Consolidated Document number 52/VBHN-BTC Circular guiding certain provisions on financial regulations for the Vietnam Rural Credit Bank

MINISTRY OF FINANCE --------	SOCIALIST REPUBLIC OF VIET NAM Independence - Freedom - Happiness ---------------
Number: 52/CONSOLIDATED DOCUMENT - MINISTRY OF FINANCE	HANOI, December 31, 2020

 

CIRCULAR[1]

GUIDELINES ON CERTAIN PROVISIONS REGARDING THE FINANCIAL REGIME FOR THE VIETNAM RURAL CREDIT BANK

Circular No. 19/2018/TT-BTC dated February 12, 2018 of the Ministry of Finance guiding certain provisions regarding the financial regime for the Vietnam Rural Credit Bank, which took effect from March 29, 2018, has been amended and supplemented by:

Circular No. 84/2020/TT-BTC dated October 1, 2020 of the Ministry of Finance amending and supplementing regulations on periodic reporting within the authority of the Minister of Finance in the field of finance and banking, which took effect from November 15, 2020.

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

Pursuant to the Law on Cooperatives dated November 20, 2012;

Pursuant to the Enterprise Law dated November 26, 2014;

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

Pursuant to the Law on Electronic Transactions dated November 29, 2005;

Pursuant to the Law on Information Technology dated June 29, 2006;

Pursuant to Decree No. 93/2017/NĐ-CP dated August 7, 2017 of the Government on the financial regime for credit organizations, foreign bank branches, and financial supervision, evaluation of the effectiveness of state capital investment at credit organizations wholly owned by the State and credit organizations with state capital;

Pursuant to Decree No. 64/2007/NĐ-CP dated April 10, 2007 of the Government on the application of information technology in the activities of state agencies;

Pursuant to Decree No. 87/2017/NĐ-CP dated July 26, 2017, issued by the Government, stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

At the proposal of the Director of the Department of Banking and Financial Institutions;

The Minister of Finance issues this Circular guiding certain provisions regarding the financial regime for the Vietnam Rural Credit Bank.[2]

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Circular guides certain provisions regarding the financial regime for the Vietnam Rural Credit Bank as prescribed in Decree No. 93/2017/NĐ-CP dated August 7, 2017 of the Government on the financial regime for credit organizations, foreign bank branches, and financial supervision, evaluation of the effectiveness of state capital investment at credit organizations wholly owned by the State and credit organizations with state capital (hereinafter referred to as Decree No. 93/2017/NĐ-CP).

Article 2. Applicability

1. The Vietnam Rural Credit Bank (hereinafter referred to as the Bank) was established, organized, and operates according to the Law on Credit Organizations dated June 16, 2010, the Law Amending and Supplementing Certain Provisions of the Law on Credit Organizations dated November 20, 2017, and related supplementary, replacing documents (if any) (hereinafter referred to as the Law on Credit Organizations).

2. Other relevant agencies, organizations, and individuals.

Chapter II

SPECIFIC PROVISIONS

Article 3. Shareholders' Equity

1. Registered Capital, including:

a) Contributions from member people's credit funds.

b) Contributions from other organizations (if any).

c) State support capital.

2. Revaluation surplus is the difference between the book value of assets and their revalued value as decided by the State or other revaluation cases as prescribed by law.

3. Funds include:

a) Supplementary registered 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%."

4. Accumulated undistributed profits; accumulated unprocessed losses.

5. Other lawful capital belonging to the Bank.

Article 4. Management and Utilization of Capital and Assets

1. The Bank is responsible for managing and utilizing capital and assets in accordance with Chapter II of Decree No. 93/2017/NĐ-CP, relevant laws, and specific guidelines in this Circular.

2. For real estate held due to debt recovery as stipulated in Clause 3, Article 132 of the Law on Credit Organizations:

a) For real estate temporarily held by the Bank for sale or transfer to recover capital within three years, the Bank does not record an increase in fixed assets and does not depreciate.

b) For real estate purchased by the Bank to directly serve business operations, the Bank records an increase in assets, depreciates according to the law, and must ensure investment and purchase limits for fixed assets serving direct business operations as stipulated in Clause 3, Article 6 of Decree No. 93/2017/NĐ-CP.

3. Throughout its business operations, the Bank must maintain investment and purchase limits for fixed assets directly serving business operations based on the principle that the remaining value of fixed assets does not exceed 50% of the registered capital and supplementary registered capital reserve fund recorded in the Bank's accounting books.

