Circular No. 56/2003/TT-BTC guiding the implementation of the financial management regulations for the Social Policy Bank issued together with Decision No. 180/2002/QĐ-TTg dated December 19, 2002 of the Government 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 of the Prime Minister

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To implement Decision No. 180/2002/QĐ-TTg dated December 19, 2002 of the Prime Minister on issuing the Financial Management Regulation for the Social Policy Bank, the Ministry of Finance provides guidelines for specific implementation as follows:

Chapter 1:

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.

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 poor households and policy beneficiaries, Decision No. 180/2002/QĐ-TTg dated December 19, 2002 of the Prime Minister on issuing the Financial Management Regulation for the Social Policy Bank, the detailed guidance provided in this Circular, and other relevant legal documents governing financial management.

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

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; covers costs and operational risks. The Social Policy Bank is exempt from deposit insurance participation, 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 2:

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.

- Raising domestic capital at market interest rates for lending to poor households and policy beneficiaries must ensure the principle of raising funds only when all non-interest-bearing or low-interest capital sources have been fully utilized. The interest rate for capital raised by the Social Policy Bank shall be implemented according to the following principles:

+ In the case where the Social Policy Bank issues bonds, deposit certificates, and other securities to raise capital, the issuance interest rate shall be carried out within the framework set by the Ministry of Finance.

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

+ In the case where the Social Policy Bank raises capital through deposits from domestic organizations and individuals; savings from poor people; borrowing from domestic financial institutions and credit organizations, the maximum interest rate for raising capital shall not exceed 95% of the highest deposit interest rate of state commercial banks in the same locality during the same period.

+ In the case where 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 raising capital shall not exceed the rate specified in Circular No. 04/2003/TT-NHNN dated February 24, 2003 of the State Bank of Vietnam.

+ In the case where the Social Policy Bank borrows capital from foreign credit organizations and financial institutions, it must comply with the provisions of the Law on Credit Organizations and current legal documents. The interest rate for raising capital 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, implementing accounting and statistical records in accordance with current regulations; accurately and timely reflecting the situation of capital and asset usage and changes during operations, clearly defining the responsibilities of each department and individual for cases of damage or loss of assets.

2. The Social Policy Bank may use operational capital to provide loans to poor households and policy beneficiaries in accordance with the law to ensure the safety and development of capital.

- 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 according to plans approved by the Board of Directors. The Social Policy Bank may invest in and procure fixed assets according to the principle that the remaining value of fixed assets does not exceed 15% of the actual paid-up charter capital and must comply with all state regulations on investment management and construction.

- Procurement of vehicles for work purposes by the Social Policy Bank shall be carried out according to the following standards:

+ The Vice Chairman of the Board of Directors and the General Director of the Social Policy Bank are entitled to use one car for daily transportation between their residence and workplace and for business trips, with a new purchase price not exceeding 450 million VND per vehicle.

+ The headquarters of the Social Policy Bank is entitled to procure up to two cars with a new purchase price not exceeding 400 million VND per vehicle and two four-wheel drive vehicles assembled domestically with a new purchase price not exceeding 600 million VND per vehicle.

+ Each provincial branch of the Social Policy Bank is entitled to procure one car with a new purchase price not exceeding 350 million VND per vehicle and one four-wheel drive vehicle assembled domestically with a new purchase price not exceeding 600 million VND per vehicle. Additionally, the branches in Ho Chi Minh City and Da Nang are entitled to procure an additional four-wheel drive vehicle.

Vehicles used for work-related purposes of the Bank shall not be used to transport branch leaders from their residences to their workplaces.

- The provision of fixed-line telephones at residences and mobile phones for full-time staff working at the Social Policy Bank shall be carried out as follows:

+ Staff members are provided with one fixed-line telephone at their residence, including:

Members of the Board of Directors;

Deputy General Managers;

The Chief Accountant, Head of Office of the Central Social Policy Bank;

Management boards of transaction offices and training centers.

Management boards of provincial branches of the Social Policy Bank.

The cost of purchasing a fixed-line telephone does not exceed 300,000 VND per unit, and installation costs are settled according to the installation contract signed with postal authorities.

In cases where the subject is entitled to be provided with a fixed-line telephone but already has one at their residence, they will not be reimbursed.

+ Staff members are provided with one mobile phone, including:

Members of the Board of Directors;

Deputy General Managers;

The Chief Accountant, Head of Office of the Central Social Policy Bank;

Directors of transaction offices and training centers;

Directors of provincial branches of the Social Policy Bank.

