Circular No. 62/2016/TT-BTC guiding the implementation of financial management regulations for the Social Policy Bank issued together with Decision No. 180/2002/QĐ-TTg dated December 19, 2002 and Decision

CIRCULAR

Guidelines for implementing the financial management regulations for the Vietnam Social Policy Bank issued pursuant to Decision No.

180/2002/QĐ-TTg dated December 19, 2002 and Decision No. 30/2015/QĐ-TTg dated July 31, 2015 of the Government

Pursuant to Decision No. 16/2003/QĐ-TTg dated January 22, 2003 of the Prime Minister approving the charter on organization and operation of the Vietnam Social Policy Bank;

Pursuant to Decision No. 180/2002/QĐ-TTg dated December 19, 2002 of the Prime Minister promulgating the financial management regulations for the Vietnam Social Policy Bank;

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Pursuant to Decree No. 215/2013/NĐ-CP dated December 23, 2013 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

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

Pursuant to Decision No. 30/2015/QĐ-TTg dated July 31, 2015 of the Prime Minister amending and supplementing certain provisions of the financial management regulations for the Vietnam Social Policy Bank promulgated pursuant to Decision No. 180/2002/QĐ-TTg dated December 19, 2002 of the Prime Minister;

The Minister of Finance issues this Circular guiding the implementation of the financial management regulations for the Vietnam Social Policy Bank promulgated pursuant to Decision No. 180/2002/QĐ-TTg dated December 19, 2002 and Decision No. 30/2015/QĐ-TTg dated July 31, 2015 of the Prime Minister.

This Circular guides the implementation of the financial management regulations for the Vietnam Social Policy Bank promulgated pursuant to Decision No. 180/2002/QĐ-TTg dated December 19, 2002 of the Prime Minister on promulgating the financial management regulations for the Vietnam Social Policy Bank (hereinafter referred to as Decision No. 180/2002/QĐ-TTg) and Decision No. 30/2015/QĐ-TTg dated July 31, 2015 of the Prime Minister on amending and supplementing certain provisions of the financial management regulations for the Vietnam Social Policy Bank promulgated pursuant to Decision No. 180/2002/QĐ-TTg dated December 19, 2002 of the Prime Minister (hereinafter referred to as Decision No. 30/2015/QĐ-TTg).

At the proposal of the Director of the Department of Financial Affairs of Banks and Financial Institutions,

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

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

2. Relevant organizations and individuals.

Article 2. Applicability

1. The Vietnam Social Policy Bank is a state-owned credit institution operating without profit-making objectives; it has legal personality, registered capital, balance sheet, seal, and accounts opened at the State Bank of Vietnam, the Treasury, and other credit institutions in Vietnam.

2. Financial activities of the Vietnam Social Policy Bank shall be carried out in accordance with the provisions of Decree No. 78/2002/NĐ-CP dated October 4, 2002 of the Government on credit for the poor and other policy beneficiaries, Decision No. 180/2002/QĐ-TTg, Decision No. 30/2015/QĐ-TTg, specific guidance provided in this Circular, and other legal documents on financial management relevant thereto.

Article 3. Principles of financial management

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

Article 4. Liability System

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

Article 4. Liability System

The Chairman of the Board of Directors and the General Director of the Social Policy Bank shall be liable under the law and to state management agencies for the implementation of the financial regime of the Social Policy Bank.

Chapter II

SPECIFIC PROVISIONS

Article 5. Operating Capital of the Social Policy Bank

1. Operating Capital:

1.1. Shareholder Equity and Funds.

1.2. Raised Capital.

1.3. Entrusted Capital from domestic and foreign organizations and individuals.

1.4. Other Capital.

2. Shareholder Equity and Funds:

2.1. Charter Capital provided by the State budget at establishment and supplemented during operation. The Social Policy Bank is annually supplemented with charter capital corresponding to the credit growth rate assigned by the Prime Minister.

2.2. Funds formed during the operation of the Social Policy Bank include: Additional Charter Capital Reserve Fund, Business Development Investment Fund, Financial Provision Fund, Credit Risk Provision Fund, Reward Fund, Welfare Fund, Management Staff Reward Fund.

2.3. State budget capital (including central and local budgets) for lending to eliminate poverty, create jobs, and implement other social policies as prescribed by the Government and the Prime Minister.

2.4. Unallocated surplus income (if any).

2.5. Non-repayable funding from domestic and foreign organizations and individuals.

2.6 Other capital as prescribed by law (if any).

3. Raised Capital:

3.1. Forms of raising capital:

a) Raising interest-bearing deposits within the approved annual plan; voluntary non-interest-bearing deposits from domestic and foreign organizations and individuals; savings of the poor and other policy beneficiaries;

b) ODA capital allocated by the Government;

c) Issuance of bonds, deposit certificates, and other securities in accordance with the law;

d) Accepting deposits from credit institutions as prescribed by the State Bank of Vietnam;

đ) Borrowing from the State Bank of Vietnam;

e) Borrowing from financial and credit institutions both domestically and internationally.

