Decree No. 93/2017/ND-CP on financial regime for credit institutions and foreign bank branches and supervision of state capital investment in credit institutions wholly owned by the State and credit institutions with state capital.

DECREE

Regarding the financial regime for credit institutions, foreign bank branches, and financial supervision, evaluating the effectiveness of state capital investmentat credit institutions wholly owned by the State with 100% charter capitaland credit institutions with state capital

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Pursuant to the Law on Government Organization dated June 19, 2015;

Pursuant to the Law on Credit Institutions dated June 16, 2010;

Pursuant to the Enterprise Law dated November 26, 2014;

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

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

At the proposal of the Minister of Finance;

The Government shall issue a Decree on the financial regime for credit institutions, foreign bank branches and financial supervision, evaluating the effectiveness of state capital investment at credit institutions wholly owned by the State with 100% charter capital and credit institutions with state capital.

 

PART I

GENERAL PROVISIONS

 

Article 1. Scope of Regulation

This Decree provides for:

1. Financial regime for credit institutions, foreign bank branches.

2. Financial supervision, evaluating the effectiveness of state capital investment at credit institutions wholly owned by the State with 100% charter capital and credit institutions with state capital.

3. For credit institutions restructuring pursuant to the decision of the competent authority, in cases where laws related to credit institution restructuring provide provisions different from those stipulated in this Decree, such credit institutions shall implement according to the provisions of laws related to credit institution restructuring; for matters not provided for in laws related to credit institution restructuring, they shall implement according to the provisions of this Decree.

Article 2. Applicability

1. Credit institutions, foreign bank branches established, organized, and operate in accordance with the Law on Credit Institutions, excluding policy banks.

2. The representative body of the owner.

3. The financial agency.

4. Other organizations and individuals related.

Article 3. Principles of financial management

1. Credit institutions, foreign bank branches have autonomy in finance, bear responsibility for their business operations, fulfill their obligations and commitments in accordance with the law.

2. Credit institutions, foreign bank branches implement financial transparency in accordance with the Law on Credit Institutions and other relevant laws.

 

Chapter II

MANAGEMENT AND USE OF CAPITAL AND ASSETS

 

Article 4. Operating capital of credit institutions, foreign bank branches

1. Shareholders' equity:

a) Charter capital or authorized capital;

b) Differences arising from asset revaluation, exchange rate differences;

c) Surplus share capital;

d) Funds: Supplementary capital reserve fund, development investment fund, financial contingency fund;

đ) Accumulated undistributed profits, accumulated unprocessed losses;

e) Other capital belonging to credit institutions, foreign bank branches.

2. Raised capital:

a) Deposits raised from organizations and individuals; capital raised through the issuance of securities;

b) Entrusted investment capital;

c) Loans from domestic and foreign credit institutions, financial organizations;

d) Loans from the State Bank of Vietnam.

3. Other capital as prescribed by law.

Article 5. Actual value of charter capital, authorized capital

1. The actual value of charter capital or authorized capital is determined by the charter capital or authorized capital and surplus share capital, plus (minus) accumulated undistributed profits (accumulated unprocessed losses) reflected in accounting records.

2. During the course of operation, credit institutions, foreign bank branches must maintain the actual value of charter capital or authorized capital at a minimum level equal to the statutory capital ratio prescribed by the Government.

3. When there is a change in charter capital or authorized capital, credit institutions, foreign bank branches must publicly announce the new charter capital or authorized capital.

Article 6. Use of capital and assets

1. Credit organizations and foreign bank branches may use operating capital for business activities in accordance with the Law on Credit Institutions and other relevant laws, ensuring safety and development principles of capital.

2. Credit organizations and foreign bank branches have the right to change the structure of capital and assets to serve the development of business activities in compliance with legal provisions.

3. Credit organizations are permitted to purchase and invest in fixed assets directly serving their operations under the principle that the remaining value of fixed assets does not exceed 50% of the charter capital and additional reserve fund recorded in accounting books. Credit organizations must fully comply with legal regulations on investment management, construction, and other relevant laws. For credit organizations holding 100% state-owned charter capital and those with state-owned capital, the procurement and investment in fixed assets must also follow the regulations applicable to state-owned enterprises and enterprises with state-owned capital.

The transfer of capital and assets between branches or independent subsidiaries of credit organizations shall be carried out in accordance with the Charter of the credit organization.

4. Foreign bank branches are allowed to purchase and invest in fixed assets directly serving their operations under the principle that the remaining value of fixed assets does not exceed 50% of the allocated capital and additional reserve fund recorded in accounting books. Foreign bank branches must fully comply with Vietnamese legal regulations on investment management, construction, and other relevant laws.

Article 7. Capital contribution, purchase of shares, and transfer of capital of credit institutions

1. The contribution of capital, purchase of shares, and transfer of capital of credit institutions shall be conducted in accordance with the Law on Credit Institutions and other relevant laws.

