Circular 20/2020/TT-BTC amending Circular 312/2016/TT-BTC

CIRCULAR

Amending and supplementing a number of articles of the Ministry of Finance’s Circular No. 312/2016/TT-BTC of November 24, 2016, prescribing the financial regime applicable to the Deposit Insurance of Vietnam^[1]

Pursuant to the June 16, 2010 Law on Credit Institutions, and the November 20, 2017 Law Amending and Supplementing a Number of Articles of the Law on Credit Institutions;

Pursuant to the June 18, 2012 Law on Deposit Insurance;

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

Pursuant to the Government’s Decree No. 68/2013/ND-CP of June 28, 2013, detailing and guiding the Law on Deposit Insurance;

Pursuant to the Government’s Decree No. 87/2017/ND-CP of July 26, 2017, defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

Pursuant to the Government’s Decree No. 91/2015/ND-CP of October 13, 2015, on investment of state capital in, and management and use of capital and assets by, enterprises, and Decree No. 32/2018/ND-CP of March 8, 2018, amending and supplementing a number of articles of Decree No. 91/2015/ND-CP;

Pursuant to the Government’s Decree No. 87/2015/ND-CP of October 6, 2015, on supervision of investment of state capital in enterprises; financial supervision, assessment of operational efficiency and disclosure of financial information of state-owned and state-invested enterprises;

In implementation of the Prime Minister’s Decision No. 1394/QD-TTg of August 13, 2013, on establishment of the Deposit Insurance of Vietnam;

In implementation of the Prime Minister’s Decision No. 1395/QD-TTg of August 13, 2013, approving the organization and operation charter of the Deposit Insurance of Vietnam;

In implementation of the Prime Minister’s Decision No. 527/QD-TTg of April 1, 2016, amending and supplementing a number of articles of the organization and operation charter of the Deposit Insurance of Vietnam promulgated together with the Prime Minister’s Decision No. 1395/QD-TTg of August 13, 2013;

At the proposal of the Director of the Department of Banking and Financial Institutions,

The Minister of Finance promulgates the Circular amending and supplementing a number of articles of the Ministry of Finance’s Circular No. 312/2016/TT-BTC of November 24, 2016, prescribing the financial regime applicable to the Deposit Insurance of Vietnam.

Article 1.To amend and supplement a number of articles of the Ministry of Finance’s Circular No. 312/2016/TT-BTC of November 24, 2016, prescribing the financial regime applicable to the Deposit Insurance of Vietnam

1. To add the following Point e to Clause 2, Article 4:

“e/ Income from special loans to specially controlled credit institutions. The Vietnam Deposit Insurance shall separately monitor this income in the professional reserve fund.”

2. To amend and supplement Clauses 4 and 5 of Article 5 as follows:

“4. The Deposit Insurance of Vietnam may use its working capital to purchase government bonds, long-term bonds of supporting credit institutions under the State Bank of Vietnam’s decisions and bills of the State Bank of Vietnam, and make deposits at the State Bank of Vietnam.  

5. The professional reserve fund may be used for:

a/ Paying insurance sums to depositors in accordance with the law on deposit insurance. In case the professional reserve fund is insufficient to pay insurance sums to depositors, the Deposit Insurance of Vietnam may:

- Receive aid or borrow loans from credit institutions in accordance with the Law on Deposit Insurance and other relevant legal documents.

- Sell government bonds, long-term bonds of supporting credit institutions or bills of the State Bank of Vietnam. Difference between selling price and cost price (positive difference or negative difference after being offset with the risk provision in accordance with law) of government bonds, long-term bonds of supporting credit institutions or bills of the State Bank of Vietnam shall be accounted into the professional reserve fund.

b/ Providing special loans to specially controlled credit institutions in accordance with law. The use of the professional reserve fund for providing special loans to specially controlled credit institutions must not affect the capability to pay deposit insurance sums to depositors. The Deposit Insurance of Vietnam shall closely monitor loans and urge recovery of debts in order to minimize the risk of capital loss.

c/ Offsetting losses arising from irrecoverable special loans provided to specially controlled credit institutions specified in Article 7a of this Circular.”

3. To amend and supplement Points a and b, Clause 2 of Article 6 as follows:

“a/ Annually, the Deposit Insurance of Vietnam shall set aside a certain proportion of revenues from working capital investment for being accounted as its income and send a dossier of set aside revenue proportion to the Ministry of Finance before January 15 of the planning year, enclosed with a capital use plan, expected income, expenses and other relevant documents.

b/ Within 60 days after receiving a complete dossier, the Ministry of Finance shall assume the prime responsibility for, and coordinate with the State Bank of Vietnam in, determining specific revenue proportion to be set aside in the planning year for the Deposit Insurance of Vietnam. The revenue proportion to be set aside shall be determined on the principle of enabling the Deposit Insurance of Vietnam to cover all expenses for professional operations expenses and set aside funds in accordance with regulations.”

4. To amend and supplement Point c, Clause 2 of Article 7 as follows:

“c/ To promptly settle value of lost assets and irrecoverable debts and set aside risk provisions as prescribed at Point 1.9, Clause 1, Article 19 of this Circular.”