3.2. Principles of raising capital

a) Annually, the General Director of the Social Policy Bank bases on the credit plan and plans the sources of raised capital to submit to the Board of Directors of the Social Policy Bank for approval;

b) Raising funds at market interest rates for lending to poor households and policy beneficiaries must ensure the principle of only raising when maximum use has been made of non-interest-bearing or low-interest-bearing sources. The interest rate for raising capital by the Social Policy Bank shall be implemented according to the following principles:

- In case the Social Policy Bank issues government-guaranteed bonds to raise capital, the issuance interest rate shall be carried out within the interest rate range prescribed by the Ministry of Finance.

- In case the Social Policy Bank raises capital through issuing deposit certificates and other securities (excluding the issuance of government-guaranteed bonds); accepting deposits from domestic organizations and individuals; raising savings from the poor; borrowing from domestic financial and credit institutions, the interest rate for raising capital shall not exceed the highest deposit interest rate of the same term and period of four banks including: Vietnam Agriculture and Rural Development Bank, Vietnam Joint Stock Commercial Bank for Investment and Development, Vietnam Joint Stock Commercial Bank for Foreign Trade, and Vietnam Joint Stock Commercial Bank for Industry and Trade in the same locality.

- In case the Social Policy Bank accepts deposits from credit institutions as stipulated in point 3.1, clause 3 of Article 5 of this Circular, the interest rate for raising capital shall not exceed the interest rate prescribed by the State Bank of Vietnam.

- In case the Social Policy Bank borrows from the State Bank of Vietnam in Vietnamese dong or foreign currency, the borrowing interest rate shall be implemented according to the regulations of the State Bank of Vietnam.

- In case the Social Policy Bank borrows from credit and financial institutions abroad, it must comply strictly with the provisions of the Law on Credit Institutions and current legal documents. The interest rate for raising capital must be submitted to the Ministry of Finance for review and comments before implementation.

Article 6. Management of Capital and Assets

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

2. The Social Policy Bank may use operational capital to provide loans to poor households and other target groups as prescribed by law, ensuring safety and development of capital.

2.1. Construction investment and procurement of fixed assets for the operation of the Social Policy Bank must comply with legal provisions applicable to state-owned enterprises holding 100% of charter capital, according to plans approved by the Board of Directors, while ensuring that the total remaining value of all fixed assets (original value of fixed assets minus depreciation) at the Social Policy Bank does not exceed 25% of its actual paid-up charter capital.

2.2. The Social Policy Bank shall implement depreciation of fixed assets in accordance with the regulations of the Ministry of Finance for wholly state-owned limited liability companies.

3. The Social Policy Bank shall ensure capital safety in operations in accordance with Article 9 of the Financial Management Regulation issued together with Decision No. 180/2002/QĐ-TTg and other legal provisions on ensuring capital safety in operations.

4. In case of losses of capital, assets, including loan receivables, the Social Policy Bank must establish a Committee to prepare a record determining the extent, cause, responsibility, and handling according to the following principles:

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

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

4.3. For objective risks of loan receivables, the Social Policy Bank uses the Credit Risk Reserve Fund to cover or handle risks according to the Prime Minister's decision.

4.4. The residual loss value after recovery and coverage from the above sources, if insufficient, shall be covered by the Financial Reserve Fund of the Social Policy Bank. In case the Financial Reserve Fund is insufficient to cover the loss, the Social Policy Bank shall handle it as follows:

a) For residual loss values without a source of coverage that are less than 10% of the actual paid-up charter capital, the Social Policy Bank shall record them as operating expenses.

b) For residual loss values without a source of coverage that are equal to or greater than 10% of the actual paid-up charter capital, the Social Policy Bank shall gradually allocate them to operating expenses. The allocation period shall be decided by the Chairman of the Board of Directors of the Social Policy Bank after consulting with the Minister of Finance.

Clause 5. Inventory and revaluation of assets

5.1. The Social Policy Bank shall conduct inventory and revaluation of assets in the following cases:

a) Inventory of assets periodically and at the end of the fiscal year;

b) Revaluation of assets according to the decision of the competent state authority;

c) Liquidation or sale of assets.

5.2. The inventory and revaluation of assets must comply with current regulations applicable to wholly state-owned limited liability companies. The results of the revaluation of assets of the Social Policy Bank must be sent to the Ministry of Finance. In case the revaluation result differs from the book value recorded in the accounting books, the Social Policy Bank shall explain the reasons clearly and propose measures to report to the Ministry of Finance for consideration and decision.

6. The Social Policy Bank has the right to lease assets under its management according to the principle of efficiency, preservation, and development of capital as stipulated by the Civil Code and other laws. The leasing of assets under the management of the Social Policy Bank shall be decided by the General Director of the Social Policy Bank.