2. Credit institutions may only use charter capital and reserve funds to contribute capital and purchase shares of enterprises and other credit institutions in accordance with the Law on Credit Institutions and other relevant laws.

3. The authority to decide on plans for contributing capital and purchasing shares of enterprises and other credit institutions; plans for transferring invested capital outside shall be implemented in accordance with the Law on Credit Institutions, other relevant laws, and the Charter of the credit institution. For credit institutions holding 100% state-owned charter capital and those with state-owned capital, they must also comply with legal regulations on the management and use of state-owned capital invested in production and business at enterprises.

4. Credit institutions are not allowed to contribute capital or purchase shares of enterprises and other credit institutions that are shareholders or capital contributors of the same credit institution.

Article 8. Ensuring Safety of Capital

Credit organizations and foreign bank branches are responsible for implementing regulations on ensuring the safety of operational capital as follows:

1. Managing, using capital and assets, distributing profits, implementing financial management systems and accounting systems in accordance with this Decree and other relevant laws.

2. Implementing regulations on ensuring safety in operations as stipulated by the Law on Credit Institutions and other relevant laws. In cases where the minimum capital adequacy ratio set forth in the Law on Credit Institutions and guidelines issued by the State Bank of Vietnam is not met or there is a possibility of not meeting it, within a maximum period of one month, credit organizations and foreign bank branches must report to the State Bank of Vietnam measures to ensure the minimum capital adequacy ratio including:

a) Measures to transfer external investments;

b) Measures to increase charter capital; allocated capital;

c) Other measures.

3. Purchasing insurance for assets required to be insured.

4. Participating in deposit guarantee organizations in accordance with the Law on Credit Institutions, the Law on Deposit Insurance, other relevant laws, and publicly disclosing participation in deposit guarantee organizations at headquarters and branches.

5. Handling the value of lost assets in accordance with Article 12 of this Decree.

6. Recording risk reserves in operating costs in accordance with the Law on Credit Institutions, enterprise laws, and other relevant laws.

7. Other measures for capital preservation as prescribed by law.

Article 9. Inventory of Assets

1. Credit organizations and foreign bank branches shall conduct asset inventory in the following cases:

a) At the end of the fiscal year;

b) When splitting, merging, consolidating, or changing legal form;

c) To determine asset losses due to natural disasters, enemy attacks, or other situations as required by credit organizations and foreign bank branches;

d) As prescribed by competent state agencies.

2. For excess or missing assets, the causes and responsibilities of those involved must be clearly identified for specific handling in each case.

Article 10. Revaluation of Assets

1. Credit organizations and foreign bank branches shall revalue assets in the following cases:

a) Pursuant to the decision of a competent state agency;

b) When changing legal form or diversifying ownership forms;

c) When using assets for external investment or recovering assets upon termination of external investment activities: Credit organizations and foreign bank branches shall revalue the assets used for external investment.

d) Other cases as prescribed by law.

2. The revaluation of assets and accounting treatment for increases or decreases in value resulting from revaluation as stipulated in Clause 1 of this Article shall be carried out according to the provisions of the law for each specific case.

Article 11. Depreciation of Fixed Assets

1. Credit organizations and foreign bank branches shall record depreciation of fixed assets in accordance with the laws applicable to enterprises.

2. Credit organizations and foreign bank branches may use funds obtained from depreciation of fixed assets for reinvestment to replace, modernize fixed assets, and for other business needs as prescribed by law.

Article 12. Handling Asset Losses

When suffering asset losses, credit organizations and foreign bank branches must identify the cause, responsibility, and handle them as follows:

1. In cases where the loss is due to subjective reasons, the person causing the loss must compensate. The authority to decide on the amount of compensation is implemented according to the Charter of the credit organization or foreign bank branch. The handling of the responsibility of the person causing the loss is carried out according to the provisions of the law.

2. If the asset has been insured, it shall be handled according to the insurance contract.

3. Utilize the provision fund established in expenses to offset the loss as prescribed by law.

4. The value of the loss, after being offset by personal, collective, or insurance organization compensation and utilizing the provision fund established in expenses, if there is still a shortfall, shall be offset by the financial reserve fund of the credit organization or foreign bank branch. If the financial reserve fund is insufficient to cover the shortfall, the remaining amount shall be recorded as other expenses for the period.

Article 13. Leasing of Assets

Credit organizations and foreign bank branches may lease assets under their management and use in accordance with the law, ensuring efficiency, safety, and capital development.

Article 14. Purchase and Sale, Transfer of Assets

1. Credit organizations and foreign bank branches may purchase and sell, transfer assets to recover capital for more effective business purposes.

2. The purchase and sale, transfer of assets by credit organizations and foreign bank branches shall be conducted in accordance with the Law on Credit Institutions, relevant legal provisions, and the Charter of the credit organization or foreign bank branch. For credit organizations wholly owned by the State, they must also comply with the legal provisions on the sale of assets by state-owned enterprises.