Article 5. Revenue

The revenue of the Bank includes the income items prescribed in Article 16 of Decree No. 93/2017/NĐ-CP. Specifically:

1. Interest income and similar income:

a) Interest income from deposits.

b) Interest income from loans:

- Interest income from loans to member credit unions.

- Interest income from loans to customers who are not member credit unions.

c) Interest income from securities trading and investment.

d) Income from guarantee services.

đ) Interest income from debt buying and selling operations.

e) Other income from lending activities.

2. Income from service activities:

a) Income from payment services including: income from card and electronic banking services; income from opening settlement accounts and providing payment means for member credit unions and non-member credit union customers.

b) Income from cash management services.

c) Income from agency and representative services.

d) Other income from service activities including:

- Income from financial, banking, and investment advisory services.

- Income from new service products serving the operations of member credit unions and community development in the area.

- Income from agency services in banking and insurance sectors.

- Other income from services as prescribed by law.

3. Income from securities trading activities (excluding stocks).

4. Income from other activities:

a) Income from debts processed through risk provisions (including debts that have been written off but are now recovered).

b) Income from debt buying and selling operations.

c) Income from leasing assets excluding amounts received from leasing temporary real estate holdings used to offset loans given to process loans according to Clause 3, Article 132 of the Law on Credit Institutions to recover debts.

d) Income from asset transfers and liquidations.

đ) Income from reversal of provisions.

e) Other income from other banking business activities permitted by the State Bank of Vietnam.

5. Other income includes:

a) Income from debts owed by parties whose identity cannot be determined according to the law, recorded as increased income.

b) Customer fines and compensation payments for breach of contract recorded as income.

c) Insurance compensation income recorded as income after covering losses covered by insurance.

d) Other income as prescribed by law.

Article 6. Principles for Recognizing Revenue

The principles for recognizing revenue for the Bank's income items prescribed in Article 16 of Decree No. 93/2017/NĐ-CP are as follows:

1. Determining revenue for corporate income tax purposes shall be carried out in accordance with the Corporate Income Tax Law and related guiding documents.

2. For interest income and similar income:

a) Interest income from lending activities: The Bank is responsible for assessing the ability to recover debts and classifying debts according to the legal regulations on banking to serve as the basis for recording interest receivable and shall record as follows:

- The Bank records interest receivable arising during the period into income for debts classified as standard loans not requiring specific risk provisions according to the State Bank of Vietnam.

- The interest receivable of debts remaining in the standard loan category due to implementation of state policies and interest receivable arising during the period for the remaining debts shall not be recorded as income; the Bank shall monitor these off-balance sheet and record them as income when they are recovered.

b) Interest income from deposits: is the interest receivable during the period.

3. Income from securities trading activities (excluding stocks):

a) For trading securities: The Bank records income according to the legal regulations on accounting for trading securities.

b) For investment securities, except those that must be classified as loans and provisioned for risk like a loan, the Bank records expected interest income.

4. For income from foreign exchange rate differences resulting from revaluation of foreign currencies and gold, the Bank shall recognize according to accounting standards and relevant legal regulations.

5. For income from remaining activities: revenue is the total amount of goods and services provided during the period accepted for payment by customers regardless of whether the money has been collected or not.

6. For receivables already recorded as income but later assessed as uncollectible or not collected by the due date, the Bank shall reduce revenue if in the same accounting period or record it as expenses if in a different accounting period and monitor off-balance sheet to urge collection. When collected, it shall be recorded as income.

Article 7. Costs

The costs of the Bank include the expenses stipulated in Article 17 of Decree No. 93/2017/ND-CP. Specifically:

1. Interest expenses and similar expenses:

a) Payment of interest on deposits: Payment of interest on deposits of member credit unions; Payment of interest on deposits of non-member credit union customers.

b) Payment of interest on loans.

c) Payment of interest on issuance of securities.

d) Other expenses for credit activities.

2. Service activity expenses:

a) Expenses for payment services.

b) Expenses for treasury services.

c) Expenses for telecommunications services.

d) Expenses for agency and trustee services.

đ) Expenses for advisory services.

e) Commissions paid to agents, brokers, trustees for permitted agency, brokerage, and trustee activities. In particular, for brokerage commissions, the following provisions apply:

- The Bank may pay brokerage commissions for permitted brokerage activities.

- Brokerage commissions paid to third parties (as intermediaries) shall not be applicable to agents of the Bank; management positions, employees of the Bank, and related persons of the Bank as prescribed by the Law on Credit Organizations and any amending, supplementing, or replacing legal documents (if any).

- Payment of brokerage commissions must be based on a contract or confirmation between the Bank and the recipient of the brokerage commission, which must include basic contents such as: name of the recipient; nature of the expense; amount; method of payment; time of implementation and completion; responsibilities of the parties.

