systems and accounting systems as prescribed in this Decree and relevant laws.

2. Purchasing insurance for assets in accordance with the provisions of the law.

3. Recording risk reserve provisions in operating expenses as prescribed in this Decree and relevant laws.

4. Repurchasing, exchanging securities issued by the Development Bank in accordance with the provisions of the law.

5. Handling asset losses in accordance with Article 14 of this Decree.

6. Implementing other measures to safeguard capital in accordance with the provisions of the law.

Article 10. Inventory, Revaluation, Liquidation, and Sale of Assets

1. Inventory of assets and handling inventory results:

a) The Development Bank conducts an inventory of assets when closing the books to prepare annual financial reports; when implementing decisions on division, separation, merger, consolidation, or conversion of legal form; after natural disasters, epidemics, or other causes leading to changes in the Development Bank's assets; according to the decision of the competent state agency;

b) The handling of inventory results at the Development Bank shall be carried out in accordance with current regulations applicable to limited liability companies wholly owned by the State.

2. Asset revaluation:

a) The Development Bank conducts revaluation of assets in accordance with the law applicable to limited liability companies wholly owned by the State;

b) The results of the revaluation of assets of the Development Bank shall be submitted to the competent state agency for decision on revaluation and concurrently sent to the Ministry of Finance.

3. Liquidation and Sale of Assets:

a) The Development Bank may liquidate or sell assets that are damaged beyond repair, technologically obsolete, unused, or not needed to recover capital on a public and transparent basis;

b) The authority, method, procedure, and formalities for the liquidation and sale of assets of the Development Bank shall be implemented in accordance with the law applicable to limited liability companies wholly owned by the State;

c) Revenue or expenses arising from the liquidation and sale of assets (including the residual value of liquidated or sold assets) shall be recorded as income or expenses of the Development Bank in accordance with the provisions.

Article 11. Depreciation of Fixed Assets

1. The Development Bank shall implement depreciation of fixed assets in accordance with the law applicable to limited liability companies wholly owned by the State.

2. The Development Bank may use the amount of depreciation of fixed assets for reinvestment to replace, modernize fixed assets, and other operational requirements in accordance with the law applicable to limited liability companies wholly owned by the State.

Article 12. Investment in Basic Construction and Purchase of Fixed Assets

1. Investment in basic construction and purchase of fixed assets serving the operations of the Development Bank shall comply with the provisions of the law applicable to limited liability companies wholly owned by the State and the annual plan approved by the Board of Directors. In cases where the investment project value exceeds the decision-making authority for limited liability companies wholly owned by the State, the Board of Directors shall report to the Ministry of Finance for submission to the Prime Minister for decision. Investment in basic construction from public investment funds (if any) shall be carried out in accordance with the Public Investment Law and related guiding documents.

Article 13. Leasing, Lending, Pledging, and Hypothecation of Assets

1. The Development Bank may lease, pledge, or hypothecate assets under its usage rights or ownership according to the laws applicable to state-owned joint stock companies with 100% state capital.

2. For assets leased by the Development Bank or received as pledges or collateral from customers, or held for safekeeping, the Development Bank shall manage, store, or utilize them in accordance with agreements with customers and in compliance with the law.

Article 14. Handling Asset Losses

When asset losses occur, the Development Bank shall determine the extent, cause, responsibility, and handle them according to the following principles:

1. If the loss is due to subjective reasons, the individuals or groups causing the loss must compensate for damages in accordance with the law. The Development Bank shall specify the compensation procedures and decide on the amount of compensation in compliance with the law; it shall be responsible for its decisions.

2. If the asset has been insured, it shall be handled according to the insurance contract.

3. Utilize provisions set aside in expenses to offset losses in accordance with the law.

4. The value of the loss after compensating with personal and collective compensation, insurance organization compensation, and using provisions set aside in expenses, if insufficient, shall be covered by the Financial Reserve Fund. In cases where the Financial Reserve Fund is insufficient, the shortfall shall be recorded as other operating expenses for the period.