Article 15. Liquidation of Assets

1. Credit institutions and foreign bank branches may liquidate assets that are substandard, have lost quality; assets that are damaged and cannot be restored; technologically obsolete assets that are not needed for use or are not used effectively and cannot be sold in their original condition; assets that have been used beyond their prescribed useful life and cannot continue to be used.

2. The authority to decide on the liquidation of assets shall be carried out in accordance with the Law on Credit Institutions, relevant laws, and the Charter of credit institutions and foreign bank branches. For credit institutions wholly owned by the State, they must also comply with the provisions of the law on the liquidation of assets for state-owned enterprises.

3. When liquidating assets, credit institutions and foreign bank branches must establish a Liquidation Board. For assets that must be auctioned according to the law when being liquidated, credit institutions and foreign bank branches must organize auctions in accordance with the law.

Chapter III

REVENUE AND EXPENSES

 

Article 16. Revenue

1. All income of credit institutions and foreign bank branches must be determined in accordance with Vietnamese accounting standards and relevant legal provisions, with valid invoices or supporting documents, and must be fully recorded in revenue.

2. Revenue from business activities of credit institutions and foreign bank branches includes:

a) Interest income and similar income: Interest income from deposits, interest income from loans, interest income from securities trading and investment, income from guarantee operations, interest income from financial leasing, interest income from debt purchase and sale operations, other income from lending activities;

b) Service income: Income from payment services; income from cash management services; income from agency and representative operations; income from other service activities;

c) Income from foreign exchange and gold trading activities: Income from foreign currency trading; interest income from exchange rate differences; income from gold trading; income from derivative financial instruments related to money;

d) Income from securities trading activities (excluding stocks);

đ) Income from capital contribution, transfer of equity stakes, and shares;

e) Other income: Income from debts resolved through risk reserves (including debts that were written off but are now recoverable); income from other derivative financial instruments; income from debt purchase and sale operations; income from asset transfers and liquidations; income from the reversal of long-term investment impairment provisions; other income as stipulated by law;

g) Other income as stipulated by law.

3. The Ministry of Finance, in coordination with the State Bank of Vietnam, shall provide detailed guidance on the income of credit institutions and foreign bank branches as specified in Clause 2 of this Article.

Article 17. Expenses

1. Expenses of credit institutions and foreign bank branches are actual expenses incurred in connection with their business activities; they must adhere to the principle of matching revenue and expenses; they must have valid invoices and supporting documents as required by law. Credit institutions and foreign bank branches shall not record expenses funded by other sources. The determination and recording of expenses must be consistent with Vietnamese accounting standards and relevant legal provisions.

2. Expenses of credit institutions and foreign bank branches include:

a) Interest expenses and similar expenses: Payment of deposit interest; payment of loan interest; issuance of interest-bearing securities; other expenses for lending activities;

b) Service activity expenses: Expenses for payment services; expenses for cash management services; expenses for telecommunications services; expenses for agency and representative operations; expenses for consulting services; commissions paid to agents, brokers, and trustees for permitted agency, brokerage, and trustee activities;

c) Foreign exchange and gold trading activity expenses: Expenses for foreign currency trading; expenses for exchange rate differences; expenses for gold trading; expenses for derivative financial instruments related to money;

d) Expenses for permitted securities trading activities as stipulated by the Law on Credit Institutions;

đ) Expenses for capital contributions, equity stake transfers, and share transfers;

e) Other activity expenses: Expenses for interest rate swap operations; expenses for debt purchase and sale operations; expenses related to financial leasing operations; expenses for other derivative financial instruments; expenses for other business activities;

g) Tax payment expenses and fees;

h) Employee expenses: Salary, remuneration, bonuses, allowances; expenses for social insurance, health insurance, labor insurance, unemployment insurance, personal accident insurance, trade union fees; expenses for transaction uniforms and protective equipment; subsidies; meal expenses; medical expenses; other employee expenses as stipulated by law;

i) Management and public service expenses: Expenses for materials and printing; travel expenses; training and professional development expenses; research and application of science and technology expenses; innovation and productivity improvement award expenses; postage and telephone expenses; publication, publicity, advertising, and marketing expenses; book and newspaper purchase expenses; expenses for group activities; office electricity, water, and sanitation expenses; conference, reception, ceremonial, transaction, and diplomatic expenses; consulting and auditing expenses; domestic and international expert rental expenses; fire prevention and extinguishing expenses; environmental protection expenses, and other expenses;

k) Asset expenses: Depreciation of fixed assets; maintenance and repair expenses; purchase and supply expenses; asset insurance expenses; asset rental expenses;

l) Provision expenses:

Risk provision expenses for activities as stipulated in Article 131 of the Law on Credit Institutions.