The cost of purchasing a mobile phone does not exceed 3,000,000 VND per unit, and installation costs are settled according to the installation contract signed with postal authorities.

- The depreciation of fixed assets of the Social Policy Bank shall be carried out in accordance with regulations applicable to 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 provisions of the law.

4. The Social Policy Bank implements measures to ensure capital safety in operations as stipulated in Article 9 of the Financial Management Regulation issued together with Decision No. 180/2002/QĐ-TTg dated December 19, 2002, of the Prime Minister, and other regulations on ensuring capital safety in 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 are lost due to subjective reasons of a collective or individual, the entity causing the loss must compensate according to the provisions of 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 related to loan balances, the Social Policy Bank uses the credit risk reserve fund to cover the losses or implement risk management measures as decided by the Prime Minister.

- The value of the loss after recovery and coverage from the above sources, if insufficient, is covered 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. Inventory and revaluation of assets must comply with current regulations applicable to state-owned enterprises. The results of inventory and revaluation of assets of the Social Policy Bank must be submitted to the Ministry of Finance. In cases where the results of inventory and revaluation of assets differ from the book values recorded in accounting books, the Social Policy Bank is responsible for clearly explaining the reasons and proposing measures to handle the situation, 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 principle of efficiency, preservation, and development of capital in accordance with the Civil Code and other laws. The leasing of office space is decided by the Board of Directors upon the proposal of the General Director of the Social Policy Bank.

8. The Social Policy Bank may liquidate or sell off assets that are obsolete, deteriorated, or technologically outdated and have no demand or effective use.

- When selling or liquidating assets, the Social Policy Bank must establish a committee to assess the technical condition and appraise the asset value or hire an appraisal firm. Assets that must be sold through public auction according to the law when being sold or liquidated, the Social Policy Bank must organize such auctions and publicly announce them in accordance with the law. If the assets are liquidated by dismantling or destruction, a liquidation committee must be established, 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 sold or liquidated, along with the costs of sale or liquidation, is accounted for in the operating results of the Social Policy Bank.

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 relevant laws.

III/ PROVISION FOR AND MANAGEMENT OF RISK RESERVES

1. The Social Policy Bank can account for foreign exchange risk reserves as expenses for foreign-currency funds raised according to government regulations for lending to poor households and policy targets. The provision for foreign exchange risk reserves can only be made when the average foreign exchange rate in the inter-bank market announced by the State Bank of Vietnam (SBV) at the time of provisioning exceeds the foreign exchange rate currently recorded in the Social Policy Bank's accounting books.

 

Time of provisioning for foreign exchange risk reserves: Provisioning for foreign exchange risk reserves is carried out for each type of foreign-currency funds raised and summarized in a detailed schedule of foreign exchange risk reserves as the basis for accounting for operating expenses of the Social Policy Bank. Provisioning for foreign exchange risk reserves is conducted at the end of the accounting period (December 31) to prepare annual financial statements.

In cases where the amount to be provisioned for foreign exchange risk reserves is greater than the existing balance of foreign exchange risk reserves, the Social Policy Bank shall provision for foreign exchange risk reserves 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 establishing foreign exchange risk reserves is to compensate for risks arising from fluctuations in foreign exchange rates on the market leading to an increase in costs for the Social Policy Bank when purchasing foreign currency to repay foreign debts. The Social Policy Bank may use existing foreign exchange risk reserves to offset actual foreign exchange rate differences that occur when purchasing foreign currency to repay foreign debts. In cases where the foreign exchange risk reserve is insufficient to cover the foreign exchange rate differences occurring in the year, the Chairman of the Board of Directors 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 is used to offset risks caused by objective factors such as natural disasters, fires, epidemics, changes in state policies, or market price fluctuations... occurring individually and locally after utilizing insurance compensation (if any).

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 is calculated using the arithmetic mean method based on the monthly loan balances throughout the year as stipulated in Point 3, Section IV of this Circular.

2.3. The establishment of credit risk reserve funds shall be carried out 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 for the following year. In cases where the credit risk reserve fund is insufficient to cover losses incurred during the year, the Chairman of the Board of Directors of the Social Policy Bank shall report to the Minister of Finance for consideration and decision.

The Chairman of the Board of Directors of the Social Policy Bank is responsible for prescribing and implementing the use of the credit risk reserve fund to handle risks in the operations of the Social Policy Bank.

3. Handling risks caused by widespread objective factors shall be carried out according to the Prime Minister's decision.

