Circular No. 97/1998/TT-BTC guides the financial management regime for the Training Credit Fund

CIRCULAR

Guidelines for Financial Management of the Education Credit Fund

Implementing Decision No. 51/1998/QĐ-TTg dated March 2, 1998 of the Prime Minister on establishing the Education Credit Fund, following the agreement of the State Bank of Vietnam in Circular No. 502/CV-NHNN1 dated June 11, 1998, the Ministry of Finance provides guidelines for financial management of the Education Credit Fund as follows:

I. GENERAL PROVISIONS

1. The Education Credit Fund is established to provide loans at preferential interest rates to students and pupils studying at universities, colleges, vocational high schools, and vocational training institutions throughout the country. The Education Credit Fund is managed by one state-owned commercial bank designated by the State Bank of Vietnam (hereinafter referred to as the Managing Bank). The Managing Bank shall be responsible for the operation of the Fund under the law.

2. The initial capital of the Education Credit Fund is 100 billion VND (one hundred billion VND). The Education Credit Fund operates without profit objectives. It is exempt from paying income derived from the use of state budget funds. In case of profit, it may be considered for tax reduction to supplement the Fund's capital.

3. The fiscal year of the Fund begins on January 1 and ends on December 31 of each year.

4. The Education Credit Fund is subject to financial management by the Ministry of Finance. The Fund must comply with current regulations on financial management, Accounting and Statistics Ordinance, and the provisions of this Circular.

II. SPECIFIC PROVISIONS

1. Regarding sources of operating capital for the Education Credit Fund:

a. The initial capital of the Education Credit Fund when established is 100 billion VND formed from the following sources:

The state budget allocates 30 billion VND.

The remainder is provided by:

The State Bank lending according to the specified target of the Government.

Commercial banks voluntarily contributing capital.

Contributions and support from organizations and individuals both within and outside the country.

b. Annual supplementary capital:

The State Bank supplements according to the plan approved by the Prime Minister.

The State Bank lending according to the specified target of the Government.

Commercial banks providing loans at preferential interest rates or voluntarily contributing.

Voluntary contributions, non-repayable or repayable with preferential interest rates or no interest from organizations and individuals both within and outside the country for educational purposes.

2. Management and use of capital.

The capital of the Education Credit Fund is used to provide loans to students and pupils studying at universities, colleges, vocational high schools, and vocational training institutions.

The loan term, interest rate, and maximum amount of loan per student or pupil of the Fund must be implemented in accordance with the Credit Regulations issued by the Governor of the State Bank applicable to the Fund.

Temporary idle capital of the Fund can only be deposited at the Managing Bank. The Managing Bank must pay interest on these deposits at the same rate as the interest rate of the Education Credit Fund for loans.

The Managing Bank has the responsibility to manage and use the capital for its intended purpose, lend and recover capital in accordance with credit regulations, to the correct recipients, and effectively.

3. Financial income and expenditure of the Education Credit Fund.

a. Income of the Fund includes the following items:

Interest from loans.

Interest from deposits at the Managing Bank.

Other income (if any).

b. Operating expenses of the Fund include:

Payment of loan interest.

Payment of interest on capital contributed voluntarily by commercial banks at the same rate as the interest rate of the Education Credit Fund.

Payment of service fees to the Managing Bank. The fee rate is applied according to the government's regulations on service fees for loans from state investment credit funds in Vietnamese currency.

Quarterly, the Managing Bank is allowed to temporarily deduct 75% of the service fees earned based on the average outstanding loan balance according to the quarterly plan. For the next quarter, the Managing Bank will recalculate the service fees earned based on the actual average outstanding loan balance of the previous quarter to adjust promptly. If the temporary deduction exceeds the earned amount, the excess must be deducted from the planned deduction of the next quarter.

At the end of the year, based on the total service fees earned for the year according to the final audit by the Ministry of Finance, the Managing Bank will calculate and adjust the temporarily deducted fees for the year. If the deduction is insufficient, additional deductions will be made. If the deduction exceeds the earned amount, the excess must be refunded or deducted from the planned fees for the next year.

Service fees are calculated based on the outstanding loan balance within the limit, not including overdue balances.

c. Handling surplus or deficit in income and expenditure.

The results of annual financial surplus or deficit of the Fund are handled as follows:

In cases where income exceeds expenditure: The surplus of income over expenditure of the Fund is used to establish (supplement) the Reserve Fund. The Reserve Fund is used to supplement the operating capital of the Fund to offset risks in credit activities.

