Decision No. 122/2001/QD-NHNN dated February 20, 2001 of the State Bank of Vietnam promulgating the model charter on organization and operation of State-run Commercial Banks

DECISION

PROMULGATING THE MODEL CHARTER ON ORGANIZATION AND OPERATION OF STATE-RUN COMMERCIAL BANKS

THE STATE BANK GOVERNOR

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

Pursuant to the Government’s Decree No. 15/CP of March 2, 1993 on the tasks, powers and State management responsibilitie’s of the ministries and ministerial-level agencies;

Pursuant to the Government’s Decree No. 49/2000/ND-CP of September 12, 2000 on the organization and operation of the commercial banks;

At the proposal of the director of the Department for Banks and Non-Bank Credit Institutions,

DECIDES:

Article 1.-To promulgate together with this Decision the Model Charter on organization and operation of the State-run commercial banks.

Article 2.-This Decision takes effect 15 days after its signing and replaces Decision No. 318/QD-NHNN5 of November 25, 1996 of the State Bank Governor to promulgate the Model Charter on organization and operation of the State-run banks.

Article 3.-The director of the Office, the director of the Department for Banks and Non-Bank Credit Institutions, the heads of units under the State Bank, the directors of the State Bank’s branches in provinces and centrally-run cities, the chairmen of the Managing Boards and the general directors of the State-run commercial banks shall have to implement this Decision.

MODEL CHARTER ON ORGANIZATION AND OPERATION OF STATE- RUN
COMMERCIAL BANKS
(Promulgated together with Decision No. 122/2001/QD-NHNN of February 20, 2001 of the State Bank Governor)

Chapter I

GENERAL PROVISIONS

Article 1.-The State-run commercial banks (hereafter called the bank for short) are established under the State Bank Governors decisions and may carry out banking activities and other relevant business activities for the purpose of profit, contributing to achieving the economic targets set by the State.

Article 2.-The bank has:

1. The legal person status under Vietnamese law;

2. Its proper name and head-office;

3. The organization and operation charter, the managerial and executive apparatus;

4. The charter capital;

5. Its own seal, accounts opened at the State Bank as well as domestic and foreign banks according to the regulations of the State Bank;

6. The financial balance sheet, funds as provided for by law.

Article 3.-The bank has the operation duration of 99 years as from the date the decision on its establishment is issued.

Article 4.-The bank submits to the State management by the State Bank, the ministries, the ministerial-level agencies, the agencies attached to the Government and the People’s Committees of all levels according to their respective functions and law provisions.

Chapter II

THE CONTENTS AND SCOPE OF OPERATION OF THE BANK

Section 1. CAPITAL MOBILIZATION

Article 5.-The bank mobilizes capital in the following form:

1. Accepting deposits of organizations, individuals and other credit institutions in forms of demand deposit, time deposits and other kinds of deposit.

2. Issuing deposit certificates, bonds and other valuable papers to mobilize capitals of domestic and foreign organizations and individuals when so approved by the State Bank Governor.

3. Borrowing capital of other credit institutions operating in Vietnam and foreign credit institutions.

4. Borrowing short-term loans of the State Bank in form of capital reallocation.

5. Other forms of capital mobilization as stipulated by the State Bank.

Section 2. CREDIT ACTIVITIES

Article 6.-The bank provides credit to organizations and individuals in forms of loans, discount of commercial bills and other valuable papers, guaranty, financial leasing and other forms prescribed by the State Bank.

Article 7.-The bank provides loan capital to organizations and individuals in the following forms:

1. Short-term loans to meet the demand for capital for production, business, service and welfare.

2. Medium- and long-term loans for the purpose of execution of investment projects on development of production, business, services and welfare.

3 Provision of loans under the Prime Ministers decisions in case of necessity.

Article 8.-

1. The bank is entitled to request customers to supply documents proving the feasible business plans and financial capabilities of their own as well as their guarantors before deciding the provision of loans; entitled to terminate the provision of loans and recover debts ahead of time when detecting that the customers have supplied false information and/or violate the credit contracts.

2. The bank is entitled to handle assets used as security for loans of the borrowing customers as well as assets of the guarantors in fulfilling their guaranty obligations in order to recover debts according to the provisions of the Government’s Decree on securing loans of credit institutions; to institute lawsuits against customers for their violations of the credit contracts and/or against the guarantors for their failure to perform or improper performance of their guaranty obligations according to the provisions of law.

3. The bank is entitled to exemption and/or reduction of lending interest rates, banking charges, to debt reschedule and/or debt purchase/sale according to the regulations of the State Bank.

Article 9.-

1. The bank provides guaranty for loans, payment, contract performance, bidding participation and other forms of banking guaranty for organizations and individuals according to the regulations of the State Bank.