7. The Social Policy Bank may liquidate or sell assets that are obsolete, deteriorated, damaged beyond repair, technologically outdated, or unused effectively according to the following principles:

7.1. Authority to decide on the liquidation or sale of fixed assets:

a) The General Director decides on plans to liquidate or sell fixed assets with a remaining value below 50% of the total remaining value of all fixed assets recorded on the balance sheet in the quarterly or annual financial report of the Social Policy Bank at the time closest to the decision to liquidate or sell the asset.

Plans to liquidate or sell fixed assets with a value exceeding the level delegated to the General Director shall be reported to the Board of Directors for decision;

b) In case the plan to sell fixed assets of the Social Policy Bank cannot recover the invested capital, the Social Policy Bank must clearly explain the inability to recover the capital, report to the Board of Directors and the Ministry of Finance before selling the fixed assets to ensure supervision;

c) In particular, for newly invested or purchased fixed assets that have been put into use within three years but fail to achieve economic efficiency as approved by the competent authority, if the Social Policy Bank has no need to continue using them and selling them cannot recover the invested capital leading to the inability to repay loans according to promissory notes or loan contracts, then the responsibility of those involved must be clarified to report to the Board of Directors for handling according to the law.

7.2. Methods of liquidation or sale of fixed assets:

a) The Social Policy Bank shall carry out the sale of fixed assets through public auction via an organization with the function of selling auctioned assets or organize such auctions publicly according to the procedures stipulated by laws on the sale of auctioned assets. In cases where the remaining value of fixed assets recorded in accounting books is less than 100 million VND, the General Director of the Social Policy Bank shall specify and bear full responsibility for selecting the method of sale either through public auction or negotiation.

b) In cases where the transfer of fixed assets attached to land is involved, it must be carried out in accordance with the provisions of the Law on Land.

7.3. Procedures and formalities for liquidation and sale of assets:

a) The General Director of the Social Policy Bank shall establish a Liquidation and Sale Committee for fixed assets at the Social Policy Bank. The tasks of the Liquidation and Sale Committee for fixed assets are to assist the General Director of the Social Policy Bank in performing the following tasks:

- Determining the technical condition and residual value of the assets to be liquidated or sold.

- Identifying the causes and responsibilities of collectives and individuals related to the situation where newly invested fixed assets do not generate economic benefits and thus need to be sold but cannot recover the full investment capital, or fixed assets that have not been fully depreciated and are damaged beyond repair and need to be liquidated or sold, to report to the Board of Directors for handling according to regulations.

- Organizing the determination or hiring an organization with the function of appraising the value that can be obtained from the liquidation or sale of assets.

- Organizing the sale of auctioned assets or hiring an organization with the function of selling auctioned assets according to relevant laws.

- In cases of negotiated sales, they shall be carried out according to the provisions of the General Director.

b) When the Social Policy Bank implements an investment construction project approved by the competent authority, if the Social Policy Bank needs to dismantle or cancel old fixed assets, the liquidation and accounting of old fixed assets when dismantling or canceling shall be conducted in accordance with the provisions for the liquidation of fixed assets stipulated in this Circular.

8. For assets that the Social Policy Bank leases, receives as collateral, pledges, or holds in custody for customers, the Social Policy Bank has the responsibility to manage, store, or use them in accordance with agreements with customers in compliance with the law.

Article 7. Exchange Rate Differences

1. The Social Policy Bank may account exchange rate differences arising from payments or revaluation of foreign currency funds mobilized for lending to poor people and policy targets as income or expenses according to the Government's regulations.

2. The revaluation of foreign currency funds (conducted separately for each type of foreign currency mobilization) shall be carried out at the time of preparing the Balance Sheet and summarized in a detailed schedule of exchange rate differences to serve as the basis for accounting income and expenses of the Social Policy Bank.

3. The exchange rate used for revaluation of foreign currency funds is the central exchange rate published by the State Bank of Vietnam on the date of preparing the Balance Sheet.

Article 8. Establishment of Loan Risk Reserve Fund and Risk Management

1. The Social Policy Bank shall establish a Loan Risk Reserve Fund to manage credit risks for loans to poor people and other policy targets as prescribed by law. The establishment of the Loan Risk Reserve Fund shall be conducted on December 31 each year.

The Loan Risk Reserve Fund shall be utilized to address non-recoverable debts as decided by the competent authority.

2. Sources of forming the Loan Risk Reserve Fund:

2.1. General reserves shall be recorded as operating expenses of the Social Policy Bank.

2.2. Specific reserves shall be established based on the annual income and expenditure balance of the Social Policy Bank.

3. The level of establishing the Loan Risk Reserve Fund is as follows:

3.1. The amount of general reserve shall be 0.75% calculated on the outstanding loan balance excluding overdue loans and written-off loans at the time of establishing the reserve.