IV/ INTEREST RATE DIFFERENTIAL AND MANAGEMENT FEE SUBSIDY

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

- The State budget only subsidizes interest rate differentials and management fees for loans made to specified targets as provided for in Decree No. 78/2002/NĐ-CP dated October 4, 2002 of the Government. The State budget does 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

+ Debts that have been exempted or forgiven by the Government and other debts that have been allowed to be handled by the Government for customers but with corresponding sources 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.

- Management fees are determined based on actual management costs in accordance with regulations but not exceeding 0.6% per month calculated on the outstanding loan balance that has earned interest.

- Subsidies are implemented through provisional quarterly payments according to plans and adjusted based on the actual 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. Developing a subsidy plan for interest rate differentials and management fees.intention.

- Based on the national program to eliminate poverty, reduce poverty, and create jobs, the Social Policy Bank develops a subsidy plan for interest rate differentials and management fees for the planning year and submits it to the Ministry of Finance and the Ministry of Planning and Investment at the time of compiling the annual State budget revenue and expenditure plan in accordance with the State Budget Law and guiding documents.

- The development of the Social Policy Bank's subsidy plan for interest rate differentials and management fees for the planning year is carried out according to the formulas stipulated below.

- On the basis of the Social Policy Bank's subsidy plan for interest rate differentials and management fees, based on the national program to eliminate poverty and create jobs, and taking into account the State budget balance capacity, the Ministry of Finance determines the subsidy plan for interest rate differentials and management fees and notifies the Social Policy Bank.

- Based on the annual interest rate differential and management fee subsidy target announced by the Ministry of Finance, the Social Policy Bank is responsible for developing and reporting to the Ministry of Finance a provisional quarterly subsidy plan as the basis for implementation.

3. Determining the actual interest rate differential and management fee subsidy amount.

The Social Policy Bank determines the actual interest rate differential and management fee subsidy amount according to the following formulas.

 

The management fee is determined based on actual management costs of expenditures in accordance with the provisions of this Circular but not exceeding 0.6% per month calculated on the outstanding loan balance that has earned interest.

Where:

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

 

b) Average interest rate on sources of capital

- Total interest payable for capital raising is the total interest payable for all sources of capital raised by the Social Policy Bank throughout the quarter, year.

 

Entrusted capital from domestic and foreign organizations and individuals, and state capital transferred for debt write-offs and forgiveness for customers as decided by the Government shall be excluded when calculating the average capital source interest rate.

Total Interest Receivable

c) Average lending interest rate

d) Proportion of Loans Earning Interest

- The proportion of loans earning interest applied for the planning year is the actual proportion of loans earning interest in the first six months of the preceding year. The actual proportion of loans earning interest in the first six months of the preceding year is calculated by dividing the actual interest received in six months by the interest receivable in six months.

- The actual proportion of loans earning interest is calculated by dividing the actual interest received in the quarter or year by the interest receivable in the quarter or year.

The ratio of actual interest-bearing outstanding loans is calculated by dividing the actual interest received quarterly and annually by the interest due quarterly and annually.

d) The management fee level applied in the first three years shall be determined based on the actual management costs according to the content and expenditure standards prescribed in this Circular, approved annually by the Ministry of Finance but not exceeding 0.6% per month calculated on the outstanding loan balance that generates interest. For social policy bank programs implementing entrusted loans as decided by the Prime Minister with specified management fee levels, the Social Policy Bank shall enjoy the management fees as stipulated in such decisions.

4/ Procedures for subsidizing interest rate differences 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 quarterly subsidy plan of the Social Policy Bank, the Ministry of Finance shall temporarily subsidize the Social Policy Bank according to regulations on the 25th day of the first month of each quarter.

- Adjust quarterly subsidy amount

+ On the 15th day of the first month of the following quarter, based on the consolidated data from branches, the Social Policy Bank shall calculate the actual amount to be subsidized in the previous quarter, the difference with the temporarily subsidized amount in the previous quarter, along with explanations sent to the Ministry of Finance.

+ Based on the plan allocated in the State budget expenditure forecast; based on the subsidy request of the Social Policy Bank, the Ministry of Finance shall determine the actual amount to be subsidized in the previous quarter.

a. If the actual amount to be subsidized in the previous quarter is higher than the temporarily subsidized amount, the Ministry of Finance shall supplement the remaining amount together with the temporarily subsidized amount for the next quarter.

b. If the actual amount to be subsidized in the previous quarter is lower than the temporarily subsidized amount, the Ministry of Finance shall deduct the excess amount from the temporarily subsidized amount for the next quarter.

