Directive No. 6-NH/CT On continuing to build, consolidate, and develop credit cooperatives

DIRECTIVE

OF THE STATE BANK NO. 6-NH/CT ON MAY 22, 1985 ON CONTINUING TO BUILD, STRENGTHEN AND DEVELOP CREDIT COOPERATIVES
REGARDING THE IMPLEMENTATION OF THE RESOLUTION OF THE SIXTH SESSION OF THE PARTY CENTRAL COMMITTEE, DIRECTIVE NO. 13-NH/CT ON JULY 28, 1983, AND GUIDANCE DOCUMENTS OF THE CENTRAL BANK, PROVINCES AND CITIES ACROSS THE COUNTRY HAVE ACTIVELY IMPLEMENTED THE CONSTRUCTION, STRENGTHENING, AND DEVELOPMENT OF CREDIT COOPERATIVES AND HAVE ACHIEVED MANY POSITIVE RESULTS.

BY NOW, PROVINCES IN THE SOUTH HAVE COMPLETED THE CONSTRUCTION PRIMARILY, WITH OVER 80% OF VILLAGES MEETING THE REQUIREMENTS HAVING BUILT CREDIT COOPERATIVES, ATTRACTION OF 30% OF LABOR TO JOIN CREDIT COOPERATIVES, WITH SHARE CAPITAL AMOUNTING TO OVER 130 MILLION DONG. IN THE NORTH, MOST PROVINCES AND CITIES HAVE BEGUN TO STRENGTHEN CREDIT COOPERATIVES, REACHING NEARLY 70% OF THE OLD BASES, COLLECTING MORE THAN 50 MILLION NEW SHARES.

GENERALLY, THE MOVEMENT OF NEWLY BUILT AND STRENGTHENED CREDIT COOPERATIVES IS STILL AT THE ORGANIZATIONAL LEVEL AND HAS NOT YET PROMOTED BUSINESS OPERATIONS ACCORDING TO ASSIGNED FUNCTIONS AND RESPONSIBILITIES; THE AMOUNT OF FUNDS RAISED AND LOANED IS NOT SIGNIFICANT COMPARED TO THE AMOUNT OF MONEY HELD AS WELL AS THE CAPITAL NEEDS IN PRODUCTION AND LIVING CONDITIONS IN RURAL AREAS.

IN LIGHT OF CURRENT REQUIREMENTS, ACCORDING TO THE SPIRIT OF RESOLUTIONS 6 AND 7 OF THE PARTY CENTRAL COMMITTEE, CREDIT COOPERATIVES MUST EXPAND BUSINESS ACTIVITIES IN AN ORDERLY AND EFFECTIVE MANNER, FOLLOWING THE PRINCIPLE THAT CREDIT COOPERATIVES ARE INDEPENDENT ECONOMIC ACCOUNTING UNITS, SELF-SUFFICIENT IN FINANCIAL TERMS, ENHANCING FUNDS RAISING AND EXPANDING LOANS, SELF-GUARANTEEING ALL COSTS AND OPERATING PROFITABLY, BEING RESPONSIBLE FOR THEIR OWN ASSETS AND OPERATING CAPITAL AS LEGAL ENTITIES OF COLLECTIVE ECONOMIC ORGANIZATIONS. IT IS NECESSARY TO MAKE THE MOVEMENT A WIDESPREAD POPULAR EFFORT FOR THE REAL BENEFIT OF WORKING PEOPLE. THE BUSINESS FOCUS OF CREDIT COOPERATIVES SHOULD BE SERVING THE DEVELOPMENT OF FAMILY ECONOMIES IN THE RIGHT DIRECTION, ADDRESSING SOME OF THE DIFFICULTIES IN LIVING CONDITIONS, LINKING THE ACTIVITIES OF CREDIT COOPERATIVES WITH THOSE OF OTHER COOPERATIVES AND AGRICULTURAL PRODUCTION GROUPS, MARKETING COOPERATIVES, AND SMALL AND HANDICRAFT INDUSTRY COOPERATIVES; SIMULTANEOUSLY, THEY SHOULD EFFECTIVELY PERFORM THE TASKS DELEGATED BY THE BANK.