- For brokerage expenses for leasing assets (including seized assets and debt-settlement assets): the maximum brokerage commission for leasing each asset of the Bank shall not exceed 5% of the total revenue from leasing that asset through brokerage in the year.

- For brokerage expenses for selling collateralized or pledged assets: the brokerage commission for selling each collateralized or pledged asset of the Bank shall not exceed 1% of the actual value received from selling the asset through brokerage.

- The Board of Directors or General Director of the Bank shall issue regulations on brokerage commissions to be uniformly applied and publicly disclosed.

3. Expenses for trading in permitted types of securities as prescribed by the Law on Credit Organizations and other relevant legal documents.

4. Other activity expenses:

a) Expenses for debt buying and selling operations.

b) Expenses for other business activities as prescribed by law.

5. Tax and fee expenses.

6. Employee expenses:

a) Salary, remuneration, bonuses, and allowances.

b) Expenses for contributions based on salary: social insurance, health insurance, unemployment insurance, purchase of personal accident insurance, trade union fees.

c) Uniform expenses.

d) Safety equipment expenses: only allowed for individuals who need safety equipment while working.

đ) Allowance expenses.

e) Meal expenses: The Bank shall implement meal expenses according to the level prescribed for state-owned enterprises.

g) Medical expenses including: regular medical examination expenses for employees, preventive drug purchase expenses, and other medical expenses under the responsibility of the enterprise as prescribed by current laws.

h) Other expenses including: annual leave expenses, additional expenses for female workers as prescribed by labor laws, and other expenses as prescribed by law.

7. Management and public service expenses:

a) Material and printing paper expenses; travel expenses.

b) Training and professional instruction expenses including: training and professional instruction expenses for Bank staff and professional banking and information technology training expenses for member credit unions.

c) Research and application of science and technology expenses including:

- Establishment of a science and technology development fund as prescribed by law. The use of the fund shall be carried out according to current regulations.

- Expenses for the remaining amount when the balance of the science and technology development fund is insufficient to cover research and technology application expenses in the year.

d) Innovation, productivity improvement, cost-saving award expenses: in accordance with the principle of suitability with the actual benefits brought about. The Bank must establish and publicly disclose award regulations and form a Committee to verify innovations.

đ) Postal and telephone expenses; publication, publicity, advertising, marketing, promotional material purchase expenses; expenses for group activities; electricity, water, office sanitation expenses; conference, reception, ceremonial, transaction, external affairs expenses; consulting and auditing expenses; domestic and foreign expert rental expenses; fire prevention and extinguishing expenses; environmental protection work expenses and other expenses.

8. Asset expenses:

a) Depreciation expenses for fixed assets used in business activities shall be implemented according to the management, use, and depreciation accrual system for enterprises.

b) Maintenance and repair expenses for assets.

c) Purchase and supply expenses for tools and equipment.

d) Asset insurance expenses.

đ) Fixed asset rental expenses: Rental expenses for fixed assets shall be carried out according to the lease contract. In cases where rental payments are made in one lump sum for multiple years, the rental payments shall be gradually allocated to business expenses over the number of years of asset usage.

e) Management and operation service rental expenses for assets and buildings shall be carried out according to the lease contract.

9. Provision expenses:

a) Provision expenses:

- Risk provision expenses in operations as prescribed in Article 131 of the Law on Credit Organizations.

- Risk provision expenses for special bonds issued by the Vietnam Asset Management Corporation as prescribed in Point a Clause 2 Article 21 of Government Decree No. 53/2013/ND-CP dated May 18, 2013 on the establishment, organization, and operation of the Vietnam Asset Management Corporation and Clause 12 Article 1 of Government Decree No. 34/2015/ND-CP dated March 31, 2015 amending and supplementing certain articles of Government Decree No. 53/2013/ND-CP; guidelines of the State Bank of Vietnam and any amending, supplementing legal documents (if any).

- To establish provisions for inventory write-downs, impairment provisions for financial investments, doubtful debts, and other provisions (if any) in accordance with general regulations applicable to enterprises.

b) The portion of costs for establishing risk provisions shall be deductible when determining corporate income tax in accordance with the laws on corporate income tax.

10. Costs for deposit insurance and preservation.

11. Other expenses:

a) Membership fees for industry associations in which the Bank participates.

b) Party and mass organization work expenses at the Bank (the portion of expenses outside the organizational budget funded from specified sources).

c) Expenses from selling, liquidating assets, and residual values of liquidated fixed assets (if any).

d) Expenses for recovering written-off debts, including bad debt recovery costs, such as service fees paid to organizations permitted to perform debt recovery services under the law, and costs incurred in purchasing and selling debts.