2. The bank is entitled to effect the international payment, to provide guaranty for loans, payment and other forms of banking guaranty where the guarantees are foreign organizations or individuals.

Article 10.-

1. The bank discounts commercial bills and other short-term valuable papers for organizations and individuals.

2. The bank rediscounts the commercial bills and other short-term valuable papers for other credit institutions.

Article 11.-The bank must set up the financial leasing company when conducting financial leasing activities.

Section 3. PAYMENT AND TREASURY SERVICES

Article 12.-

1. The bank opens deposit accounts at the State Bank (Transaction Bureaus or provincial/municipal branches of the State Bank) where its head office is located and maintain the compulsory reserve deposit balances thereat according to the regulations of the State Bank; open deposit accounts at other domestic banks according to the regulations of the State Bank.

2. The banks transaction bureaus and branches open deposit accounts at the State Banks branches in the provinces or cities where such transaction bureaus and branches are headquartered.

3. The bank opens accounts for domestic and foreign customers according to the provisions of law.

Article 13.-

1. The bank provides the following payment and treasury services:

a) Supplying payment instruments.

b) Domestic payment for customers.

c) Collection and expenditures on others behalf.

d) Other payment services according to the regulations of the State Bank.

e) International payment services when so permitted by the State Bank.

f) Cash collection and payment for customers.

2. The bank organizes the internal payment system and participates in the domestic inter-bank payment system, and participates in the international payment system when so permitted by the State Bank.

Section 4. OTHER ACTIVITIES

Article 14.-The bank performs the following other activities:

1. Using its charter capital and reserve fund to contribute capital to and/or purchase shares of, enterprises and other credit institutions according to the provisions of law.

2. Pooling capital with foreign credit institutions to set up joint venture credit institutions in Vietnam according to the Government’s regulations on organization and operation of foreign credit institutions in Vietnam.

3. Participating in the monetary market according to the regulations of the State Bank.

4. Dealing in foreign exchange and gold on domestic and international markets when so permitted by the State Bank.

5. Being entitled to make the entrustment, to accept the entrustment, to act as agents in domains related to banking activities, including the management of property and/or investment capital of domestic and foreign organizations and individuals, under entrustment or agency contracts.

6. Providing insurance services; being entitled to set up affiliate companies or joint ventures for insurance business according to the provisions of law.

7. Providing the following services:

a) Financial and monetary consultancy for customers in forms of providing direct consultancy for customers or setting up affiliate companies according to the provisions of law.

b) Preserving precious exhibits, valuable papers, leasing safes, pledging and other services according to the provisions of law.

8. Directly conducting or setting up affiliate companies to conduct other business activities related to banking operation according to the provisions of law.

Article 15.-The bank must not directly deal in real estates.

Article 16.-In the course of operation, the bank abides by the regulations on restrictions in order to ensure safety in operation according to the provisions in Section 5, Chapter III of the Law on Credit Institutions and the regulations of the State Bank; on reserves for stock goods price drop and/or securities price drop according to the provisions of law.

Chapter III

ORGANIZATIONAL STRUCTURE, ADMINISTRATION, MANAGEMENT, CONTROL OF THE BANK

Section 1. ORGANIZATIONAL STRUCTURE

Article 17.-The organizational system of the Bank

1. Head office

2. Transaction centers, branches (called grade 1-branches), representative offices, public-service units, companies affiliated to the bank.

3. Branches of the grade 1-branches (called grade 2- branches).

4. Branches of the grade 2-branches (called grade 3- branches).

5. Transaction bureaus and savings banks, affiliated to transactions centers, grade 1-branches, grade 2-branches, grade 3-branches.

The list of transaction centers, branches (grade 1), representative offices, public-service units, affiliate companies is inscribed in the appendix enclosed with the bank’s Charter.

Article 18.-The organizational structure of the managerial and executive apparatus of the head office

1. The managing board and the assisting apparatus.

2. The control board.

3. The general director and the assisting apparatus.

4. The internal inspection and audit system.

Article 19.-The apparatus assisting the general director

1. The deputy- general directors.

2. The chief accountant.

3. Specialized, professional sections or departments.

4. The internal inspection and audit section (called the internal inspection section for short).

Article 20.-The organizational structure of the executive apparatus of the transaction center, grade 1- branches. grade 2- branches, grade 3 branches

1. Director.

2. Deputy directors

3. Head of accountancy section.

4. Specialized and professional sections.

5. Transaction bureaus, savings banks.

6. Internal inspection, audit teams.

Article 21.-The organizational structure of the executive apparatus of the public-service units and representative offices shall be prescribed by the Managing Board in conformity with the provisions of law.

Article 22.-The organizational structure of the executive apparatus of affiliate companies shall comply with the Governments regulations applicable to each type of affiliate company permitted to be set up.