5. To amend and supplement Point b, Clause 4 of Article 7 as follows:

“b/ The professional reserve fund of the Deposit Insurance of Vietnam decreases due to payment of insurance sums to depositors at institutions participating in deposit insurance; or offsetting of losses arising from special loans  provided to specially controlled credit institutions.”

6. To add the following Points d and dd to Clause 4, Article 7:

“d/ Using working capital to purchase long-term bonds of supporting credit institutions in accordance with law, thus affecting annual income of the Deposit Insurance of Vietnam.

dd/ Selling government bonds, long-term bonds of supporting credit institutions or bills of the State Bank of Vietnam to pay insurance sums to depositors in case the professional reserve fund is not enough to pay deposit insurance sums.”

7. To add the following Article 7a:

“Article 7a. Offsetting of losses in case of providing special loans to specially controlled credit institutions

a/ The Deposit Insurance of Vietnam may use the balance of income from special loans provided to specially controlled credit institutions which are separately monitored in the professional reserve fund under Point e, Clause 2, Article 4 of this Circular to offset losses arising from irrecoverable special loans. In case the balance of income from special loans is not enough to offset losses, the Deposit Insurance of Vietnam shall report such to the State Bank of Vietnam for consideration and decision on use of the professional reserve fund for offsetting losses in accordance with law.

b/ The Deposit Insurance of Vietnam may not set aside provision for non-performing special loans.”

8. To amend and supplement Point 1.9, Clause 1 of Article 19 as follows:

“1.9. Expenses for risk provision (including expenses for provision for long-term bonds of supporting credit institutions) must comply with regulations on setting aside and settlement of provisions for inventory markdowns, loss of investments, bad receivables, and warranty for products, goods, services and construction works at enterprises.”

9. To amend and supplement Item g, Point 1.10, Clause 1 of Article 19 as follows:

“g/ Expenses for remaining asset loss (including loss of long-term bonds of supporting credit institutions) after being offset by risk provision and other sources (if any) under the prescribed regime.”

10. To amend and supplement Clause 3 of Article 21 as follows:

“3. The evaluation of operational efficiency and business rating of the Deposit Insurance of Vietnam for use as a basis for setting aside reward and welfare funds and management reward fund must comply with regulations applicable to single-member limited liability companies with 100% of charter capital owned by the State.”

11. To amend and supplement Clauses 2 and 3 of Article 24 as follows:

“2. The State Bank of Vietnam shall assume the prime responsibility for, and coordinate with the Ministry of Finance in, reviewing financial plans. Based on opinions of the Ministry of Finance, the State Bank of Vietnam shall assign financial plan targets and targets for evaluation of operational efficiency and business rating the Deposit Insurance of Vietnam before April 30 of the planning year and take responsibility for its decision.

a/ Financial plan targets include:

- Total income minus total expenses exclusive of salaries;

- Expenses for allowance for those on overseas working trips;

- Expenses for scientific research;

- Expenses for human resource training and further training;

- Expenses for hiring of domestic and foreign experts.

In the course of implementing a financial plan, if failing to achieve financial targets assigned by the State Bank of Vietnam, the Deposit Insurance of Vietnam shall send a written request for adjustment of the plan to the State Bank of Vietnam and implement the plan only after obtaining written approval of the State Bank of Vietnam (after receiving the Ministry of Finance’s opinions). The State Bank of Vietnam shall take responsibility for its decision on adjustment of the Deposit Insurance of Vietnam’s financial plan.

b/ Targets for evaluation of operational efficiency and business rating of the Deposit Insurance of Vietnam must comply with the Government’s Decree No. 87/2015/ND-CP of October 6, 2015, on supervision of investment of state capital in enterprises; financial supervision, evaluation of operational efficiency and disclosure of financial information of state-owned and state-invested enterprises, and its revising, replacing or guiding documents (if any). These targets for evaluation may not be adjusted during the implementation of financial plans (except cases offorce majeureevents).

3. Based on plan targets assigned by the State Bank of Vietnam under Point a, Clause 2 of this Article, the Board of Directors of the Deposit Insurance of Vietnam shall approve detailed financial plans for implementation.”

12. To add the following Clause 4 to Article 25:

“4. Methods of report submission:

The Deposit Insurance of Vietnam shall make written reports and submit them to the Ministry of Finance and State Bank of Vietnam by either of the following methods:

a/ Direct submission;

b/ Sending by post.”

13. To add the following Article 25a:

“25a. Disclosure of enterprise information

The Deposit Insurance of Vietnam shall disclose information in accordance with the law on deposit insurance and law on disclosure of information by state-owned enterprises.”

14. To amend and supplement Clause 3 of Article 29 as follows:

“3. Pursuant to the provisions of this Circular and relevant regulations, within 120 days from the signing date of this Circular, the Board of Directors of the Deposit Insurance of Vietnam shall issue an internal financial regulation to serve as a basis for implementation and send one copy thereof to the State Bank of Vietnam for monitoring and supervision.”

Article 2.Implementation provisions

1. This Circular takes effect on May 20, 2020.

2. Any problems arising in the course of implementation of this Circular should be reported to the Ministry of Finance for study, consideration and settlement.-

For the Minister of Finance
Deputy Minister
HUYNH QUANG HAI