The provision for risk on special bonds issued by the Vietnam Asset Management Company shall be made in accordance with point a, Clause 2, Article 21 of Decree No. 53/2013/NĐ-CP dated May 18, 2013 of the Government on the establishment, organization, and operation of the Vietnam Asset Management Company, and Clause 12, Article 1 of Decree No. 34/2015/NĐ-CP dated March 31, 2015 of the Government amending and supplementing certain provisions of Decree No. 53/2013/NĐ-CP; guidelines of the State Bank of Vietnam and other amended and supplemented legal documents (if any).

The provision for reduction in inventory value, provision for loss on financial investments, provision for doubtful debts, and other provisions (if any) shall be made in accordance with general regulations applicable to enterprises.

The portion of expenses for risk provisions that is deductible when determining corporate income tax shall be implemented in accordance with the legal provisions on corporate income tax.

 m) Expenses for deposit preservation and insurance;

 n) Other expenses: Fees paid to industry associations in which credit institutions and foreign bank branches participate; expenses for party and mass organizations' work at credit institutions and foreign bank branches (the portion of expenses outside the budget of party and mass organizations funded from the specified source); expenses for selling, liquidating assets, and residual values of liquidated fixed assets (if any); expenses for recovering written-off debts, bad debt recovery costs; expenses for handling remaining asset losses after compensation from sources as stipulated in Clause 4, Article 12 of this Decree; expenses for revenues that were recorded but not actually received; expenses for social work in accordance with legal provisions on taxes; fines for administrative violations except for fines that individuals must pay according to the law; other expenses.

3. The Ministry of Finance shall take the lead and coordinate with the State Bank of Vietnam to provide specific guidance on the expenses of credit institutions and foreign bank branches as prescribed in Clause 2 of this Article.

Article 18. Accounting Currency

1. Economic and financial transactions shall be reflected in accounting books, financial statements, and final accounts in Vietnamese Dong, denoted nationally as “đ” and internationally as “VND”.

2. In cases where the accounting unit primarily receives and pays in a single foreign currency, it may choose such foreign currency as the monetary unit for bookkeeping and bear legal responsibility therefor. When preparing and presenting financial reports for use in Vietnam, they must be converted into Vietnamese Dong.

Article 19. Credit institutions and foreign bank branches shall accurately account for revenue and expenses in accordance with established regulations, bear legal responsibility for the accuracy and truthfulness of revenues and expenses, and comply with regulations on invoices and accounting vouchers.

 

Chapter IV

DISTRIBUTION OF PROFITS

 

Article 20. Taxable Income for Corporate Income Tax

The taxable income for corporate income tax of credit institutions and foreign bank branches shall be carried out in accordance with the legal provisions on corporate income tax.

Article 21. Profit Distribution for Credit Institutions Wholly Owned by the State

After covering previous year losses in accordance with the Law on Corporate Income Tax, paying corporate income tax, and deducting other expenses, the remaining profit of credit institutions shall be distributed in the following order:

1. Dividing profits among capital contributors in accordance with economic contracts already signed (if any).

2. Covering losses from previous years that have exceeded the period allowed for deduction from pre-tax profits.

3. The remaining profit after deducting the amounts specified in Clauses 1 and 2 of this Article shall be distributed in the following order:

a) Allocating 5% to the supplementary charter capital reserve fund, with the maximum level of this fund not exceeding the charter capital of the credit institution;

b) Allocating 10% to the financial provision fund;

c) Allocating up to 25% to the development investment fund;

d) Allocating to the reward and welfare fund for employees in the credit institution:

Credit institutions classified as type A under the law shall allocate three months' salary to the two reward and welfare funds;

Credit institutions classified as type B under the law shall allocate one and a half months' salary to the two reward and welfare funds;

Credit institutions classified as type C under the law shall allocate one month's salary to the two reward and welfare funds;

Credit institutions that do not classify themselves shall not establish the two reward and welfare funds.

e) Allocating to the fund for rewarding managers and supervisors of credit institutions:

Credit institutions classified as type A under the law shall allocate one and a half months' salary of the business manager and supervisor to the fund;

Credit institutions classified as type B under the law shall allocate one month's salary of the business manager and supervisor to the fund;

Credit institutions classified as type C under the law or those that do not classify themselves shall not establish the fund for rewarding business managers and supervisors.

f) The remaining profit after allocating to the funds specified in Points a, b, c, d, and e of this Clause shall be remitted to the state budget.

Article 22. Distribution of post-tax profit for credit organizations that are cooperatives

The post-tax profit of credit organizations that are cooperatives, after covering previous year losses in accordance with the Law on Corporate Income Tax, paying corporate income tax, and deducting the amounts specified in Clause 1, Clause 2, and Clause 3 of this Article, shall be distributed in the following order:

1. Allocate 5% to the additional paid-in capital reserve fund, with the maximum level of this fund not exceeding the amount of the organization's registered capital.