In cases where income is less than expenditure: The deficit of income due to objective reasons will be reviewed and resolved by the Ministry of Finance, the State Bank, the Ministry of Planning and Investment, and the Ministry of Education and Training to compensate using state budget funds within the approved plan indicators.

4. Management of income and expenditure.

The Managing Bank is responsible for collecting all income generated during operations accurately, fully, and promptly to record in the Fund's revenue, and not to leave any income off the books or unrecorded in revenue.

The Managing Bank must separately track and record all income and expenses arising from the Fund's operations.

The use of the Reserve Fund to supplement the capital and offset risks of the Fund as stipulated below must have the approval of the Ministry of Finance and the State Bank.

5. Compensation for credit risks in the operation of the Education Credit Fund.

For risks caused by subjective reasons by individuals or groups within the Managing Bank, the Bank must consider the responsibility of the relevant individuals or groups to urge the recovery of debts or handle compensation to recover debts.

In cases where risks arise due to objective reasons such as students or trainees dying, going missing, or being unable to repay debts due to loss of working capacity, or being under execution of criminal sentences or absconding, and there is confirmation from their parents or guardians that they have no assets to repay the debt on their behalf, the Reserve Fund shall be used to cover the shortfall. If insufficient, the Ministry of Finance, State Bank, Ministry of Planning and Investment, and Ministry of Education and Training shall appraise and submit to the Prime Minister for consideration and resolution.

To handle risks arising from objective reasons, the bank managing the Fund must have the following legal documents:

For cases where the customer is a student who has died or gone missing;

The legal documents include:

Certificate of death or disappearance (in accordance with the Civil Code).

Confirmation from local authorities that the student or trainee and their parents or guardians have no assets to repay the bank's debt.

Notarized copy of the loan agreement.

For cases where the customer is a student or trainee who is still alive but has lost working capacity:

The legal documents include:

Certificate of loss of working capacity issued by provincial health authority.

Confirmation from local authorities that the student or trainee and their parents or guardians have no assets to repay the bank's debt.

Notarized copy of the loan agreement.

For cases where the customer is a student or trainee who is serving a sentence or absconding:

The legal documents include:

Warrant of arrest or confirmation from the police regarding the borrower's absconding, and confirmation from the court regarding the borrower's service of sentence.

Confirmation from local authorities that the student or trainee and their parents or guardians have no assets to repay the bank's debt.

Notarized copy of the loan agreement.

The bank managing the Fund must prepare a report and request for handling the amount of risk due to objective reasons and send it to the Ministry of Finance and the State Bank. Upon receiving the report from the bank managing the Fund, the Ministry of Finance will cooperate with the State Bank to appraise and determine the allowable risk amount for the bank managing the Fund to use the reserve fund to cover or submit to the Prime Minister for consideration and resolution.

6. Accounting system and reporting.

The bank managing the Fund shall implement accounting books, record vouchers, monitor, and conduct separate accounting for activities generated from the Fund according to the current accounting regulations.

The bank managing the Fund is responsible for finalizing financial accounts and submitting the following quarterly and annual reports to the Ministry of Finance:

Annually, the bank managing the Fund must prepare a plan for necessary capital to address interest rate differences and risks and submit it to the Ministry of Finance, Ministry of Planning and Investment, State Bank, and Ministry of Education and Training as a basis for calculating the necessary additional capital from the state budget to be decided by the Prime Minister.

Report on income and expenses.

Report on sources and use of funds.

Deadline for submission of reports:

Quarterly report not later than 10 days after the end of the quarter.

Annual settlement report not later than 30 days after the end of the year.

7. Financial settlement audit.

Based on the annual financial settlement report prepared by the bank managing the Fund, the Ministry of Finance will cooperate with the State Bank to audit the annual financial settlement of the Fund, including officially determining the service fee enjoyed by the bank managing the Fund, and addressing risk coverage.

III. IMPLEMENTATION

The bank managing the Fund is responsible under the law for the use and management of state and social capital and property for educational and training purposes; it is subject to financial inspection by state financial agencies according to the Accounting and Statistics Ordinance and financial regulations stipulated in this Circular.

This Circular takes effect fifteen days from the date of signature.

During the implementation process, if there are difficulties, please reflect them to the Ministry of Finance for consideration and resolution./.