Chapter III
CLASSIFICATION OF DEBTS, ESTABLISHING AND USING PROVISIONS FOR RISKS

1. The Development Bank shall classify debts in accordance with the guidelines of the State Bank of Vietnam.

2. Based on the debt classification results stipulated in Clause 1 of this Article, the Development Bank shall calculate and monitor the risk provisions required to be established (general and specific provisions) for each credit activity specified in Article 3 of this Decree; the establishment rate shall follow the guidelines of the State Bank of Vietnam for commercial banks.

The Development Bank shall include in annual operating costs the establishment of risk provisions for state investment credit, export credit, mandatory guarantee loans, and other loans that the Development Bank bears credit risks. The establishment shall be carried out as follows:

1. For risk provisions for state investment credit, export credit, and mandatory guarantee loans (hereinafter referred to as risk provisions for state investment credit, export credit, and mandatory guarantee loans): Annually, the Development Bank shall base on financial income and expenditure differences to decide on the establishment rate but not less than 0.75% of the total outstanding credit balance for investment, export, and mandatory guarantee loans, ensuring that the risk reserve fund balance does not exceed the total amount required to be established as stipulated in Clause 2 of Article 15 of this Decree.

2. For risk provisions for other loans:

a) For loans from the re-lending of foreign government loans:

For loans made under the Re-lending Mandate Agreement between the Ministry of Finance and the Development Bank signed after the Government's Decree No. 97/2018/ND-CP dated June 30, 2018, on re-lending ODA and concessional foreign loans of the Government took effect (hereinafter referred to as Decree No. 97/2018/ND-CP), the Development Bank shall establish and use risk provisions in accordance with Decree No. 97/2018/ND-CP and any subsequent amendments and supplements (if any);

For loans made under the Re-lending Mandate Agreement between the Ministry of Finance and the Development Bank signed before the effective date of Decree No. 97/2018/ND-CP, the Development Bank shall establish risk provisions in accordance with the Re-lending Mandate Agreement signed with the Ministry of Finance. In cases where the Re-lending Mandate Agreement does not specify risk provision establishment, the Development Bank shall establish risk provisions in accordance with point b of this clause;

b) For other remaining loans that the Development Bank bears credit risks: Annually, the Development Bank shall use the positive difference between loan interest income and funding costs for all such lending activities to establish risk provisions and ensure that the risk reserve fund balance for other loans does not exceed the amount required to be established as stipulated in Clause 2 of Article 15 of this Decree.

3. The establishment of risk provisions for credit shall be conducted quarterly. For the year-end accounting period, it shall be recorded at the time of settlement based on the debt classification results as of November 30 of the accounting year.

1. The risk reserve funds of the Development Bank include investment credit risk reserve funds, export credit risk reserve funds, mandatory guarantee loan risk reserve funds, and other loan risk reserve funds formed from the following sources:

a) Risk provisions established according to the provisions of Article 16 of this Decree;

b) Amounts recovered from principal loans that have been processed using risk reserve funds;

c) The difference between the selling price of on-balance-sheet loans after deducting related sale costs as prescribed by law, which is higher than the book value of the loan (principal, interest) as prescribed;

d) Transferring the balance of the risk reserve fund for investment credit lending, export credit lending, and guarantee risk reserve funds into the investment credit risk reserve fund, export credit risk reserve fund, and mandatory guarantee loan risk reserve fund; transferring the balance of the risk reserve fund for other lending activities into the other loan risk reserve fund at the time this Decree takes effect;

e) Other sources as prescribed by law.

2. The Development Bank shall manage and monitor each risk reserve fund separately and use them to handle risks according to the Credit Risk Management Regulations of the Development Bank issued by the Prime Minister.

a) The investment credit risk reserve fund, export credit risk reserve fund, and mandatory guarantee loan risk reserve fund are used to handle risks for investment credit loans, export credit loans, and mandatory guarantee loans as prescribed by law; the other loan risk reserve fund is used to handle risks for other loans as prescribed by law;

b) In cases where the balance of the investment credit risk reserve fund, export credit risk reserve fund, and mandatory guarantee loan risk reserve fund exceeds the required provision amount as prescribed, the Development Bank shall transfer the excess portion into income;

c) After recovering all outstanding debts, the balance of the other loan risk reserve fund can be transferred into the investment credit risk reserve fund, export credit risk reserve fund, and mandatory guarantee loan risk reserve fund; the excess portion can only be transferred into income when the investment credit risk reserve fund, export credit risk reserve fund, and mandatory guarantee loan risk reserve fund have been fully established according to this Decree;

d) In cases where the risk reserve funds are insufficient to cover the risks approved by the competent authority for handling in the year, the Development Bank shall report to the Ministry of Finance to coordinate with the Ministry of Planning and Investment to submit to the Prime Minister for consideration and decision in accordance with the law.