3.2. The Social Policy Bank shall decide on the specific reserve amount based on the results of loan classification and the financial capacity of the Social Policy Bank.

4. The maximum balance of the Loan Risk Reserve Fund shall equal the total balance of overdue loans and written-off loans at the time of establishing the reserve. In cases where the balance of the Loan Risk Reserve Fund exceeds the maximum limit, the Social Policy Bank shall return the excess portion to its income. In cases where the Loan Risk Reserve Fund is insufficient to cover the risks in a given year, the Chairman of the Board of Directors shall report to the Ministry of Finance for consideration and decision by the Prime Minister.

5. The Chairman of the Board of Directors of the Social Policy Bank shall be responsible for stipulating and implementing the use of the Loan Risk Reserve Fund to manage risks in the operations of the Social Policy Bank in accordance with the provisions of the law.

Article 9. Subsidizing Interest Rate Differential and Management Fees

1. Scope and Principles of Subsidizing Interest Rate Differential and Management Fees of the Social Policy Bank:

1.1. The State budget shall only subsidize interest rate differential and management fees for loans to the target groups specified in Decree No. 78/2002/NĐ-CP dated October 4, 2002 of the Government on credit for poor people and other policy targets. The State budget shall not subsidize interest rate differential and management fees for:

a) The outstanding loan balance that does not comply with the target group;

b) Programs entrusted by domestic and foreign organizations and individuals to the Social Policy Bank;

c) The outstanding loan balance that has been written off or cancelled by the Government and other debt amounts that have been allowed to be processed for customers but have corresponding sources of processing for the Social Policy Bank.

1.2. The annual subsidy rate for interest rate differential shall be determined based on the difference between the average interest rate of all sources of capital (including non-interest-bearing sources) and the average lending rate and the outstanding loan balance for poor people and other policy targets as prescribed by law.

1.3. The subsidy shall be temporarily provided quarterly based on the annual state budget estimate allocated for this purpose; the official annual subsidy amount will be determined after the end of the fiscal year.

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

2. Preparing Plans for Subsidizing Interest Rate Differential and Management Fees

2.1. Based on the social credit programs assigned by the Government and the Prime Minister, the Social Policy Bank shall prepare plans for subsidizing interest rate differential and management fees for the planning year and submit them to the Ministry of Finance and the Ministry of Planning and Investment during the annual state budget revenue and expenditure estimate preparation period in accordance with the State Budget Law and related guiding documents.

2.2. The preparation of plans for subsidizing interest rate differential and management fees for the planning year by the Social Policy Bank shall be carried out according to the formulas prescribed in Clause 3 of this Article.

2.3. On the basis of the plans for subsidizing interest rate differential and management fees prepared by the Social Policy Bank, the Ministry of Finance shall coordinate with the Ministry of Planning and Investment to consolidate them into the annual state budget estimate and report to the Government for consideration and approval by the National Assembly. Based on the approved state budget estimate and the Decision on allocating the state budget estimate issued by the Prime Minister, the Ministry of Finance shall notify the Social Policy Bank of the subsidized interest rate differential and management fee amount.

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

The Social Policy Bank shall determine the actual subsidized interest rate differential and management fee amount according to the following formulas:

Subsidized amount = Actual interest rate differential + Management fee of the Social Policy Bank.

3. 1 Interest rate differential:

 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

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

- Average source of funds balance:

The average source of funds balance of the Social Policy Bank shall be calculated for all non-interest-bearing and interest-bearing sources of funds. When calculating the average source of funds balance, the Social Policy Bank may exclude:

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

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

+ Receivables from the state budget.

+ Cash and deposits at other credit institutions to ensure payment capability, but not exceeding 7% of the average loanable capital. If the cash and deposit balances at other credit institutions exceed 7% of the average loanable capital, the Social Policy Bank can only exclude 7% when calculating the average interest rate of sources of funds (loanable capital is the total capital after deducting actual investment capital, entrusted capital, state capital transferred for write-offs, and receivables from the state budget).

c) Average lending interest rate

- The total interest receivable for loans is calculated at 90% of the due interest receivable on on-time debts and overdue debts of the outstanding loan balance, calculated monthly within each quarter and year, and the interest receivable from deposits.

- The loan balance eligible for compensation by the Vietnam Bank for Social Policies is the actual outstanding loan balance not less than 93% of the capital sources used for lending. In cases where the actual outstanding loan balance is lower than 93% of the capital sources used, the Vietnam Bank for Social Policies must calculate the interest receivable based on a loan balance equal to 93% of the capital sources.

3.2. Management Fee:

a) The Vietnam Bank for Social Policies is granted a management fee calculated as a percentage (%) of the average outstanding loan balance (excluding non-performing and overdue debts) of loans to poor people and other policy targets as prescribed.

b) Principles for establishing the management fee level:

- Adhering strictly to the provisions of Decision No. 180/2002/QĐ-TTg, Decision No. 30/2015/QĐ-TTg, and the provisions of this Circular.