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

- At the end of the fiscal year, based on the officially settled figures approved by the Board of Directors, the Social Policy Bank shall recalculate the total amount to be subsidized for the entire year, along with explanations sent to the Ministry of Finance and the Ministry of Planning and Investment.

- Based on the annual subsidy plan allocated in the State budget; based on the settlement figures and actual operational situation of the Social Policy Bank during the year, the Ministry of Finance shall re-determine the official total amount to be subsidized for the entire year for the Social Policy Bank and implement adjustments. Specifically, the management fee received will be determined based on the average outstanding loan balance and the corresponding management fee ratio approved by the Ministry of Finance in the notification of the subsidy plan forecast.

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

+ If the officially subsidized amount for the entire year is higher than the temporarily subsidized amount throughout the year (quarterly), the Ministry of Finance shall supplement the remaining amount within the notified plan. Any excess difference between the officially subsidized amount for the entire year and the notified plan (if any) shall be allocated in the subsidy plan for the following year.

+ If the officially subsidized amount for the entire year is lower than the temporarily subsidized amount throughout the year (quarterly), the excess difference shall be retained to subsidize the first quarter 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);

- Income from debts processed from the risk reserve fund, processed 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;

- Service payment and treasury expenses include service payment expenses; postal and communication network fees; transportation and handling of money expenses; counting, sorting, and packaging money expenses; money protection expenses, and other expenses related to payment and treasury activities.

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

+ In the case of entrusted loans through groups: The service fee level for entrusted loans shall be agreed upon between the Social Policy Bank and the entrusted lending organization, where the expense paid to the entrusted organization shall not exceed 0.22% per month calculated on the outstanding loan balance that generates interest, and the commission paid to borrowing groups shall not exceed 0.1% per month calculated on the outstanding loan balance that generates interest.

+ In the case of entrusted loans without going through groups: The service fee level for entrusted loans shall be agreed upon between the Social Policy Bank and the entrusted lending organization, but shall not exceed 0.32% per month calculated on the outstanding loan balance that generates interest.

- Expenses for participating in the money market;

- Other operational activity expenses.

2.2. Expenses for taxes, fees, and levies as prescribed.

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;

- Allowance expenses for members of the Board of Directors working part-time at the central level as prescribed in Decree No. 25/CP dated May 23, 1993 of the Government;

- Responsibility allowance expenses for members of the Advisory Board of the Board of Directors, members concurrently serving on the Supervisory Board of the Board of Directors, and members of the Representative Board at all levels, with a monthly expense of 50,000 VND per person.

- Payment expenses for commune and ward officials at a rate of 50,000 VND per commune or ward per month.

- Expenses for termination allowances 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 system.

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

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

- Repair expenses of fixed assets aimed at restoring the capacity of the asset, which are directly recorded or gradually allocated to operating expenses in the year. For special fixed assets where repair expenses occur unevenly between periods and years, if the Social Policy Bank wishes 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 review and decision. The Social Policy Bank must settle the actual repair expenses incurred with the pre-recorded repair expenses; if the actual repair expenses are greater than the pre-recorded amount, the difference shall be directly recorded or gradually allocated to the period's expenses; if the actual repair expenses are less than the pre-recorded amount, the difference shall be recorded as income for the period.

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

- The cost for purchasing labor tools shall be calculated based on the number of officers and staff of the Social Policy Bank with an average amount not exceeding 2.2 million VND per person per year.

- The cost for purchasing property insurance for assets that must be insured according to the provisions of the law shall be based on the property 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 item shall be implemented in accordance with the State regulations.

- The total annual management and administrative expenditure of the Social Policy Bank shall be calculated based on the average number of officers and staff of the Social Policy Bank with a maximum amount not exceeding 16 million VND per person per 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 officers and staff traveling domestically and internationally shall be carried out in accordance with the current regulations of the Ministry of Finance for administrative and service agencies.

+ Expenditure for training and professional skills training for officers and staff of the Social Policy Bank. The level of expenditure shall be in accordance with the State regulations for administrative and service agencies.

+ Expenditure for scientific research, technological innovation research; initiatives and improvements aimed at enhancing the operational efficiency of the Social Policy Bank. Research topics and research cost estimates for each topic must be approved by the Board of Directors of the Social Policy Bank and bear responsibility for the effectiveness of those topics.