The Development Bank bases its decisions on the legal provisions applicable to enterprises and commercial banks regarding the establishment and use of inventory depreciation reserves, financial investment loss reserves, bad debt reserves, other reserve provisions, and financial capacity to determine the level of reserve provisions included in annual expenses.

Chapter IV
INTEREST SUBSIDY AND MANAGEMENT FEES

1. The State subsidizes the Development Bank's interest rate to:

a) Fulfill the State’s mission of providing investment credit and export credit and fulfill the obligation of guaranteeing credit for small and medium-sized enterprises borrowing from commercial banks according to the guarantee contracts signed in accordance with the law;

b) Support post-investment activities for post-investment support contracts arising before the effective date of Decree No. 32/2017/NĐ-CP.

2. The annual interest subsidy for fulfilling the State’s mission of providing investment credit and export credit and fulfilling the obligation of guaranteeing credit for small and medium-sized enterprises borrowing from commercial banks is determined based on the difference between total costs for capital raising and total income from capital utilization when performing these tasks.

3. The Ministry of Finance shall provide detailed guidance on interest subsidies for the Development Bank.

1. The Development Bank shall be granted a management fee calculated as a percentage (%) of the average outstanding balance of State investment credit loans, export credit loans, and mandatory guaranteed debt as stipulated in this Decree. For loans disbursed under credit contracts signed and funded after the effective date of Decree No. 32/2017/NĐ-CP, the management fee shall only be calculated on the average outstanding balance excluding non-performing debts and overdue debts.

2. Principles for establishing the management fee ratio:

a) The management fee ratio shall be established stably for each three-year period. The level of the management fee shall be determined based on the results of implementing operational targets assigned by the Government and the Prime Minister, financial conditions, State-set standards and regulations, and actual needs, ensuring that the Development Bank has sufficient funds for its operations, risk reserves for investment credit and export credit, and mandatory guaranteed debt as stipulated in this Decree;

b) Some basic indicators serving as the basis for determining and adjusting the management fee ratio during each period include: projected outstanding balance, projected credit targets assigned during the fee calculation period; costs related to risk reserve provisions and administrative expenses as specified in Article 23 of this Decree.

3. The Development Bank shall propose the management fee level to report to the Ministry of Finance for submission to the Prime Minister for consideration and decision. The proposal shall include the following main contents: legal basis, principles, foundation, method, and data for calculating costs associated with activities, risk reserve costs, and other expenses.

In cases where there are sudden changes in costs due to additional functions and tasks decided by competent authorities; due to natural disasters, epidemics, and other objective reasons requiring adjustment of the management fee ratio, the Development Bank shall report to the Ministry of Finance for submission to the Prime Minister for consideration and decision on adjusting the management fee ratio appropriately.

1. The procedures for preparing, reviewing, approving, and allocating the annual interest subsidy and management fee compensation budget for the Development Bank shall be carried out in accordance with the State Budget Law, Public Investment Law, and guiding documents, amendments, supplements, and replacements (if any).

2. Based on the annual interest subsidy and management fee compensation budget allocated by the State budget, excess interest subsidy and management fee compensation from previous years, actual occurrences of the previous quarter, and anticipated occurrences of the current quarter reported by the Development Bank, the Ministry of Finance shall temporarily compensate the Development Bank within the annual budget allocation range provided by the State budget at the beginning of each quarter and settle accounts after the end of the fiscal year.

3. If the actual interest subsidy and management fee compensation received exceeds the allocated budget, the shortfall will be included in the next year's budget. If the actual interest subsidy and management fee compensation received is less than the allocated budget, it shall be implemented according to the State Budget Law, Public Investment Law, and guiding documents, amendments, supplements, and replacements (if any).