- Ensuring that the Vietnam Bank for Social Policies has sufficient funds for proactive spending, operational expenses, and taking into account the provision for credit risk according to the prescribed regulations.

c) Some basic indicators serving as the basis for calculating fees:

- Anticipated credit growth assigned by the Prime Minister during the fee calculation period: Based on the credit growth situation of previous years and the medium-term public investment plan to determine the anticipated average growth rate during the fee calculation period. If the actual annual credit growth assigned by the Prime Minister during the fee calculation period results in a higher or lower average growth rate for the Vietnam Bank for Social Policies compared to the anticipated average growth rate when setting the fee, the Ministry of Finance will review and report to the Prime Minister to adjust the management fee level based on the proposal of the Vietnam Bank for Social Policies to ensure appropriateness.

- Entrusted fees for associations and organizations and commission fees for savings and loan groups: Determined based on actual conditions but not exceeding the maximum level prescribed in Decision No. 30/2015/QĐ-TTg.

- Personnel costs: Implemented in accordance with the current regulations on salary systems for limited liability companies owned by the State and the State's regulations.

- Depreciation expenses, rental expenses, repair expenses, labor tool expenses, management and administrative expenses, payment and reserve expenses, tax payment expenses, credit risk provision, and other expenses: Implemented in accordance with current legal regulations, adhering to the State's prescribed system and assigned tasks, ensuring economy, safety, and effectiveness.

d) The Minister of Finance shall submit to the Prime Minister for consideration and decision on the management fee level that the Vietnam Bank for Social Policies enjoys for each period of three years or more.

In case of sudden changes, the Vietnam Bank for Social Policies shall report to the Ministry of Finance to submit to the Prime Minister for consideration and decision on the appropriate management fee level.

For programs implemented by the Vietnam Bank for Social Policies through entrusted lending decisions made by the Prime Minister, if there are specified management fee levels, the Vietnam Bank for Social Policies shall enjoy the management fee levels as prescribed in these decisions.

4. Procedure for Compensating Interest Rate Differential and Management Costs

4.1. Quarterly Temporary Compensation

a) Quarterly temporary compensation is carried out according to the principle: Each quarter, 25% of the annual compensation plan allocated by the state budget is provided.

b) Based on the annual compensation plan allocated by the state budget within the state budget expenditure plan, in the first month of each quarter, the Ministry of Finance will temporarily compensate the Vietnam Bank for Social Policies as prescribed.

4.2. Annual Adjustment According to Official Settlement

a) At the end of the fiscal year, based on the officially settled compensation figures approved by the Board of Directors, the Vietnam Bank for Social Policies sends the officially settled compensation report, approved by the Board of Directors, to the Ministry of Finance and the Ministry of Planning and Investment.

b) Based on the annual compensation plan allocated by the state budget; based on the officially settled figures approved by the Board of Directors and the actual operating situation of the Vietnam Bank for Social Policies during the year, the Ministry of Finance will verify and determine the official total compensation amount for the Vietnam Bank for Social Policies for the year and make adjustments as follows:

- If the officially settled total compensation for the year exceeds the temporarily compensated amount during the year (quarterly), the Ministry of Finance will provide the additional amount within the announced plan. Any excess difference between the officially settled total compensation for the year and the announced plan (if any) will be arranged in the next year's compensation plan.

- If the officially settled total compensation for the year is lower than the temporarily compensated amount during the year (quarterly), the excess amount will be retained to transfer to the compensation for the following year (in case the following year still incurs compensation); or must be returned to the state budget (in case the following year does not incur compensation).

Article 10. Income of the Social Policy Bank

The income of the Social Policy Bank includes:

1. Income from business operations:

1.1. Interest from loans to poor households and policy beneficiaries.

1.2. Interest from deposits of the Social Policy Bank at the State Bank of Vietnam, the National Treasury, and commercial banks.

1.3. Fees for handling entrusted re-lending according to the entrustment contract.

1.4. Subsidies for interest rate differences and management fees provided by the state budget.

1.5. Income from payment services and cash reserves.

1.6. Income from other business activities.

2. Income from other activities:

2.1. Income from liquidation and sale of assets of the Social Policy Bank.

2.2. Income from debts that have been processed from the Risk Reserve Fund, in accordance with regulations.

2.3. Exchange rate differences (if any).

2.4. Other income as prescribed by law.

Article 11. Expenses of the Social Policy Bank

The expenses of the Social Policy Bank are expenditures incurred during the course of operations, including:

1. Business operation expenses:

1.1. Costs of capital mobilization.

1.2. Costs of payment services and cash reserves, including costs related to payment services; postal and telecommunications network fees; transportation and handling of money; counting, sorting, and packaging of money; security of money, and other costs related to payment services and cash reserves.