2. Allocate 10% to the financial reserve fund.

3. Allocate at least 20% to the development investment fund.

4. The remaining profit after deducting the amounts specified in Clause 1, Clause 2, and Clause 3 of this Article shall be distributed in the following order:

a) For Credit Cooperatives:

At least 30 days before convening the members' general meeting, the representative of state capital at the bank must seek the opinion of the State Bank of Vietnam on the distribution of the remaining profit prior to voting at the members' general meeting.

Within 15 working days from the date of receiving complete documentation, the State Bank of Vietnam must consult with the Ministry of Finance to reach a consensus on the distribution of the remaining profit to instruct the state capital representative at the bank to vote at the members' general meeting.

Within 15 working days from the date of receiving complete documentation, the Ministry of Finance must provide a formal written opinion sent to the State Bank of Vietnam.

Specifically, the portion of profit allocated to state members shall be used to supplement the registered capital (the state support capital).

b) For People's Credit Funds: The distribution of the remaining profit shall be carried out in accordance with the Law on Cooperatives and the Charter of the People's Credit Fund.

Article 23. Distribution of post-tax profit for other credit organizations and foreign bank branches

The post-tax profit of credit organizations and foreign bank branches, after covering previous year losses in accordance with the Law on Corporate Income Tax, paying corporate income tax, and deducting the amounts specified in Clause 1, Clause 2, and Clause 3 of this Article, shall be distributed in the following order:

1. Dividing profits among capital contributors in accordance with economic contracts already signed (if any).

2. Cover previous year losses that have exceeded the allowable period for deduction from pre-tax profit.

3. Allocate 5% to the additional paid-in capital reserve fund of the credit organization or to the additional reserve fund of the foreign bank branch. The maximum level of this fund shall not exceed the amount of the credit organization's registered capital or the foreign bank branch's authorized capital.

4. Allocate 10% to the financial reserve fund.

5. The distribution of the remaining profit shall be decided by the credit organization or foreign bank branch. For credit organizations that are joint-stock commercial banks where the state holds more than 50% of the registered capital, at least 30 days before convening the shareholders' general meeting, the representative of state capital at the bank must seek the opinion of the State Bank of Vietnam on the distribution of the remaining profit prior to voting at the shareholders' general meeting.

Within 15 working days from the date of receiving complete documentation, the State Bank of Vietnam must consult with the Ministry of Finance to reach a consensus on the distribution of the remaining profit to instruct the state capital representative at the bank to vote at the shareholders' general meeting.

Within 15 working days from the date of receiving complete documentation, the Ministry of Finance must provide a formal written opinion sent to the State Bank of Vietnam.

Article 24. Management and use of funds

1. The supplementary capital reserve fund, the capital contribution fund for supplementary registered capital, and the capital contribution fund shall be managed.

2. The financial contingency fund shall be used to cover the remaining losses and damages to assets occurring during business operations after compensation from organizations and individuals causing such losses, insurance organizations, and the provision set aside in expenses; it may also be used for other purposes as prescribed by law.

3. The development investment fund shall be used to expand the scale of business operations, modernize technology and equipment, working conditions of credit institutions, and supplement their registered capital. Based on investment needs and the fund's capacity, credit institutions shall decide on the form and methods of investment according to the principles of efficiency, safety, and capital development.

4. The reward fund for managers of credit institutions and supervisors shall be used for:

a) Rewarding the Chairman and members of the Board of Directors/Board of Members, General Director, Director, Deputy General Director, Deputy Director, Supervisor, and Chief Accountant;

b) The level of rewards shall be decided by the Shareholders' Meeting/Representative Owner based on the effectiveness of the credit institution's business operations and the completion of assigned tasks, upon the proposal of the Chairman of the Board of Directors/Board of Members of the credit institution.

5. The incentive fund shall be used for:

a) Year-end or regular rewards for staff within the credit institution. The level of rewards shall be decided by the Board of Directors/Board of Members of the credit institution based on the proposal of the General Director (or Director) and the trade union of the credit institution, considering the labor productivity and work achievements of each staff member;

b) Special rewards for individuals and groups within the credit institution who have innovative ideas improving techniques and procedures that bring about benefits in business operations. The level of rewards shall be decided by the Board of Directors/Board of Members of the credit institution;

c) Rewards for individuals and units outside the credit institution that have successfully fulfilled contractual conditions and contributed effectively to the credit institution's business activities. The level of rewards shall be decided by the Board of Directors/Board of Members of the credit institution.

6. The welfare fund shall be used for:

a) Investing in constructing or repairing welfare facilities of the credit institution, contributing capital to jointly build welfare facilities within the industry or with other units according to agreed contracts;

b) Funding sports, cultural, and public welfare activities for the collective staff of the credit institution;

c) Providing regular and emergency assistance to staff, including retired and disabled staff of the credit institution;

d) Funding other welfare activities.

The Board of Directors/Board of Members and General Director (or Director) of the credit institution shall cooperate with the Trade Union Executive Committee of the credit institution to manage and utilize this fund.