đ) Expenses for processing remaining asset losses after compensation from prescribed sources under Clause 4, Article 12 of Decree No. 93/2017/NĐ-CP.

e) Expenses for revenues that have been recorded but not actually received.

g) Social work expenses in accordance with the laws on taxation.

h) Administrative penalty payments, except for fines that individuals must pay according to the law.

i) Other expenses include:

- Expenses for debts that were previously untraceable and recorded as income but later identified as creditors.

- Payment of penalties and compensation for economic contract violations within the responsibility of the Bank.

- Administrative penalty payments, except for fines that individuals must pay according to the law.

- Court fees and enforcement fees within the responsibility of the Bank.

- Other expenses as prescribed by law.

Article 8. Principles for Recording Bank Expense Items

1. Bank expenses are actual expenses incurred in connection with the Bank's business activities; they comply with the principle of matching revenue and expenses; they must be supported by valid invoices and receipts as stipulated by law. The Bank shall not record expenses funded by other sources. The determination and recording of expenses shall be consistent with Vietnamese accounting standards and relevant legal provisions.

2. The determination of expenses for calculating corporate income tax shall be carried out in accordance with the Corporate Income Tax Law and guiding documents.

3. The Bank may only record business expenses that are deductible under the laws on corporate income tax. Specifically, for the portion of risk provision costs exceeding the allowable limit, which is deductible when determining corporate income tax due to differences between the laws on corporate income tax and the State Bank of Vietnam's regulations (if any); membership fees for foreign industry associations in which the Bank participates, and administrative penalty payments (except for fines that individuals must pay according to the law), the Bank may use post-tax profits to offset these expenses.

Article 9. Distribution of post-tax profit of the Bank

1. The distribution of post-tax profit of the Bank shall be carried out in accordance with Article 22 of Decree No. 93/2017/NĐ-CP.

2. The Bank shall record and monitor the portion of profit distributed to state members for use in supplementing the charter capital (state support capital) in a separate sub-account.

Article 10. Content of reports, report forms, reporting periods, deadlines for submission of reports

1. The Bank shall implement the reporting system as prescribed in Articles 25 and 26 of Decree No. 93/2017/NĐ-CP and the guidance provided in this Circular.

2. The annual financial plan report of the Bank includes: Capital sources and utilization plan; Income, expense, business result, and state budget revenue target plan; Labor force and salary plan.

3. Financial statements include:

a) Interim and annual balance sheets.

b) Interim and annual income statement.

c) Interim and annual cash flow statement.

d) Interim and annual notes to financial statements.

đ) Other reports, including:

- Monthly accounting balance sheet.

- Report on certain financial safety indicators for the year.

- Report on the income situation of managers, staff, and employees for the year.

The Bank's financial statements shall be implemented in accordance with the legal provisions on the financial reporting system for credit organizations; specifically, the report on certain financial safety indicators and the report on the income situation of managers, staff, and employees shall be carried out according to Appendix 1 and Appendix 2 attached to this Circular.

4. Deadlines for submitting reports

a) Deadline for submitting the annual financial plan report: As prescribed in Article 25 of Decree No. 93/2017/NĐ-CP.

b) Deadline for submitting the monthly report: no later than the 10th day of the following month.

c) Deadline for submitting the interim financial report: no later than the 30th day of the first month of the next quarter.

d) Deadline for submitting the unaudited annual financial report: no later than 90 days from the end of the fiscal year.

đ) Deadline for submitting the audited annual financial report accompanied by the independent auditor's conclusion (audit report): immediately upon completion of the audit.

e) If the last day of the deadline for submitting the financial report is a public holiday, a Tet holiday, or a weekend, the latest date for submitting the financial report is the next working day after that day.

5. Recipients of reports

The Bank shall submit financial reports to the State Bank of Vietnam for the main supervision of the implementation of the financial system of the Bank; at the same time, submit them to the Ministry of Finance.

Article 11. Methods of Reporting

The Bank shall submit reports to the Ministry of Finance through the following methods:

1. Written reports:

The Bank shall submit written annual financial reports that have been audited for the reports specified in points a, b, c, and d of Clause 3, Article 10 of this Circular.

2. Electronic reports:

a) The Bank shall submit electronic reports for the reports specified in Article 10 of this Circular.

b) The Bank shall connect with the Ministry of Finance through the Ministry of Finance's electronic portal to submit electronic financial reports to the Ministry of Finance in accordance with specific guidelines from the Ministry of Finance.

c) In case of data transmission system failure, the Bank must send the report file stored on a portable storage device or submit a written report to the Ministry of Finance (Department of Banking and Financial Organization Finance) at its headquarters - No. 28 Tran Hung Dao - Hoan Kiem - Hanoi.