THE GUIDANCE ON THE CONSTRUCTION, STRENGTHENING, AND DEVELOPMENT OF CREDIT COOPERATIVES IS A HEAVY TASK THAT REQUIRES CONSTANT AND SPECIFIC DIRECTION FROM PARTY COMMITTEES AND LOCAL AUTHORITIES; IN THE SHORT TERM, IT IS NECESSARY TO GRASP THE FOLLOWING POLICIES AND MEASURES TO PROVIDE DIRECTION AND ORGANIZE IMPLEMENTATION:

I. CONSTRUCTING NEW ORGANIZATIONS AND STRENGTHENING EXISTING ONES

1. PROVINCES AND CITIES IN THE SOUTH NEED TO URGENTLY COMPLETE THE CONSTRUCTION OF CREDIT COOPERATIVES IN VILLAGES MEETING THE REQUIREMENTS THIS YEAR AND CONTINUE TO STRENGTHEN THE ALREADY BUILT COOPERATIVES, PUTTING THESE UNITS INTO ACTUAL OPERATION.
CREDIT COOPERATIVE

PROVINCES AND CITIES IN THE NORTH SHOULD CONTINUE TO STRENGTHEN CREDIT COOPERATIVES IN ALL THREE ASPECTS OF ORGANIZATION, BUSINESS OPERATIONS, AND FINANCIAL ACCOUNTING. VILLAGES THAT HAVE BEEN STRENGTHENED IN ORGANIZATIONAL TERMS SHOULD FOCUS ON ENHANCING BUSINESS OPERATIONS, ESPECIALLY SELF-BUSINESS OPERATIONS.

2. AT 3. CONSTRUCT CREDIT COOPERATIVES IN NECESSARY WARD LEVELS IN MARKET TOWNS, SMALL CITIES, AND CITIES ACROSS THE COUNTRY. WARD LEVEL CREDIT COOPERATIVES CAN OPERATE ACCORDING TO THE REGULATIONS ON THE ORGANIZATION AND OPERATIONS OF RURAL CREDIT COOPERATIVES ISSUED UNDER DECISION NO. 52/NH-QĐ ON JUNE 2, 1983 AND DIRECTIVE NO. 13/NH-CT ON JULY 28, 1983 OF THE GENERAL DIRECTOR OF THE STATE BANK OF VIETNAM.

CREDIT COOPERATIVES ARE TO BE BUILT AT THE WARD LEVEL, WITH EACH WARD ESTABLISHING ONE CREDIT COOPERATIVE, WITHOUT FORMING CREDIT COOPERATIVES AT THE DISTRICT OR COUNTY LEVEL.

WHEREWARDS ALREADY HAVE SAVINGS FUNDS, FUNDS RAISING AMONG THE POPULATION CAN BE CONDUCTED THROUGH TWO FORMS: SOCIALIST SAVINGS DEPOSITS MANAGED BY THE SAVINGS FUND AND POPULAR DEPOSITS AND DEPOSITS FROM SOCIAL ORGANIZATIONS IN THE WARD MANAGED BY THE CREDIT COOPERATIVE.

THE ORGANIZATION AND GUIDANCE FOR THE CONSTRUCTION AND STRENGTHENING OF WARD LEVEL CREDIT COOPERATIVES SHALL BE HANDLED BY THE AGRICULTURAL CREDIT DEPARTMENT.

II. STRENGTHENING AND EXPANDING THE ACTIVITIES OF CREDIT COOPERATIVES ACROSS THE COUNTRY

1. STRENGTHEN FUNDS RAISING, CREDIT COOPERATIVES MUST RAISE FUNDS THEMSELVES TO HAVE SUFFICIENT FUNDS FOR LOANS.
SHARE CAPITAL SOURCES, CREDIT COOPERATIVES NEED TO WIDELY PROMOTE THE DEVELOPMENT OF MEMBERS AND ATTRACT ADDITIONAL SHARES FROM ALMOST EVERYONE WHO IS OF AGE TO JOIN THE CREDIT COOPERATIVE. WHERE THE SHARE CAPACITY IS LOW, IT SHOULD BE REVISED THROUGH THE MEMBER ASSEMBLY, WITH WARDS SETTING THE MINIMUM SHARE AT 200 DONG OR MORE. IN ADDITION TO FIXED SHARES, THEY SHOULD ENCOURAGE MEMBERS WITH ABILITY TO CONTRIBUTE MORE SHARES.