Chapter V
INCOME, EXPENSES AND SALARY REGIME
OF THE DEVELOPMENT BANK

Article 22. Income of the Development Bank

1. Income from business operations:

a) Interest income from state investment credit and export credit loans; interest income from mandatory guarantee loans;

b) Other interest income;

c) Guarantee fee income;

d) Management fee for relending foreign government loan sources;

đ) Deposit interest income;

g) Interest rate subsidy income as stipulated in point a, Clause 1, Article 19 of this Decree;

h) Management fee income from the state budget;

i) Entrusted management and lending service fees;

k) Income from foreign exchange operations;

l) Income from payment services and treasury operations;

m) Income from the purchase and sale, discounting, and rediscounting of negotiable instruments;

n) Interest income from debts that have been written off and transferred to off-balance sheet monitoring;

2. Income from other activities:

a) Service income and income from leasing assets of the Development Bank;

b) Exchange rate differential income;

c) Income from asset disposal and liquidation;

d) Penalty income due to customer breach of contract;

đ) Income from capital contribution and equity transfer activities;

e) Other income as prescribed by law.

Article 23. Expenditures of the Development Bank

1. Business operation expenditures:

a) Interest payments: loan interest; deposit interest of customers; issuance of negotiable instruments;

b) Expenditures for issuance, purchase, discounting, and rediscounting of negotiable instruments; expenditures for capital mobilization;

c) Expenditures for capital contribution and equity transfer activities;

d) Market participation expenditures; payment and treasury service expenditures including payment service expenditures; transportation and handling of money, counting and sorting, packaging of money, security of money, and other payment and treasury operation expenses;

đ) Exchange rate differential expenditures; foreign exchange operation expenditures;

e) Tax, fee, and stamp duty payments for activities required to be paid according to regulations;

g) Commission, agency, brokerage, and entrusted service fees;

2. Provision establishment expenditures:

a) Establishment of risk reserve funds for credit activities as stipulated in Article 16 of this Decree;

b) Establishment of other provision items as stipulated in Article 18 of this Decree.

3. Administrative operation expenditures:

b) Management and public service expenditures: travel expenses; electricity, water, postal, communication, fuel, materials, ink, office supplies expenses; literature and book purchasing expenses; scientific research and technology application expenses; vocational training expenses; innovation initiatives to improve the Development Bank's operational efficiency; project implementation expenses serving management and bank operations; domestic and international consultant and expert hiring expenses; outsourced labor expenses; inspection, audit, settlement expenses; environmental protection, facility security, fire prevention and extinguishing, national defense and security expenses; publication expenses; propaganda expenses; conference, reception, ceremonial, transaction, external relations expenses; departure and arrival expenses; penalty expenses for contract breaches with customers, administrative penalties including accounting and statistics law violations and other administrative penalties as prescribed by law (excluding personal responsibility fines); association membership fee expenses; support expenses for party and mass organization work (expenses outside the party and mass organization budgets funded from designated sources); other expenses as prescribed by law;

Article 24. Expenses that cannot be recorded as operating costs of the Development Bank

1. Losses that have been supported by the State or compensated by insurance agencies, the party causing damage.

2. Penalties for administrative violations, environmental violations, overdue loan penalties due to subjective reasons, and financial system violation penalties attributable to individual responsibility.

3. Investment construction expenses for basic infrastructure, procurement, upgrading, and renovation of fixed assets from investment capital for basic construction.

5. Expenses supporting localities, social organizations, and other agencies.

6. Expenses exceeding the prescribed limits under this Decree and other relevant regulatory legal documents.

7. Expenses covered by other funding sources.

The Development Bank manages labor, salaries, remuneration, and bonuses for employees and managers according to the laws applicable to state-owned joint-stock companies with 100% state capital, consistent with the nature, model, and operations of the Development Bank, and guidelines from the Ministry of Labor, Invalids, and Social Affairs.

Chapter VI
FINANCIAL RESULTS, RESERVE FUNDING AND USE

Article 26. Financial Results and Distribution of Financial Results

1. Financial results are the difference between income and expenses incurred during the fiscal year:

a) The Development Bank achieves a surplus when the difference between income and expenses incurred during the fiscal year is positive (+).

b) The Development Bank incurs a deficit when the difference between income and expenses incurred during the fiscal year is negative (-).