Article 12. Responsibilities of Management Authorities

1. The Ministry of Finance shall guide the Bank to submit reports electronically.

2. Responsibilities of the State Bank of Vietnam

a) The State Bank of Vietnam shall base on the provisions of Decree No. 93/2017/ND-CP and other laws regarding financial supervision and evaluation of state capital investment efficiency at credit institutions with state capital to conduct financial supervision and evaluate the efficiency of state capital investment at the Bank. The State Bank of Vietnam shall prepare a report on the evaluation of state capital investment efficiency at the Bank, send it to the Ministry of Finance for comments before April 30 of the following year, and announce the classification results before June 30 each year.

b) Annually (before March 31 of the following year) and every six months (before July 31), the State Bank of Vietnam shall notify the Ministry of Finance about the financial situation of the Bank according to Clause 2, Article 38 of Decree No. 93/2017/ND-CP, specifically as follows:

- Evaluation of the financial situation and operational effectiveness of the Bank.

- Other relevant indicators and contents.

- Financial violations of the Bank discovered during inspection and supervision (if any).

specialized agency under the People's Committee of the province/city.)[3] Time of data closure:

- For the six-month report: From January 1 of the reporting period to June 30 of the reporting period (excluding data reflecting at a specific point in time).

- For the annual report: From January 1 of the reporting year to December 31 of the reporting year (excluding data reflecting at a specific point in time).

For coal-fired thermal power plants where the enterprise holds 100% of the registered capital and uses 100% of its own capital to invest in the project approved by the competent authority, E is determined as 100%;)[4] Method of submitting reports shall be carried out through one of the following methods:

- Direct submission in paper form; - Submission via postal service

Article 13. Responsibilities of the Bank in paper form; - Submission via postal service

- Sending via email systems or specialized information reporting software systems;

- Other methods as prescribed by law.

Implement financial regulations as stipulated in the Law on Credit Institutions; Decree No. 93/2017/ND-CP; detailed guidance provided in this Circular and other regulatory documents on financial management.

1. This Circular takes effect from March 29, 2018.

Chapter III

IMPLEMENTATION

Article 14. Implementation clause

[5]

2. This Circular replaces Circular No. 93/2013/TT-BTC dated July 8, 2013 issued by the Ministry of Finance guiding the financial regime for Cooperative Banks.

3. During the period when there is no guidance from the Ministry of Finance on the implementation of electronic reporting, the Bank shall submit reports in written form, except for the monthly accounting balance sheet of the Bank.

4. In case of difficulties during implementation, please reflect them to the Ministry of Finance for consideration and resolution./.

DEPUTY MINISTER

 

CERTIFIED CONSOLIDATED DOCUMENT DEPUTY MINISTER (Issued together with Circular No. 19/2018/TT-BTC dated February 12, 2018 of the Ministry of Finance) Huynh Quang Hai

 

ANNEX 1

VIETNAM COOPERATIVE BANK

Some financial safety indicators

Address:…

Year...

Unit: million dong/percent

End of period

Serial number	Index	Total assets
1	Own capital
2	Capital (billion VND)
3	Tier 1 own capital
a	Tier 2 own capital
b	Total risky "Assets"
4	Capital adequacy ratio (3)/(4)
5	Real value of charter capital/capital received
6	Net profit after tax/shareholders' equity (ROE)
7	Net profit after tax/Total assets (ROA)
8	Loan growth rate
9	Deposit growth rate
10	Short-term capital usage rate for medium and long-term loans
11	Loan-to-deposit ratio
12	Date     month     year

 

ASSETS

HEAD OF ACCOUNTING DEPARTMENT

Management income situation, staff GENERAL DIRECTOR (Signature, stamp)

 

ANNEX 2

VIETNAM COOPERATIVE BANK

Some financial safety indicators

Address:…

Unit: million dong, person

Unit: million dong/percent

Number of people

Serial number	Content	Total salary	Total bonus	Total income	Average salary/person/month	Average income/person/month	Management
1	Full-time management
1.1	Part-time management
1.2	Staff, workers
2	Circular No. 19/2018/TT-BTC dated February 12, 2018 of the Ministry of Finance guiding some provisions on the financial regime for Vietnam Cooperative Bank, effective from March 29, 2018.

 

ASSETS

HEAD OF ACCOUNTING DEPARTMENT

Management income situation, staff GENERAL DIRECTOR (Signature, stamp)