Chapter V

FINANCIAL PLAN, REPORTING REGIME, AUDIT AND FINANCIAL SUPERVISION, ASSESSMENT OF THE EFFECTIVENESS OF STATE CAPITAL INVESTMENT IN ENTERPRISES THAT ARE STATE-OWNED CREDIT INSTITUTIONS WITH 100% STATE CAPITAL AND CREDIT INSTITUTIONS WITH STATE CAPITAL

 

Article 25. Financial Plan

1. The annual financial plan of credit organizations and foreign bank branches includes:

a) Capital sources and capital utilization plans;

b) Income, expense, business results, and state budget expenditure plans;

c) Labor force and salary plans.

2. Preparation of financial plans

a) For credit organizations held 100% by the State.

Before July 31 each year, credit organizations shall prepare the financial plan for the following year and submit it to the Ministry of Finance and the State Bank of Vietnam for the purpose of building the state budget estimate.

Before March 1 of the planning year, based on the previous year's business results, credit organizations shall review and complete their financial plans to be submitted to the State Bank of Vietnam and the Ministry of Finance for financial supervision work and assessment of the business performance of credit organizations.

The State Bank of Vietnam shall take the lead and coordinate with the Ministry of Finance to review the financial plans prepared by credit organizations to provide formal opinions in writing and assign evaluation criteria for credit organizations before April 30 of the planning year.

b) For credit organizations held more than 50% by the State.

Before July 31 each year, credit organizations shall prepare the financial plan for the following year and submit it to the Ministry of Finance and the State Bank of Vietnam for the purpose of building the state budget estimate.

Before March 1 of the planning year, based on the previous year's business results, credit organizations shall review and complete their financial plans to be submitted to the State Bank of Vietnam and the Ministry of Finance for financial supervision work and assessment of state capital investment effectiveness at credit organizations.

The State Bank of Vietnam shall take the lead and coordinate with the Ministry of Finance to review the financial plans prepared by credit organizations and determine specific evaluation indicators to assign tasks to the State Capital Representatives at credit organizations before April 30 of the planning year.

c) For other credit organizations and foreign bank branches, the preparation of financial plans shall be carried out in accordance with the charter of credit organizations and foreign bank branches.

Article 26. Reporting System

1.      At the end of the accounting period, credit organizations and foreign bank branches must prepare and submit financial reports in accordance with the provisions of the law.

2. The Ministry of Finance shall provide detailed guidance on the content, format, reporting periods, submission deadlines, methods of submitting reports in writing, electronic reporting methods, units submitting reports, and units receiving reports.

3. The Board of Directors or Chairman of the Board of Directors, Board of Members or Chairman of the Board of Members, or General Director (Director) of credit organizations and foreign bank branches shall be responsible for the accuracy and truthfulness of these reports.

Article 27. Audit

1. Credit organizations must organize internal audit in accordance with Article 41 of the Law on Credit Organizations and other relevant laws.

2. The audit of financial statements of credit organizations and foreign bank branches shall be conducted in accordance with current laws on auditing. The results of the audit of financial statements of credit organizations must be sent to the Ministry of Finance and the State Bank of Vietnam.

Article 28. Financial Regulations

Based on guiding documents on financial systems, credit organizations and foreign bank branches shall establish their own financial regulations to be submitted to the Shareholders' Meeting or the Board of Directors (in cases where the Shareholders' Meeting has delegated authority), and approved by the Board of Members as a basis for implementation.

Article 29. Financial supervision of enterprises that are credit organizations held 100% state capital and credit organizations with state capital

1. Financial supervision of enterprises that are credit organizations held 100% state capital, financial supervision of subsidiaries, associated companies, capital investment abroad by credit organizations, and special financial supervision of enterprises that are credit organizations held 100% state capital shall be carried out in accordance with general regulations applicable to state-owned enterprises and provisions stipulated in this Decree.

2. For enterprises that are credit organizations with state capital, the content, methods, and reporting system for financial supervision shall be implemented in accordance with regulations on financial supervision of enterprises with state capital and provisions stipulated in this Decree.

Article 30. Criteria for evaluating the effectiveness of state capital investment in credit organizations held 100% state capital and credit organizations with state capital

1. The criteria for evaluating the effectiveness of state capital investment in credit organizations held 100% state capital and credit organizations with state capital include:

a) Criterion 1. Revenue;

b) Criterion 2. Post-tax profit and post-tax profit margin;

c) Criterion 3. Non-performing loan ratio and potential loss capital ratio;

d) Criterion 4. Compliance with laws of credit organizations regarding investment, management, and use of state capital at credit organizations, tax laws, and other revenue payments to the state budget, and regulations on financial reporting systems for financial supervision;

đ) Criterion 5. Implementation status of public goods products and services (if any).

2. The criteria prescribed in Clause 1 of this Article shall be determined and calculated from data in annual audited financial reports and periodic statistical reports as prescribed by law.