2. When financial results achieve a surplus, after offsetting previous years' deficits (if any), it shall be distributed as follows:

b) Allocate 10% to the financial reserve fund, with the maximum level of this fund not exceeding 25% of the Development Bank's paid-in capital;

d) Allocate to the award and welfare fund for Development Bank employees:

For the Development Bank classified as Class A, allocate three months' salary for the award and welfare funds;

For the Development Bank classified as Class B, allocate one and a half months' salary for the award and welfare funds;

For the Development Bank classified as Class C, allocate one month's salary for the award and welfare funds;

e) Allocate to the management bonus and Supervisory Board fund:

For the Development Bank classified as Class A, allocate one and a half months' salary for the management and Supervisory Board members;

For the Development Bank classified as Class B, allocate one month's salary for the management and Supervisory Board members;

For the Development Bank classified as Class C, no allocation for the management bonus and Supervisory Board fund;

g) The remaining amount after allocating to the above funds shall be added to the supplementary paid-in capital reserve fund.

Article 27. Management and use of funds

a) The Development Bank shall establish and promulgate regulations on the management and use of funds in accordance with the provisions of the law for internal application within the bank; such regulations must ensure democracy, transparency, and involve the Executive Committee of the Development Bank's Trade Union, and be publicly disclosed within the bank before implementation;

b) During the fiscal year, the Development Bank shall temporarily allocate funds based on financial results to have resources available for fund usage according to the predefined purposes.

2. The supplementary capital reserve fund shall be used to supplement the registered capital.

3. The financial reserve fund shall be used for:

a) To cover the remaining losses and damages to assets occurring during operations after compensation from organizations and individuals causing the loss, insurance organizations, and the use of reserves established in expenses;

b) For other purposes as prescribed by law;

c) The Board of Directors of the Development Bank shall decide on the use of the financial reserve fund.

a) Expanding the scale of operations and updating technological equipment, working conditions of the Development Bank, and supplementing the registered capital of the Development Bank;

b) The Board of Directors of the Development Bank shall decide on the use of the development investment fund; determine the form and methods of investment in compliance with the regulations applicable to a limited liability company wholly owned by the State.

5. The labor incentive fund shall be used for:

a) Year-end bonuses or regular bonuses for employees of the Development Bank. The bonus amount shall be decided by the Development Bank's Board of Directors based on the proposal of the General Director and the Development Bank's Trade Union, considering the productivity and work achievements of each employee;

b) Special bonuses for individuals and teams of the Development Bank who have innovative ideas improving technology and business processes that enhance operational efficiency. The bonus amount shall be decided by the Development Bank's Board of Directors;

c) Bonuses for individuals and units outside the Development Bank who have effectively contributed to the bank's activities. The bonus amount shall be decided by the Development Bank's Board of Directors.

6. The management and Supervisory Board reward fund:

a) Shall be used to award annual bonuses and at the end of the term for the Chairman and members of the Board of Directors, members of the Supervisory Board, the General Director, Deputy General Directors, and Chief Accountants of the Development Bank;

b) The annual bonus and end-of-term bonus amounts shall be determined by the State-owned enterprise representative body based on the level of completion of assigned tasks and the operational effectiveness of the Development Bank, following the recommendation of the Development Bank's Chairman of the Board of Directors;

c) In cases where the Chairman and members of the Board of Directors, members of the Supervisory Board, the General Director, Deputy General Directors, and Chief Accountants are awarded incentives under the law on commendation and rewards, the Development Bank's labor incentive fund may be used to provide awards to these individuals at levels specified by the law on commendation and rewards for each type of commendation and reward.

7. The welfare fund shall be used for:

a) Investing in the construction or repair and supplementation of welfare facilities of the Development Bank;

b) Funding sports, cultural, and public welfare activities for the collective of Development Bank staff;

c) Providing regular and emergency assistance to staff, including retired staff, and health retreats for Development Bank staff;

d) Funding other welfare activities.

The Board of Directors and the General Director shall cooperate with the Development Bank's Trade Union to manage and utilize this fund.