1.3. Payment of service fees to organizations implementing entrusted lending to poor households and other policy beneficiaries. The level of service fee payments shall not exceed 0.125% per month based on the outstanding loan balance that earns interest, as agreed between the Social Policy Bank and the entrusted lending organization.

1.4. Payment of service fees to associations and cooperatives and commissions to savings and loan groups. The maximum total amount of service fee payments shall not exceed 0.125% per month based on the outstanding loan balance that earns interest, with specific allocation ratios determined by the Social Policy Bank.

1.5. Costs of participating in the money market.

1.6. Other costs for business activities.

2. Tax, fee, and levy payments as prescribed.

3. Costs of establishing the Risk Reserve Fund.

4. Exchange rate differences (if any).

5. Costs to compensate losses of capital, assets, and loan balances (if any).

6. Costs for employees, civil servants, officials, and workers of the Social Policy Bank.

6.1. Salaries and allowances for officials as prescribed by law.

6.2. Contributions to social insurance, health insurance, unemployment insurance, and trade union fees as prescribed by law.

6.3. Midday meal expenses: The maximum expense shall not exceed the basic salary set by the State for civil servants/person/month.

6.4. Uniform expenses: The expense shall not exceed half of the maximum uniform expense deductible when calculating taxable income for enterprises.

6.5. Expenses for labor protection equipment for those required to wear such equipment under the law.

6.6. Remuneration for non-executive members of the Board of Directors working at the central level as prescribed by law.

6.7. Allowances for members of the Advisory Board, concurrently serving members of the Supervisory Board, and members of the Representative Board at various levels, with a monthly allowance of 0.2 times the basic salary set by the State for civil servants for each member.

6.8. Remuneration for village and ward cadres, with a maximum of 0.12 times the basic salary set by the State/village or ward/month.

6.9. Severance pay for workers as prescribed by law.

6.10. Expenses for female workers as prescribed by regulations.

6.11. Annual leave pay as prescribed by law.

7. Costs related to the assets of the Social Policy Bank

7.1. Depreciation costs of fixed assets in accordance with the current regulations on the management, use, and depreciation of fixed assets for enterprises.

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

7.3. Rental costs of assets recorded as operating costs based on actual expenses in the year according to the asset rental contract; in cases where rental fees are paid in advance for multiple years, the rental fees are gradually allocated to operating costs based on the number of years of asset usage.

7.4. Repair, renovation, and upgrade costs for rented or borrowed bank premises. The maximum cost shall not exceed 5% of the average original value of fixed assets in the year.

7.5. Tool and equipment expenses: The expense shall not exceed 2% of the annual management fee allocated to the Social Policy Bank.

7.6. Insurance costs for assets that must be insured under the law, based on the asset insurance contract signed with the insurance agency.

8. Costs for management and public service activities These costs are implemented according to the principle:

8.1. The Social Policy Bank is permitted to proactively allocate funds for general public service activities within the total management fee allocated, following the principles of thrift, efficiency, and reasonable and valid documentation.

8.2. Costs for management and public service activities include:

a) Expenses for purchasing office supplies and printing materials, including expenses for purchasing office materials, printing paper, stationery, fuel, and other materials.

b) Allocate travel expenses for officials and staff traveling domestically and internationally according to the current regulations of the Ministry of Finance for administrative and service organizations; for monthly travel expense allocations for officials who frequently travel to serve credit activities at local levels, the General Director of the Vietnam Social Policy Bank shall examine and stipulate in accordance with the actual conditions of each locality but not exceeding twice the state-prescribed standard;

c) Allocate funds for training and professional instruction for officials and staff of the Vietnam Social Policy Bank. The allocation level shall be in accordance with the state's regulations for administrative and service organizations;

d) Allocate funds for scientific research, technological innovation; initiatives and improvements aimed at enhancing the operational efficiency of the Vietnam Social Policy Bank. Research topics and research cost estimates must be approved by the General Director of the Vietnam Social Policy Bank, who will bear responsibility for the effectiveness of these projects;

đ) Allocate postal and telephone expenses, which include postal fees, telecommunications, telegrams, telephone, leased line transmission services, telex, fax charges based on invoices from postal authorities. The allocation for fixed-line telephone installation at private residences and mobile phone expenses for designated individuals shall be decided by the General Director of the Vietnam Social Policy Bank based on financial capacity and work requirements;

e) Allocate support for the activities of the Party and mass organizations of the Vietnam Social Policy Bank (when their operating budgets are insufficient) according to state regulations (excluding allocations for supporting trade unions at the sectoral and local levels, social organizations, and other agencies);

g) Allocate funds for purchasing materials, books, and newspapers;

h) Allocate electricity, water, health, and office sanitation expenses;

i) Allocate transaction, external affairs, conference, reception, ceremonial, and other expenses that are directly linked to operational efficiency, with a maximum expenditure level not exceeding 5% of total costs;

k) Allocate funds for inspection, audit, and examination activities of the Vietnam Social Policy Bank according to prescribed regulations;

l) Allocate funds for fire prevention and firefighting activities within the organization according to regulations;

m) Allocate funds for environmental protection activities;

n) Other management expenses as prescribed;

9. Other Expenses

9.1. Allocation for the sale or liquidation of assets (including the residual value of fixed assets when sold or liquidated).