ACTIVELY PROMOTE PUBLICITY, ORGANIZATION, AND MOTIVATION FOR THE PUBLIC TO DEPOSIT MONEY INTO CREDIT COOPERATIVES, APPLY INTEREST RATES CORRECTLY, ENSURE CONVENIENT DEPOSITS AND WITHDRAWALS, AND FULL PAYMENT OF BOTH PRINCIPAL AND INTEREST. IT IS NECESSARY TO ORGANIZE CREDIT GROUPS IN VILLAGE GROUPS, STREET BLOCKS, AND PRODUCTION TEAMS TO COLLECT SMALL AMOUNTS OF IDLE MONEY FROM THE PUBLIC INTO DEPOSITS OF THE CREDIT COOPERATIVE OR SOCIALIST SAVINGS DEPOSITS. SAVINGS ARE FUNDS RAISED BY THE BANK, AND CREDIT COOPERATIVES MUST FULLY PAY THE SAVINGS FUND ACCORDING TO THE SET PAYMENT PERIODS.

MANAGING CASH FUNDS OF SOCIAL ORGANIZATIONS, RELIGIOUS FUNDS, AND COLLECTIVE ECONOMIC ORGANIZATIONS IN VILLAGES, INCLUDING COOPERATIVES AND AGRICULTURAL PRODUCTION GROUPS, REMOTE MARKETING COOPERATIVES, DELEGATED BY THE BANK.

2. EXPAND LOANS FROM CREDIT COOPERATIVES.

IN ADDITION TO THE SHORT-TERM PRODUCTION, BREEDING, AND LIVING LOANS TO MEMBERS AND THE PUBLIC AS PREVIOUSLY DEFINED, CREDIT COOPERATIVES WITH THE ABILITY TO RAISE MORE FUNDS CAN EXPAND LOANS TO:

- LOANS FOR PRODUCTION COSTS TO INTENSIFY CULTIVATION, INCREASE YIELDS, AND IMPROVE THE PRODUCTIVITY OF CROPS AND LIVESTOCK;

- LOANS TO PARTY AND GOVERNMENT EMPLOYEES WHO ARE MEMBERS OF CREDIT COOPERATIVES IF THEY HAVE NOT YET RECEIVED LOANS FROM SAVINGS FUNDS;

- LOANS TO HOUSEHOLDS ENGAGED IN SMALL AND HANDICRAFT INDUSTRIES AND TRADE IF THEY HAVE REGISTERED FOR BUSINESS;

- LOANS TO THE FOURTH QUARTER OF MARKETING COOPERATIVES.

- Lending to households engaged in small-scale production and laboring petty traders who have registered for business;

- Lending to the trading portion of cooperatives;

- In the case of production expenses of cooperatives; agricultural production groups, small-scale industrial cooperatives, and other economic organizations where it is necessary to purchase small amounts in cash and the credit cooperative has sufficient capital, they may be granted loans. If the credit cooperative does not have capital, the bank will directly grant loans. Collective economic organizations located far from banks shall be examined and permitted by the head of the basic bank branch to open deposit accounts for settlement, depositing and withdrawing cash at credit cooperatives.

Loans must ensure compliance with policies and directions, be planned, and be guided by the People's Committee and the State Bank provincial, city, and special zone branches.

3. Credit cooperatives shall self-fund to expand lending; banks will not provide additional funds and also do not encourage credit cooperatives to deposit money in banks. The county bank branch shall assist credit cooperatives in doing a good job in planning, ensuring the mobilization of more capital, timely lending, and effectiveness, without leaving idle capital. County and district bank branches shall rearrange loan targets reasonably based on the capital availability of each credit cooperative and guide credit cooperatives to expand lending according to Point 2, Section II.

The amount of capital that the bank has lent to credit cooperatives must be gradually recovered based on the repayment period recorded on the loan agreement.

4. The task of agency for banks for newly established credit cooperatives shall be assigned according to the requirements and capabilities of each credit cooperative, either individually or in several areas. When assigning credit cooperatives to act as agents, thorough training and guidance must be provided, and all regulations concerning accounting, payment, and inspection must be strictly followed.

For credit cooperatives in wards, do not assign them to handle banking and monetary agency tasks.

III. IMPLEMENTATION OF POLICIES AND REGULATIONS FOR THE ORGANIZATION AND OPERATIONS OF CREDIT COOPERATIVES
ORGANIZATION AND OPERATIONS OF CREDIT COOPERATIVES

The Council of Ministers has issued a decree amending some interest rates of banks and credit cooperatives. The Central Bank has issued a circular guiding the implementation of new interest rate tables for credit cooperatives. The heads of provincial, city, and special zone banks are responsible for advising the People's Committees to set and adjust specific interest rates periodically to suit local conditions, aiming to encourage people to deposit money, expand lending, stimulate production, ensure adequate costs for credit cooperative operations, and achieve reasonable savings. Strict guidance and supervision are required to prevent abuse of differences in interest rates and changes in interest rates.