Chapter VII
ACCOUNTING REGIME, FINANCIAL PLAN,
REPORTING SYSTEM AND AUDIT

Article 28. Accounting methods, accounting regulations, and statistics

1. Accounting method:

a) The Development Bank shall conduct income and expense accounting using the cash basis method (except for interest subsidy revenues specified in point a, Clause 1, Article 19 of this Decree and management fee revenues provided by the state budget, which the Development Bank shall account for as anticipated revenue; for remaining annual salary funds that have not been fully expended, the Development Bank shall account for as anticipated expenditure). The Development Bank shall be responsible under the law for the content and accuracy of all revenues and expenditures; it shall comply with legal provisions regarding invoice and accounting voucher systems.

2. The Development Bank shall follow accounting regulations guided by the Ministry of Finance. Statistical work of the Development Bank shall be carried out in accordance with legal provisions.

3. The fiscal year of the Development Bank begins on January 1 and ends on December 31 of each calendar year.

Article 29. Annual Financial Plan Report

The annual financial plan report of the Development Bank includes the following contents:

1. Capital source and utilization plan including the following basic contents:

a) Total capital sources for the year, including detailed information on certain capital sources such as: charter capital; state budget capital allocated to fulfill tasks assigned by the Government and Prime Minister; domestic and foreign capital mobilization (detailed information on capital mobilization through bond issuance guaranteed by the Government); receiving foreign loans from the Government to re-lend according to loan agreements signed with sponsors or re-lending agreements signed with the Ministry of Finance (if applicable) and other sources of capital (if applicable);

b) Total demand for capital utilization during the year, including detailed information on certain items: payment of maturing capital mobilizations (detailed information on bond repayment guaranteed by the Government); ensuring State credit investment development targets assigned by the Prime Minister; tasks related to re-lending of Government foreign loans and other tasks assigned by the Government and Prime Minister and other capital usage (if applicable);

c) Any accompanying explanatory plans (if applicable), including detailed explanations on the expected bad debt ratio for the planned year.

2. Interest subsidy and management fee plan.

3. Investment construction, procurement, upgrade, and modernization plan including indicators: Anticipated investment needs for ongoing and new construction projects in the year; anticipated procurement of new assets, upgrading, and modernizing existing assets; anticipated allocation from the development investment fund, investment capital from the state budget (if applicable) and other lawful sources as stipulated by law.

4. Income, expense, and financial result plan: Anticipated total income for the year (including detailed information: loan interest income; deposit interest income; fee income; interest subsidy income specified in point a, Clause 1, Article 19 and management fees received during the planned year as stipulated by this Decree); anticipated total expenses incurred during the planned year (including detailed information on certain expenses: business operation expenses; provision expenses; administrative operation expenses); anticipated financial results for the planned year.

5. Labor and wage plan: Total number of employees anticipated for the planned year; average wage level of employees for the planned year; planned wage fund as prescribed.

a) The preparation and submission of the medium-term and annual public investment capital plan reports of the Development Bank shall be conducted in accordance with the State Budget Law, Public Investment Law, and guiding documents, amendments, supplements, and replacements (if applicable);

b) Within ten working days after the Prime Minister issues a decision on the issuance limit of government-guaranteed bonds for the planned year, based on the results of the previous year's operations, the Development Bank shall review and complete the financial plan report to submit to the Ministry of Finance for financial oversight and evaluation of the Development Bank's performance;

c) The Ministry of Finance shall review the financial plan report prepared by the Development Bank to provide formal comments in writing and allocate evaluation criteria and ranking indicators for the Development Bank within thirty working days after the Prime Minister issues a decision on the issuance limit of government-guaranteed bonds for the planned year. Based on the comments of the Ministry of Finance, the Board of Directors shall approve the Development Bank's annual financial plan.

8. Based on the approved plan, the Development Bank shall organize the implementation of the plan indicators stipulated herein.

Article 30. Audit

1. The Development Bank shall implement internal audit systems, publish annual financial operation results in accordance with the provisions of the law, and be responsible for the published data.

3. The State Audit Agency shall conduct audits on the Development Bank's financial reports according to its plan.

4. Within thirty days from the date of receiving the audit results of the financial report, the Development Bank must submit to the Ministry of Finance and the State Bank of Vietnam and publicly disclose the audited financial reports in accordance with the law.

1. Financial planning reports as stipulated in Article 29 of this Decree.

2. Financial reports/Finalized financial reports include:

a) Financial situation report (Balance sheet)

b) Operating results report;

c) Cash flow statement;

d) Notes to the financial statements.