+ Postage and telephone expenses include expenditures for postage, telecommunication, telegram, telephone, leased telecommunications channel, telex, fax... paid according to the invoice of the postal agency. The payment for the use of fixed-line telephones installed at private residences and mobile phones for eligible recipients shall be implemented according to the following standards:

The Vice Chairman of the Board of Directors shall be reimbursed up to 200,000 VND/month for fixed-line telephones at private residences and 400,000 VND/month for mobile phones.

Other recipients shall be reimbursed up to 100,000 VND/month for fixed-line telephones at private residences and 250,000 VND/month for mobile phones.

+ Expenditure to support activities of the Party and mass organizations of the Social Policy Bank in accordance with State regulations (excluding expenditures supporting trade unions, localities, social organizations, and other agencies).

+ Expenses for purchasing materials, books, and newspapers.

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

+ Transaction costs, external relations costs, conference costs, reception and ceremonial costs, and other related costs must be linked to operational effectiveness, not exceeding 7% of total costs annually in the first three years and not more than 5% in subsequent years.

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

+ Expenditure for fire prevention and firefighting activities within the organization in accordance with regulations.

+ Expenses for environmental protection activities.

+ Other management expenses as prescribed.

2.7. Other Expenses

- Expenditure for the sale, liquidation of assets (including the remaining value of fixed assets when liquidated or sold).

- 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;

- Expenditures for repairs, maintenance, and equipment for welfare assets such as housing and rest houses for officers, civil servants, and staff of the Social Policy Bank, and expenditures 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/ DISPOSITION OF INCOME AND EXPENSE DIFFERENCES AND PURPOSES OF FUNDS

1. The disposition of income and expense differences of the Social Policy Bank shall be implemented 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 Financial reserve fund: Used to cover the remaining losses and damages to capital, assets, and loan balances occurring during the operation of the Social Policy Bank after being compensated by the responsible organizations or individuals, insurance organizations, and the risk reserve fund.

2.3 Development investment fund: Used for expanding the scale of operations and modernizing technology and equipment, working conditions of the Social Policy Bank.

Based on investment needs and the capacity of the fund, the Board of Directors of the Social Policy Bank shall decide on the form and methods of investment according to the principles of safety and effectiveness.

2.4 Unemployment assistance reserve fund: Used to pay unemployment benefits to employees who have worked at the Social Policy Bank for at least one year and temporarily lost their jobs in accordance with State regulations; training costs for employees due to changes in technology or new job assignments; vocational training for female employees of the Social Policy Bank and upgrading the professional skills of officers and staff working at 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 changes without timely reassignment or termination.

- 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.

- Year-end bonuses or regular bonuses for officers and staff of the Social Policy Bank. The bonus level shall be decided by the General Director based on the proposal of the Chairman of the Social Policy Bank's Commendation Council, based on productivity and achievements of each officer and staff member.

- Special bonuses for individuals and groups of the Social Policy Bank who have technical innovations and process improvements that bring about efficiency. The bonus level shall be decided by the General Director of the Social Policy Bank.

- Bonuses for individuals and units outside the Social Policy Bank that have good relationships and make effective contributions to the activities of the Social Policy Bank. The bonus level shall be decided by the Chairman of the Board of Directors of the Social Policy Bank.

- 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.

Investment in constructing or repairing, supplementing construction capital for welfare projects of the Social Policy Bank, contributing capital to construct common welfare projects within the industry or with other units according to agreed contracts.

- 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.

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

VII/ ACCOUNTING SYSTEM, STATISTICS, AUDIT, REPORTING, AND FINANCIAL TRANSPARENCY:

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

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) Plan for interest rate subsidy and management fee reimbursement 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 financial reports include: (according to the attached 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 loans of the Bank (according to form 03-BC)

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

- Report on provision for risk and its utilization (according to form 05-BC)

- Report on final settlement of interest rate differences and management fees requesting compensation (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 of the Social Policy Bank shall be 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 shall conduct the audit and verify the annual financial settlement report of the Social Policy Bank. The audit results 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 honesty of its financial reports. The Ministry of Finance will implement checks on compliance with financial regulations, final settlement of interest rate differences and management fees for the Social Policy Bank.

6. The Social Policy Bank shall implement internal auditing systems, publish its annual financial performance in accordance with the provisions of the Law on Credit Organizations and the scope and scale of its operations.

Chapter 3:

IMPLEMENTATION

- This Circular takes effect fifteen days after its publication in the Official Gazette.

- Based on the guidelines set forth in this Circular, and national regulations on financial systems, the Social Policy Bank shall establish financial regulations applicable within its units, report to the Ministry of Finance for approval before submitting to the Board of Directors for endorsement as the basis for implementation.

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