Regarding monthly allowances and other benefits for full-time staff of credit cooperatives, the Central Bank does not specify these but leaves it to the People's Committees at various levels to base their policies on material and spiritual incentives for village cadres, setting monthly income levels (including both monetary and in-kind income) for full-time staff in relation to key village cadres. Where in-kind compensation is not available, it can be calculated in monetary terms to ensure the income and living standards of full-time credit cooperative staff. Expenses for allowances for credit cooperative staff are self-funded. Where income is still low or insufficient, measures must be taken to promote business activities, and in the short term, the head of the basic bank branch may consider providing a maximum advance of up to six months, which must be fully recovered within twelve months. The bank will provide subsidies to newly established credit cooperatives during the initial period when there is no income, with a maximum subsidy of 1,000 dong per month for six months, and mountainous areas for twelve months.

While waiting for the study of retirement benefits for full-time staff, localities need to reorganize credit cooperatives and resolve benefits for staff who meet the criteria for retirement allowances. Allowances are deducted from the credit cooperative's reserve fund and insurance fund; if there is a shortfall, the bank will provide additional subsidies to pay according to the standard regulations stipulated in Circular No. 2-NH/TT dated August 15, 1983, of the Central Bank.

For newly established or recently consolidated credit cooperatives without income, the cost of organizing the first member assembly shall be subsidized by the head of the basic bank branch.

Regarding the commission system for credit cooperatives performing certain agency tasks for banks and savings funds, the following unified provisions apply:

- Commission for disbursing social welfare and pension payments, before the change in commission rates, temporarily pay 0.70 dong per transaction to credit cooperatives, without retaining any amount in the bank or savings fund.

- Commission for collecting cash on behalf of the bank, the bank enjoys 0.2% of the actual amount deposited into the bank.

- Collection of individual debts entitles the recipient to a uniform 30% of the interest calculated on the principal amount collected.

IV. GUIDANCE ON IMPLEMENTATION

In 1985 and subsequent years, it is necessary to strengthen guidance and management to develop a strong credit cooperative movement.

1. First, it is necessary to strengthen leadership and comprehensive direct guidance by the Party Committee and the People's Committee regarding construction, consolidation, business operations, organizational cadre work, staff benefits, asset protection, etc.

2. At all levels, the State Bank needs to play its advisory role to the Party Committee and government while also having the responsibility:

a) To regularly train and instruct staff of credit cooperatives and agricultural credit on policies and operations.

b) To promptly and adequately provide funding, materials, seals, etc., to credit cooperatives according to prescribed regulations.

c) To dispatch some bank staff with expertise to assist credit cooperatives for a period of time, especially those large-scale business operations with weak accounting. The Organizational Cadre Department and the Agricultural Credit Department shall study the system and submit it for leadership approval.

In the short term, it is necessary to increase the number of experienced key staff from the north to assist southern provinces for about six months.

3. Pay attention to the material and spiritual benefits for credit cooperative cadres, promptly encourage active network cadres in the movement.

Closely coordinate with mass organizations to regularly educate the masses; at the same time, appropriately address the material interests of members in depositing and borrowing money, making them closely connected to the credit cooperative, caring about its construction and supervision of the activities of credit cooperative cadres.

4. Localities need to have plans and measures to continue building and consolidating credit cooperatives; consider this as an important component in the program of the sector and all levels to fulfill the task of socialist transformation.

5. Guide credit cooperatives to develop practical business activity plans, revenue and expenditure budgets, financial management serving general policies, strategies, and local plans.

It is necessary to pay attention to adjusting accounting and finance of credit cooperatives, clearly settling old assets, and fully recording new assets.

Strengthen inspection of the operation and capital management of credit cooperatives. The bank assists Party Committees and People's Committees in inspecting the organization and operation of credit cooperatives and directly inspects various aspects of operations to help credit cooperatives enhance their strengths and promptly correct errors.

This Directive shall be disseminated to credit cooperatives.

Comrades Heads of Office, Heads of Cadre Organization Department, Heads of Accounting and Budget Management Department, Central Savings Fund Directors, Agricultural Credit Department Heads, and Directors of provincial, municipal, and centrally-administered city banks are responsible for guiding and directing the implementation of this Directive.