9.2. Expenses for recovering bad debts.

9.3. Other expenses as prescribed by law.

Article 12. Items Not to Be Recorded as Operating Expenses of the Vietnam Social Policy Bank

1. Losses that have been supported by the Government or compensated by insurance agencies or the party causing the loss.

2. Administrative fines, environmental fines, overdue loan penalties due to subjective reasons, financial system violation fines.

3. Investment construction capital expenditures for the acquisition, upgrading, and renovation of fixed assets from investment construction capital sources.

4. Expenses for repairing, maintaining, and equipping welfare assets such as housing and rest houses for officials, civil servants, and staff of the Vietnam Social Policy Bank, and other welfare project expenses.

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

6. Expenses exceeding the prescribed standards set forth in this Circular and related regulatory documents.

7. Expenses from other funding sources.

Article 13. Handling of Revenue and Expenditure Discrepancies

The handling of revenue and expenditure discrepancies of the Vietnam Social Policy Bank shall be carried out according to the provisions of Clause 10, Article 1 of Decision No. 30/2015/QĐ-TTg.

Article 14. Classification of the Social Policy Bank as the basis for allocating the Reward Fund for Management Staff

1. Evaluation Indicators

1.1. Indicator 1: Debt recovery ratio.

1.2. Indicator 2: Non-performing loan ratio (including both written-off loans and overdue loans).

1.3. Indicator 3: Credit growth.

1.4. Indicator 4: Compliance with current laws and regulations.

2. Methods of evaluation

2.1 Indicator 1: Debt recovery ratio

a) The Social Policy Bank is classified as Class A when the actual debt recovery ratio on total due principal debt reaches 90% or more annually (excluding principal debts due but restructured to be paid in subsequent years).

b) The Social Policy Bank is classified as Class B when the actual debt recovery ratio on total due principal debt is between 80% and less than 90% annually (excluding principal debts due but restructured to be paid in subsequent years).

c) The Social Policy Bank is classified as Class C when the actual debt recovery ratio on total due principal debt is below 80% annually (excluding principal debts due but restructured to be paid in subsequent years).

2.2. Indicator 2: Non-performing loan ratio

a) The Social Policy Bank is classified as Class A when the non-performing loan ratio on total outstanding debt is under 3%.

b) The Social Policy Bank is classified as Class B when the non-performing loan ratio on total outstanding debt is between 3% and 5%.

c) The Social Policy Bank is classified as Class C when the non-performing loan ratio on total outstanding debt exceeds 5%.

2.3 Indicator 3: Credit growth

a) The Social Policy Bank is classified as Class A when credit growth achieved exceeds 97% of the annual plan assigned by the Prime Minister.

b) The Social Policy Bank is classified as Class B when credit growth achieved is from 90% to 97% of the annual plan assigned by the Prime Minister.

c) The Social Policy Bank is classified as Class C when credit growth achieved is below 90% of the annual plan assigned by the Prime Minister.

2.4. Indicator 4: Compliance with current laws and regulations

Based on compliance with and implementation of state policies issued in the financial sector, including: tax regulations, accounting and auditing systems; financial regimes for the Social Policy Bank, expenditure regimes; procurement and asset management regimes to determine this indicator.

a) The Social Policy Bank is classified as Class A if it does not have a conclusion from the competent authority regarding violations of mechanisms or policies in any of the above areas or has been reminded by the competent authority about the implementation of mechanisms or policies as prescribed by law without reaching the level of administrative penalties.

b) The Social Policy Bank is classified as Class B if it violates any of the following situations:

- Being reminded once in writing by the Ministry of Finance about the submission of financial reports, bank classification reports, and other reports not in accordance with regulations or deadlines.

- Being administratively penalized by warning or fines (total amount of fines under 10,000,000 VND) during the fiscal year of the bank classification evaluation.

c) The Social Policy Bank is classified as Class C if it violates any of the following situations:

- Not submitting financial reports, bank classification reports, and other reports as required or submitting them incorrectly or late, being reminded twice or more in writing by the Ministry of Finance.

- Being administratively penalized by means other than warnings or being fined (total amount of fines from 10,000,000 VND or more) during the fiscal year of the bank classification evaluation.

- Management staff of the Social Policy Bank (including members of the Board of Directors, General Director, Head of Supervisory Board, Deputy General Director, and Chief Accountant) committing acts of violating the law during the execution of their duties at the Social Policy Bank to the extent that they are criminally prosecuted or allowing acts of corruption by direct subordinates at the headquarters and branches within the Social Policy Bank system according to current laws on preventing and combating corruption. Direct subordinates at the headquarters and branches include: heads of departments and units under the headquarters; branch directors; directors of trading offices and directors of centers.