3. Business activity reports include:

a) Second-level account balance sheet (including off-balance-sheet accounts)

b) Loan classification report of the Development Bank

c) Provisioning report for credit risk

d) Interest subsidy and management fee report

4. Operation status reports include:

a) Management and utilization of capital and assets for all activities at the Development Bank as stipulated in Article 8 of this Decree

b) Implementation of salary, remuneration, bonuses, allowances, and other benefits for employees and managers of the Development Bank in accordance with current laws applicable to the Development Bank

c) Financial results and fund allocations after income and expenditure differences of the Development Bank

d) Annual performance evaluation of the Development Bank based on criteria set forth in this Decree

5. Provisions regarding the preparation and submission of reports:

a) For financial reports: Consolidated financial reports prepared annually and individual financial reports prepared quarterly/yearly; Annual finalized financial reports approved by the Board of Directors of the Development Bank before submitting to the Ministry of Finance and the State Bank of Vietnam

b) For business activity reports: Business activity reports are submitted to the Ministry of Finance periodically every quarter and year, and additionally as required by the Ministry of Finance

c) For operation status reports: The Development Bank is responsible for preparing and submitting operation status reports to the Ministry of Finance and the State Bank of Vietnam every six months; The Board of Directors prepares operation status reports accompanied by the Supervisory Board's review report to be submitted to the Ministry of Finance and the State Bank of Vietnam

d) Based on the financial reports and operation status reports prepared by the Board of Directors of the Development Bank and related information and documents, the Ministry of Finance compiles and submits reports to the Prime Minister every six months after soliciting opinions from the Ministry of Planning and Investment and the State Bank of Vietnam

Chapter VIII
ASSESSMENT OF OPERATIONAL EFFECTIVENESS

Article 32. Criteria for Assessing Operational Effectiveness

a) Criterion 1: State investment credit

b) Criterion 2: Non-performing loan ratio

c) Criterion 3: Financial results

d) Criterion 4: Compliance with laws on investment, management, and use of state capital at the Development Bank for business transactions occurring during the assessment period

e) Criterion 5: Compliance with reporting requirements as stipulated in Article 31 of this Decree

2. The criteria specified in Clause 1 of this Article are determined and calculated based on data from individual audited final financial reports and periodic statistical reports as prescribed by law.

3. When calculating the assessment criteria listed in Clause 1 of this Article, factors affecting the results are considered and excluded:

a) Objective reasons excluded in accordance with regulations on assessing the operational effectiveness of state-owned enterprises

b) Non-performing loans arising from borrowers undergoing restructuring pursuant to decisions of competent authorities, non-performing loans made under Government or Prime Minister decisions

c) Due to changes in state policies impacting the Development Bank's operations

d) Delays in state budget capital disbursements affecting the Development Bank's finances

a) Performance assessment criteria for enterprise managers similar to those for a limited liability company wholly owned by the state

b) The ranking of the Development Bank as stipulated in Article 33 of this Decree

1. The evaluation of operational effectiveness and classification of Development Banks shall be based on audited individual financial reports, carried out in accordance with regulations applicable to state-owned enterprises and this Decree.

2. The Ministry of Finance shall provide specific guidelines for methods of evaluating operational effectiveness and classifying Development Banks in accordance with their nature and activities; review financial plans to assign annual evaluation and classification criteria for Development Banks after the Prime Minister issues decisions on the allocation of state investment credit development capital and the issuance limit of government-guaranteed bonds.

Chapter IX
RESPONSIBILITIES OF STATE MANAGEMENT ORGANIZATIONS AND ORGANIZATIONS AND INDIVIDUALS PROVIDING SERVICES IN IMPLEMENTING SERVICE PRICES
OF DEVELOPMENT BANKS

Article 34. Ministry of Finance

2. Submit to the Prime Minister for decision on the stable management fee ratio for each period (three years) as stipulated in Article 20 of this Decree.

3. Provide interest rate subsidies, management fees, and other grants in accordance with the law.

4. Handle financial issues concerning Development Banks within its authority or report to the competent authority for consideration and decision.

1. Take the lead and coordinate with the Ministry of Finance to submit to the Prime Minister: Allocation in the budget for investment development expenditures for interest rate subsidies and management fees, additional paid-in capital (if any) for Development Banks, ensuring timely completion; submit to the competent authority for decision on the annual allocation of investment development credit capital for Development Banks as prescribed.