Section 2. MANAGING BOARD AND CONTROL BOARD

Article 23.-Administering the bank is the Managing Board. The Managing Board post holders shall be appointed and dismissed by the State Bank Governor after obtaining the consent of the Government’s Commission for Organization and Personnel.

Article 24.-The Managing Board and its members

1. The Managing Board is composed of 5 or 7 members, including full-time members and part-time members; the part-time members are persons other than incumbent holders of leading posts in the State apparatus; the numbers of members of the Managing Board, the full-time members and the part-time members shall be stipulated by the Managing Board.

2. The chairman of the Managing Board, the member of the Managing Board who concurrently holds the post of General Director and the member of the Managing Board who concurrently holds the post of the head of the Control Board are full-time members.

3. The Managing Board members are persons who have prestige, professional ethics and knowledge about banking operation and are subjects other than those prescribed in Article 40 of the Law on Credit Institutions.

4. The chairman and other members of the Managing Board must not authorize the persons who are not members of the Managing Board to perform their respective tasks and exercise their respective powers.

5. The Managing Board chairman must not join the Managing Boards or participate in the administration of other credit institutions, except where such institutions are affiliate companies of the bank.

6. The Managing Board chairman is not concurrently the General Director or Deputy-General Director.

7. The term of office of a member of the Managing Board is 5 years. The Managing Board members may be re-appointed.

Article 25.-The tasks and powers of the Managing Board:

1. To administer the bank according to the provisions of the Law on Credit Institutions, the Governments Decree on organization and operation of commercial banks and other relevant law provisions.

2. To receive capital sources and other resources assigned by the State.

3. To submit to the State Bank Governor for approval:

a) The amendments and supplements to the Charter of the bank;

b) The establishment of affiliate companies;

c) The opening of transaction centers, branches, representative offices at home and abroad (hereinafter called the representative offices for short), the establishment of public-service units of the bank;

d) The capital contribution to, the purchase of share of, the joint venture with, foreign investors;

e) The division, separation, consolidation, merger, re-purchase or dissolution of the bank and/or its transaction centers, branches, representative offices, affiliate companies, public-service units;

f) Changes prescribed in Clause 1, Article 31 of the Law on Credit Institutions;

g) The appointment and dismissal of the chairman and members of the Managing Board, the General Director, the deputy General Director, the chief accountant of the bank;

h) The appointment and dismissal of the head and members of the Control Board;

i) The acceptance of independent audit organizations for the audit of activities of the bank.

4. To approve plans on allocation of capital and other resources to affiliate companies.

5. To decide on the capital contribution to, the purchase of share of, enterprises and/or other credit institutions, except the capital contribution to, purchase of shares of and joint venture with, foreign investors.

6. To approve plans for business activities, plans for use of after-tax profits, proposed by the General Director.

7. To decide the appointment and dismissal of directors of transaction centers, branches, representative offices or public-service units.

8. To decide on the organizational structure of the managerial and executive apparatus at the head office; the organizational structure of the executive apparatuses of the transaction centers, branches, representative offices, public-service units; the public-employee regulation, the wage-payment regulation and the commendation and discipline regulation, applicable within the bank.

9. To prescribe the interest rates, exchange rates, commission rates, charges, fine levels, applicable to customers under the provisions of law.

10. To promulgate the regulation on operation of the transaction centers, branches, representative offices, public-service units, affiliate companies.

11. To promulgate the regulation on operation of the Managing Board, the Control Board.

12. To promulgate the regulation on organization and operation of the internal inspection and audit as prescribed by law.

13. To approve the general financial reports and annual settlement of the bank.

14. To promulgate legal documents guiding in detail the implementation of policies, regimes and regulations of the State and the State Bank on banking operations.

15. To exercise other rights and perform other tasks as prescribed by law.

Article 26.-Tasks of the Managing Board members:

1. The Managing Board chairman has the tasks:

a) To take general responsibility for all activities of the Managing Board, to assign tasks to members in order to fulfill the tasks and exercise the powers of the Managing Board;

b) To sign on behalf of the Managing Board together with the General Director the reception of capital and other resources assigned to the bank by the State;

c) To sign documents falling under the competence of the Managing Board for submission to the State Bank Governor, concerned bodies;

d) To sign resolutions, decisions and documents or approve documents, which fall under the competence of the Managing Board, for implementation within the bank;

e) To convene and chair meetings of the Managing Board and assign its members to prepare contents therefor;

f) To monitor and urge the fulfillment of tasks by the Managing Board members between two meetings of the Managing Board.

2. The tasks of the Managing Board members shall be assigned by its chairman, which are suitable to the activities of the bank and the working conditions of each member.

