Decision No. 652/2001/QD-NHNN on the issuance of regulations on the method of calculating and accounting for interest income and expenditure of the State Bank and credit institutions

 Pursuant to …;

Regarding the issuance of the Provision on the Method for Calculating and Accounting Interest Income and Expenditure of the State Bank and Credit Institutions

GOVERNOR OF THE STATE BANK OF VIETNAM

Pursuant to the Law on the State Bank of Vietnam No. 01/1997/QH10 dated December 12, 1997 and the Law on Credit Institutions No. 02/1997/QH10 dated December 12, 1997

Pursuant to the Government Decree No. 15/CP dated March 2, 1993 regarding the tasks, powers, and responsibilities for state management of ministries and ministerial-level agencies;

At the proposal of the Director of the Accounting and Finance Department

DECISION:

Article 1: Issued together with this Decision is the "Provision on the Method for Calculating and Accounting Interest Income and Expenditure of the State Bank and Credit Institutions."

Article 2: This Decision shall take effect from July 1, 2001.

Article 3: The Heads of the Office, Directors of the Accounting and Finance Department, Heads of Units under the State Bank, Branch Managers of the State Bank in provinces and centrally governed cities, Chairmen of the Board of Management and General Directors (Directors) of Credit Institutions are responsible for implementing this Decision.

 

REGULATIONS

The method for calculating and accounting interest income and expenditure of the State Bank

and credit institutions

(Issued together with Decision No. 652/2001/QĐ-NHNN dated May 17, 2001 of the Governor of the State Bank)

Chapter 1
GENERAL PROVISIONS

Article 1. Scope of application

This provision regulates the methods for calculating and accounting interest income and expenditure arising from the activities of the State Bank and credit institutions operating in Vietnam.

Article 2. Definitions

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

1- Interest: Is the amount of money that the borrower, depositor, or lessee pays to the lender, investor, depositor, or lessor for the use of borrowed funds, deposited funds, or leased assets. Interest is calculated based on the amount of capital, the period of capital usage, and the interest rate.

2- Pre-revenue accounting: Is the process of calculating and recording into the income account periodically those amounts of interest that will be received at a specific point in the future (interest receivable), regardless of whether the interest has not yet been received at the time of calculation and recording.

3- Pre-expense accounting: Is the process of gradually calculating and recording into the expense account periodically those amounts of interest that will be paid at a specific point in the future, regardless of whether the interest has not yet been paid at the time of calculation and recording.

4- Actual revenue - actual expense accounting: Is the process of recording into the income or expense account according to the actual amount received or expended.

5- Allocation accounting: Is the process of gradually calculating and transferring (allocating) into the income or expense account periodically for interest already received or paid in advance.

Article 3. General principles for calculating interest income and expenditure of the State Bank and credit institutions for customers

1- The calculation of interest income and expenditure depends on the form of capital raising, lending, or investment stipulated by the State Bank and credit institutions or agreed upon with customers (if applicable). There are three ways to calculate interest income and expenditure:

a) Calculating interest income and expenditure periodically;

b) Calculating interest income and expenditure in advance;

c) Calculating interest income and expenditure afterwards.

2- In certain special cases, the calculation of interest income and expenditure is carried out as follows:

a) If the loan amount has a decision to write off debt made by the competent authority, then interest income for the loan is not calculated or collected during the write-off period (from the date of write-off to the end of the write-off period or until the loan is resolved).

b) If the borrowing customer is a business entity declared bankrupt, dissolved, split, merged, or transferred, sold, or contracted out according to the decision of the competent state agency, the calculation of interest income and expenditure is carried out in accordance with the relevant current laws.

c) If the borrowing customer is an individual who has died or has been declared missing or dead by the court and there is no heir to repay the debt, interest income for the loan is suspended from the date when the local government where the customer resides confirms the death of the borrowing customer or from the date when the court's decision declaring the borrowing customer missing or dead becomes legally effective.

d) In the case where the borrowing customer still has overdue principal, the State Bank and credit institutions will collect the principal first and collect interest when the customer has funds available.

Article 4.

The State Bank implements the actual revenue - actual expense accounting method for all interest income and expenditure arising from its activities.

Article 5.

Credit institutions must determine and be responsible for applying the method for calculating and accounting interest income and expenditure (pre-revenue; pre-expense; actual revenue - actual expense; and allocation) arising from their activities in accordance with the current financial regulations and mechanisms for capital raising, credit operations, and other related business activities.

Article 6.

Periodic calculation and accounting of interest income and expenditure applied to credit institutions

Credit institutions establish periodic calculation and accounting of interest income and expenditure suitable for their operational characteristics and management requirements but must ensure that all pre-revenue, pre-expense, actual revenue - actual expense, and allocation interest income and expenditure are fully and accurately recorded into the income or expense accounts by the end of each quarter or fiscal year.

Article 7.

The State Bank and credit institutions must prepare complete and valid documents; timely and accurately calculate and record interest income and expenditure and have the responsibility to report debts and credits to customers in accordance with current regulations.

Article 8.

For interest income and expenditure denominated in foreign currency, the State Bank and credit institutions collect and pay interest in the foreign currency raised, lent, or invested. In cases where interest is collected or paid in a different foreign currency or in Vietnamese dong, it shall be carried out according to the agreement between the State Bank or credit institution and the customer, in compliance with the current laws on foreign exchange management.