2. Coordinate with the Ministry of Finance to develop and handle within its authority any recommendations related to this Decree regarding financial management systems and operational effectiveness evaluations for Development Banks.

Article 36. State Bank of Vietnam

1. Take the lead and coordinate with the Ministry of Finance and relevant ministries and sectors to guide Development Banks in implementing loan classification and other regulations to ensure safety in operations, consistent with the nature and activities of Development Banks.

2. Coordinate with the Ministry of Finance to develop and handle within its authority any recommendations related to this Decree regarding financial management systems and operational effectiveness evaluations for Development Banks.

Take the lead in guiding labor management, salaries, remuneration, and bonuses for employees and managers of Development Banks according to Article 25 of this Decree after the salary system during the restructuring phase stipulated in Clause 2, Article 40 of this Decree has ended.

Article 38. Ministries, Sectors, People's Committees of Provinces and Central Cities

Ministers, Heads of ministerial-level agencies, Heads of governmental agencies, Chairpersons of People's Committees of provinces and centrally-administered cities shall be responsible for inspecting and supervising the activities of Development Banks in accordance with their assigned functions and tasks and the provisions of the law.

Article 39. Development Bank

3. Shall implement fully all contents prescribed in this Decree.

5. Shall report to the Ministry of Finance to submit to the Prime Minister for consideration of amendments and supplements to the provisions of this Decree if necessary.

Chapter X
IMPLEMENTATION

The Development Bank shall implement some mechanisms during the restructuring phase according to the decision of the Prime Minister and when the interest subsidy payments, management fees, and other amounts due to the Development Bank have not been fully settled according to the law, including:

1. Not required to reduce the cumulative net negative income difference (if any) when determining the minimum capital requirement as stipulated in Article 7 of this Decree to determine the credit limit of the Development Bank according to the law until the cumulative net negative income difference is resolved.

2. The salary mechanism and salary fund of the Development Bank shall be determined based on the following principles:

a) The salary of employees shall be determined based on the average salary implemented in 2018 and adjusted annually according to the increase in the consumer price index compared to 2018;

b) The salary of managers shall be determined based on the assessment of the level of task completion, in cases where the maximum level of task completion does not exceed the salary level specified in Appendix II issued together with Decree No. 52/2016/NĐ-CP dated June 13, 2016 of the Government and subsequent amending, supplementing, and replacing documents (if any);

c) The Ministry of Finance shall assess the level of task completion of Development Bank managers, consider and approve the annual salary fund of managers after receiving the opinion of the Ministry of Labor, Invalids, and Social Affairs.

a) The funding source to implement the support policy for employees as stipulated in this Article shall be recorded in the operating expenses of the Development Bank;

b) The Vietnam Social Security shall be responsible for implementing social insurance for employees according to the provisions of this clause.

Article 41. Transitional Provisions

1. The balance of capital raised by the Development Bank to cover the shortfall of the Guarantee Fund to fulfill guarantee obligations for small and medium-sized enterprises borrowing from commercial banks before this Decree takes effect shall be subsidized by the state budget.

2. The evaluation of the level of task completion of Development Bank managers before 2021 shall be carried out according to the provisions of Articles 14, 15, 16, and 17 of Decree No. 97/2015/NĐ-CP dated October 19, 2015 of the Government on managing personnel holding positions in state-owned limited liability companies with 100% state capital contribution.

Article 42. Implementation Provisions

1. This Decree takes effect from June 1, 2021 and applies from the fiscal year 2021.

2. The financial management regulations for the Development Bank issued together with Decision No. 44/2007/QĐ-TTg dated March 30, 2007 of the Prime Minister, and Clause 16 on loan classification and risk reserve fund provision of Decree No. 32/2017/NĐ-CP dated March 31, 2017 of the Government regarding state investment credit shall cease to be effective from the date this Decree takes effect.

3. The Ministers, Heads of ministerial-level agencies, Heads of government-affiliated agencies, Chairpersons of provincial and centrally-administered city People's Committees, Chairpersons of the Board of Directors, and General Directors of the Development Bank are responsible for implementing this Decree.