When calculating the criteria 1, 2, 4, and 5 prescribed in Clause 1 of this Article, factors affecting these criteria shall be considered and excluded:

a) Natural disasters, fires, epidemics, wars, and other unforeseeable and irresistible objective reasons;

b) Credit organizations expanding business operations according to plans, increasing depreciation to recover capital quickly upon approval by competent authorities, implementing social welfare programs as prescribed by the Government;

c) State adjustment of prices (for products and services priced by the state) affecting the revenue of credit organizations or having to implement economic and social targets as directed by the Government and the Prime Minister.

3. The evaluation of the performance of credit organization managers shall be conducted in accordance with government regulations and the following criteria:

a) Degree of achievement of the State Bank of Vietnam's assigned targets for post-tax profit and post-tax profit margin on equity;

b) Results of credit organization classification;

c) Degree of achievement of plans for supplying public goods products and services (for credit organizations supplying public goods products and services).

4. The Ministry of Finance shall take the lead and coordinate with the State Bank of Vietnam to guide the method of determining appropriate evaluation indicators in line with the specific characteristics of credit organization activities.

Article 31. Evaluation of the effectiveness of operations and classification of state-owned enterprises that are credit organizations holding 100% of charter capital

1. The evaluation of the effectiveness of operations and classification of credit organizations holding 100% of charter capital shall be carried out according to the regulations for state-owned enterprises and specific provisions set forth in this Decree.

2. The State Bank of Vietnam shall take the lead and coordinate with the Ministry of Finance to review financial plans to assign evaluation criteria and classifications for credit organizations holding 100% of charter capital in accordance with their business characteristics. These criteria must be communicated to the credit organization in writing before April 30 of each planning year and shall not be adjusted throughout the implementation period of the plan, except in cases of force majeure.

3. The Ministry of Finance shall take the lead and coordinate with the State Bank of Vietnam to provide detailed guidance on the methods of evaluating the effectiveness and classifying credit organizations according to the provisions of this Decree, taking into account their business characteristics.

Article 32. Evaluation of the effectiveness of state capital investment in joint-stock credit organizations where the state holds more than 50% of the charter capital

1. The evaluation of the effectiveness of state capital investment in joint-stock credit organizations where the state holds more than 50% of the charter capital shall be conducted according to the regulations for credit organizations holding 100% of charter capital as stipulated in this Decree.

2. Prior to the joint-stock credit organization convening the Shareholders' Meeting, the State Bank of Vietnam shall take the lead and coordinate with the Ministry of Finance to review financial plans to determine evaluation criteria for joint-stock credit organizations where the state holds more than 50% of the charter capital to assign tasks to the State Capital Representative at the credit organization in writing before April 30 of each planning year. Evaluation criteria shall not be adjusted throughout the implementation period of the plan, except in cases of force majeure.

3. Based on the results of the evaluation of the effectiveness of state capital investment in credit organizations and the operational results of joint-stock credit organizations where the state holds more than 50% of the charter capital, the State Bank of Vietnam shall use these results as a basis for evaluating and rewarding the State Capital Representative at the credit organization, and as a foundation for developing plans and assigning tasks to the State Capital Representative at the credit organization for the following year; simultaneously reporting to the Prime Minister for consideration and decision on whether to continue investing, expand investment, or divest state capital from these credit organizations.

 

Chapter VI

RESPONSIBILITIES OF THE BOARD OF MANAGEMENT, BOARD OF MEMBERS, GENERAL MANAGER, DIRECTOR, AND REPRESENTATIVE AT THE ORGANIZATION

CREDIT INSTITUTIONS, FOREIGN BANK BRANCHES

 

Article 33. Responsibilities of the Board of Management and Board of Members of credit organizations

1. Implement, inspect, and supervise financial activities of credit organizations within their authority as prescribed by the Law on Credit Organizations and other relevant laws.

2. Accept capital, land, natural resources, and other resources transferred by the state, owners, and contributing parties for the credit organization's use.

3. Decide or approve within their authority as prescribed by the Law on Credit Organizations, other relevant laws, and the charter of the credit organization:

a) Capital mobilization plans;

b) Plans for using, preserving, and developing capital, investment projects, asset purchases and sales of the credit organization; plans for capital contributions and share purchases in other businesses and credit organizations; plans for transferring investment capital outside;

c) Annual financial reports and long-term financial plans, annual financial plans of the credit organization;

d) Annual financial reports of independent subsidiary companies under the credit organization;

đ) Appoint representatives of the credit organization's capital invested in other businesses.

4. Publicly disclose financial reports in accordance with the Law on Credit Organizations.

5. Inspect and supervise the General Manager (Director) of the credit organization and the Director of independent subsidiary companies in the use, preservation, development of capital, organizational implementation of business operations according to approved plans and schemes, and fulfillment of obligations to the state budget.