Article 9. Factors for calculating deposit and loan interest

Deposit and loan interest is calculated based on the following factors:

1- Interest rate: Based on the specific interest rate for each capital-raising period or type of loan recorded in the deposit book or credit contract;

2- Amount: The basis for calculating interest is the actual amount of capital raised from the customer or the actual amount lent to the customer:

a) In the case of interest calculation using the accumulation method: The amount for interest calculation is the actual surplus balance of the deposit account or the actual deficit balance of the loan account on each day of the month. For holidays (public holidays, weekly rest days), the closing balance of the working day before that day is taken.

b) In the case of interest calculation based on the principal amount: Based on the deposited amount (principal) or the amount repaid.

3- Time period: The time period for calculating interest on deposits and loans can be a day, month, quarter, or year, and there is also a type calculated by the hour.

The standard time for interest calculation according to year, month, day, or hour is as follows:

+ One year has 360 days;

+ One year has 12 months;

+ One month has 30 days;

(irrespective of whether the month has 28, 29, 30, or 31 days)

+ One day is 24 hours.

a) If the interest collection or payment date coincides with a public holiday or weekly rest day, it is moved to the next working day.

b) For deposits or loans with a term of one day or more, the interest calculation period starts from the deposit date or loan date and does not include the withdrawal date or repayment date.

Chapter 2
SPECIFIC PROVISIONS

Article 10. Interest Calculation Methods

There are two methods of interest calculation:

- By accumulation.

- By principal amount.

1- By accumulation: This method applies to short-term loans, demand deposits, and non-fixed-term deposits. Interest calculation is performed at the end of the month (on specific days determined by each bank) and the total monthly accumulation is multiplied by the monthly interest rate and then divided by 30 days, according to the formula:

 

Where:

2- By principal amount: This method applies to fixed-term deposits or short-, medium-, and long-term loans agreed upon when lending. When calculating interest by principal amount, it must be based on the deposited amount or the amount repaid, the deposit period or loan usage period, and the specific interest rate applicable during the deposit or loan period. The calculation formula is as follows:

The interest rate applicable for the deposit or loan period is determined or agreed upon by the State Bank and credit organizations with customers in accordance with current regulations, including:

+ Annual interest rate;

+ Monthly interest rate;

+ Daily interest rate;

+ Hourly interest rate.

Article 11. Factors for overdue interest calculation

1- Overdue date: Calculated from the day following the due date for repayment (if the debt is not extended or the repayment period is not adjusted) recorded in the Credit Contract.

2- Overdue interest rate: Calculated according to current regulations.

3- Overdue amount: Is the balance on the overdue account.

Article 12. Interest collection and payment control

1- The controller (Chief Accountant or Head of Accounting Department or authorized person) must reconcile and verify the factors for interest calculation:

+ Interest rate level;

+ Amount for interest calculation;

+ Time period for interest calculation;

+ Applied calculation method;

+ Accuracy, validity, and legality of the interest collection and payment vouchers issued.

2- On the interest collection and payment vouchers provided to customers, there must be signatures of the Chief Accountant or Head of Accounting Department; and General Manager (Director) or authorized person.

Article 13. Interest income accounting

1- Interest income accounting under the cash basis: When collecting interest, the State Bank and credit organizations record:

Debit appropriate accounts (cash, customer deposits...)

Credit appropriate interest income accounts (interest income from deposits, interest income from loans...)

2- Interest income accounting under the accrual basis:

- When collecting interest in advance, credit organizations record:

 

Credit appropriate interest income accounts (Interest income from deposits, interest income from loans...)

If there is a provision or agreement that the credit organization will refund the difference between the pre-collected interest and the actual interest received (due to the customer repaying the loan ahead of schedule, etc.), when such a situation occurs, the credit organization records:

Debit other liabilities accounts (as detailed above)

Credit appropriate accounts (cash, customer deposits...)

 

 

- Upon maturity of interest collection, when the money is actually received, record:

Debit appropriate accounts (cash, customer deposits...)

 

Enter - Unreceived interest - Unreceived interest

2- Interest payment accounting under the accrual basis:

At the same time, record off-balance sheet:

Enter the account - Unreceived Interest - The amount of unreceived interest

Article 14. Record payment of interest

1- Record payment of interest on the actual receipt and disbursement method: When paying interest, the State Bank and credit organizations record:

Debit the appropriate Interest Payment Account (interest payment on deposits, interest payment on loans...)

Credit the appropriate account (cash, customer deposits...)

2- Record payment of interest using the allocation method:

- When paying interest in advance, credit organizations record:

- At each period, the Credit Institution calculates and gradually allocates the amount of interest paid in advance into expenses and records:

Debit Account Suitable Interest Payment

Credit Account Pending Allocation Expenses (as detailed above)

- If there is a provision or agreement that allows the Credit Institution to recover the difference between the interest paid in advance and the actual interest payable (due to the customer withdrawing deposits before maturity, etc.), when such a situation arises, the Credit Institution records:

3. Accounting for interest payment using the prepayment method:

- Periodically, the Credit Institution calculates the interest payable within the period and records:

 

- Upon maturity of interest payment, after paying the interest to the recipient, record:

4. In cases where the interest payable has been recorded as an expense but no longer needs to be paid or is waived or reduced according to regulations, the Credit Institution processes and records:

Chapter 3
IMPLEMENTING PROVISIONS

Article 15. Amendments and supplements to this Regulation shall be decided by the Governor of the State Bank.