3. Comprehensive Classification of the Social Policy Bank

3.1. The Social Policy Bank is classified as Class A if there is no indicator classified as Class C, where Indicator 1 and Indicator 2 are both classified as Class A.

3.2. The Social Policy Bank is classified as Class C if Indicator 1 or Indicator 2 is classified as Class C or if two or more indicators are classified as Class C.

3.3. The Social Policy Bank is classified as Class B in all other cases.

4. Annually, based on the evaluation indicators of operational effectiveness stipulated in this Circular, the Social Policy Bank reports its operational results and classification to the Ministry of Finance for classification purposes. In cases where the classification indicators mentioned above undergo significant changes due to objective and force majeure reasons, the Social Policy Bank reports to the Ministry of Finance for consideration and decision.

Article 15. Purposes of the funds

1. The additional paid-in capital reserve fund is used to supplement the paid-in capital.

2. The financial contingency fund is used to cover the remaining losses and damages to capital, assets, and loan balances that occur during the operation of the Social Policy Bank after being compensated by the responsible organizations or individuals, insurance organizations, and utilizing the risk reserve fund.

3. The business development investment fund is used for expanding the scale of operations and updating technology and equipment, working conditions of the Social Policy Bank.

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

4. The reward fund is used for:

4.1. Year-end bonuses and regular bonuses during competition campaigns or special bonuses for employees of the Social Policy Bank based on productivity, quality, efficiency, and achievements. The bonus amount is decided by the General Director upon the recommendation of the Social Policy Bank's Competition and Reward Council based on each employee's performance.

4.2. Bonuses for individuals and units outside the Social Policy Bank who have effectively contributed to its activities. The bonus amount is decided by the General Director of the Social Policy Bank.

5. The welfare fund is used for:

5.1. Investment in construction or repair and supplementary capital for welfare projects of the Social Policy Bank, contributing capital to joint welfare projects within the industry or with other units according to agreed contracts.

5.2. Expenditure on sports, cultural, and public welfare activities for the collective of employees of the Social Policy Bank.

5.3. Contribution to the Social Welfare Fund.

5.4. Expenditure on regular and emergency hardship allowances for employees of the Social Policy Bank.

5.5. Other welfare expenditures. The General Director of the Social Policy Bank shall stipulate such expenditures after consultation with the Trade Union Executive Committee.

6. The management staff bonus fund is used to reward members of the Board of Directors, the General Director, the Head of the Supervisory Board, Deputy General Directors, and the Chief Accountant. The bonus amount is decided by the Board of Directors of the Social Policy Bank.

Article 16. Accounting, statistical, auditing, reporting, and financial disclosure systems:

1. The Social Policy Bank implements accounting, auditing, and statistical systems as prescribed by law, records complete original vouchers, updates accounting books, and truthfully, accurately, and objectively reflects all business activities in a timely manner.

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:

3.1. Capital source plan and capital utilization plan.

3.2. Income and expense plan.

3.3. Plan for interest rate differential subsidy and management fee 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 reports (including financial reports and business reports) to the Ministry of Finance quarterly, annually, and at other times as required by this Circular.

4.1. Contents of the financial report include:

a) Balance Sheet;

b) Income and expense statement (according to form 01-BC);

c) Cash flow statement;

d) Notes to the financial statements.

4.2. Contents of the business report include:

a) Third-level account balance sheet (including off-balance sheet accounts);

b) Overdue loan situation report of the Bank (according to form 02-BC);

c) Employee income situation report (according to form 03-BC);

d) Report on the establishment and use of credit risk reserves and exchange rate differentials (according to form 04-BC);

đ) Actual interest rate differential subsidy and management fee report (according to form 05-BC).

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

5. Financial audit and settlement

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

5.2. The Ministry of Finance conducts inspections on compliance with financial regulations and the settlement of interest rate differential subsidies and management fees of the Social Policy Bank.

6. The Social Policy Bank implements internal auditing, publicly announcing its annual financial activities in accordance with the Law on Credit Organizations and the scope and scale of its operations.

Chapter III:

ORGANIZATION AND IMPLEMENTATION

Article 17. Implementation Organization

Based on the guidelines of this Circular and other state financial regulation documents, the Social Policy Bank establishes a financial regulation applicable to its units, to be reviewed and approved by the Board of Directors as a basis for implementation.

During implementation, if any difficulties arise, please report to the Ministry of Finance for consideration and resolution.

Article 18. Effective Date

1. This Circular takes effect from June 1, 2016.

2. Provisions already set out in Decision No. 30/2015/QĐ-TTg will apply from the 2015 fiscal year of the Social Policy Bank.

3. This Circular replaces Circulars No. 24/2005/TT-BTC dated April 1, 2005, and No. 102/2014/TT-BTC dated August 5, 2014, issued by the Ministry of Finance./.