6. Bear responsibility for the accuracy and truthfulness of the credit organization's financial reports.

7. Fulfill other responsibilities as prescribed by law and the charter of the credit organization.

Article 34. Responsibilities of the General Director (Director) of Credit Organizations

1. Directing the operations of credit organizations and being responsible before the Board of Directors, Board of Members, and the law for directing the operations of credit organizations.

2. Being responsible for directing the use of capital in business according to the capital utilization, preservation, and development plan approved by the Board of Directors, Board of Members; implementing the profit distribution plan after fulfilling tax obligations and other financial obligations.

3. Being responsible for mobilizing and using various sources of capital for business activities; bearing material responsibility for losses caused by subjective fault to credit organizations.

4. Establishing appropriate cost standards in accordance with the business conditions of credit organizations.

5. Preparing and submitting financial reports to the Board of Directors, Board of Members for approval; being responsible for the accuracy and truthfulness of financial reports, statistical reports, final settlement figures, and other financial information.

6. Developing annual financial plans consistent with business plans and submitting them to the Board of Directors, Board of Members for approval.

7. Deciding on investment projects, capital contributions, purchasing shares of enterprises and other credit organizations, and transferring investment capital outside according to the authorization level granted by the Board of Directors, Board of Members of credit organizations.

8. Fulfilling other responsibilities as prescribed by law and the Charter of credit organizations.

Article 35. Responsibilities of the General Director (Director) of Foreign Bank Branches

1. Representing foreign bank branches, being responsible under the law for all activities of foreign bank branches and managing daily operations in accordance with rights and obligations stipulated by current laws.

2. In cases where a foreign bank has two or more branches operating in Vietnam and implements consolidated financial management, accounting, and reporting systems, the foreign bank must authorize one General Director (Director) of a branch to be responsible under the law for all activities of foreign bank branches in Vietnam.

Article 36. Responsibilities of State Capital Representatives at Credit Organizations

State capital representatives at credit organizations must fully exercise their rights and responsibilities related to financial management, financial oversight, and evaluating the effectiveness of state capital investment at credit organizations as prescribed by this Decree, laws on the management and use of state capital for production and business at enterprises, and other relevant laws.

Chapter VII

RESPONSIBILITIES OF THE SUPERVISORY AUTHORITY

 

Article 37. Responsibilities of the Ministry of Finance

1. The Ministry of Finance shall take the lead and guide the contents assigned in Articles 16, 17, 26, 30, and 31 of this Decree and other necessary contents related to the financial management of credit organizations and foreign bank branches to implement this Decree.

2. Summarize and evaluate the implementation of this Decree to submit to the Government for amendments, supplements, or replacements when necessary.

3. Coordinate with the State Bank of Vietnam in developing and implementing supervision plans for credit organizations wholly owned by the State and credit organizations with state capital; supervise according to specific topics or as required by the Government, Prime Minister.

4. Coordinate with the State Bank of Vietnam to handle financial issues of credit organizations wholly owned by the State and credit organizations with over 50% state ownership.

Article 38. Responsibilities of the State Bank of Vietnam

1. Coordinate with the Ministry of Finance to guide the implementation of this Decree.

2. Conduct inspections, audits, and supervision of credit institutions and foreign bank branches; report every six months and annually to the Ministry of Finance on the financial situation of credit institutions and foreign bank branches and any violations of financial regulations discovered during inspections, audits, and supervision, so that timely cooperative measures can be taken.

3. Perform the function of representing the state ownership interest in credit institutions with state capital as assigned by the Government.

a) Make decisions and be responsible for such decisions within the scope of authority of the state ownership representative.

b) Lead and coordinate with the Ministry of Finance in establishing and implementing plans to supervise credit institutions wholly owned by the state, evaluate the effectiveness of state investment in credit institutions with state capital according to this Decree and other relevant laws.

c) Submit reports on the results of financial oversight and classification of credit institutions wholly owned by the state; submit reports on the results of financial oversight of credit institutions with state capital to the Ministry of Finance.

 

Chapter VIII

IMPLEMENTATION

 

Article 39. Transitional Provisions

For financial activities arising before the effective date of this Decree, if Decree No. 57/2012/ND-CP dated July 20, 2012 of the Government on financial regulations for credit institutions and foreign bank branches differs from the provisions of this Decree, then the provisions of Decree No. 57/2012/ND-CP shall apply.

Article 40. Effective Date

1. This Decree takes effect from September 25, 2017. The content regarding supervision and evaluation of the effectiveness of state investment in credit institutions wholly owned by the state and credit institutions with state capital will take effect from 2018.

2. This Decree replaces Decree No. 57/2012/ND-CP dated July 20, 2012 of the Government on financial regulations for credit institutions and foreign bank branches.

Article 41. Implementation Organization

Ministers, Heads of ministerial-level agencies, Heads of government-affiliated agencies, Chairpersons of provincial and centrally-administered city People's Committees, credit institutions, foreign bank branches, and related organizations and individuals are responsible for implementing this Decree./.