Article 27.-The assisting apparatus of the Managing Board

1. The Managing Board uses the executive apparatus and seal of the bank to perform its tasks.

2. The Managing Board has an assisting body of no more than 5 full-time officials. The Managing Board chairman shall select and replace assistants to the Managing Board.

3. The Managing Board shall set up the Control Board to inspect and supervise activities of the bank.

Article 28.-The working regime of the Managing Board

1. The Managing Board works according to the collective regime; meets once every month to consider and decide on matters under its competence and responsibility. When necessary, the Managing Board may hold extraordinary meetings to settle urgent issues of the bank on the basis of the proposal of its chairman or the head of the Control Board, or the General Director, or over 50% of the Managing Board members.

2. The Managing Board chairman convenes and chairs all meetings of the Managing Board; where he is absent, the chairman shall authorize another member in the Managing Board to convene and chair the meetings.

3. The Managing Boards meetings are considered valid when they are attended by at least 2/3 of its members. All documents on the Managing Boards meetings must be sent to its members and delegates invited to attend the meetings 5 days before the meetings.

The Managing Board meetings shall be recorded in minutes which must be signed by all participating members of the Managing Board.

The resolutions and decisions of the Managing Board must be voted for by more than 50% of its members. Where the number of votes for and the number of votes against are equal, the final decision shall rest with the side where stays the vote of the Managing Board chairman.

Any Managing Board members who have opinions different from the resolutions and/or decisions of the Managing Board may reserve their opinions and report them to the competent State bodies; pending the decisions of the competent bodies, they still must abide by the resolutions and/or decisions of the Managing Board. The reserved opinions shall be made in writing with the signatures of the reservists and kept together with the relevant resolutions and decisions of the meetings.

5. The Managing Boards resolutions and decisions are binding on the entire bank.

6. The banks General Director, the directors of transaction centers, branches, public-service units, affiliate companies shall have to fully and promptly supply necessary information relating to the banks activities at the request of the Managing Board.

7. The Managing Board members have the responsibility to keep secret the supplied information.

8. The expenses for operations of the Managing Board and the Control Board, including wages and allowances of the members of the Managing Board and the Control Board as well as the assisting body of the Managing Board, shall be accounted into the managerial costs of the bank.

The General Director ensures working conditions and facilities for the Managing Board and the Control Board.

Article 29.-The Control Board members

1. The Control Board has the minimum membership of 5, of which at least half work on the full-time basis; one member recommended by the Finance Minister, and one member recommended by the State Bank Governor. The number of the Control Board members shall be decided by the Managing Board.

2. The head of the Control Board is a member of the Managing Board and assigned by the Managing Board. Other members of the Control Board shall be appointed and dismissed by the Managing Board. The head and other members of the Control Board must be approved by the State Bank Governor.

3. The Control Board members shall be persons other than the subjects prescribed in Article 40 of the Law on Credit Institutions and satisfy the requirements on professional qualifications and ethics as prescribed by the State Bank.

Article 30.-Tasks and powers of the Control Board

1. To inspect the financial activities of the bank; supervise the observance of cost-accounting regime, and the operations of the internal inspection and audit system of the bank.

2. To appraise the annual financial reports of the bank; to examine every specific matter related to the financial activities of the bank when deeming it necessary or under the decisions of the Managing Board.

3. To frequently inform the Managing Board of the results of financial activities.

4. To report to the Managing Board on the accuracy, truthfulness and legality of book entries, keep vouchers and compile accounting books, report on the banks finance; operation of the internal inspection and audit system of the bank.

5. To propose measures for supplementing, amending or improving the financial operation of the bank according to law provisions.

6. To be entitled to use the internal inspection and audit system of the bank for the implementation of its tasks.

7. Other tasks and powers prescribed by law.

Section 3. GENERAL DIRECTOR AND ASSISTING APPARATUS

Article 31.-Administering the banks operation shall be the General Director, who is assisted by a number of deputy General Directors, chief accountant and professional apparatus.

Article 32.-The General Director is the legal person representative of the bank, who takes responsibility before the Managing Board and law for running daily activities according to his/her tasks and powers prescribed in Article 36 of this Model Charter.

Article 33.-Deputy General Directors shall assist the General Director in administering one or several domains of activities of the bank according to the latters assignment and take responsibility before the General Director and law for the tasks assigned by the General Director.

Article 34.-The General Director and Deputy General Directors must not be the subjects prescribed in Article 40 of the Law on Credit Institutions, must reside in Vietnam while holding such posts, have the professional qualifications and capability to administer the bank as provided for by the State Bank.

Article 35.-The General Director and his/her deputies shall be appointed, dismissed, commended and disciplined by the State Bank Governor at the proposal of the Managing Board.

Article 36.-The tasks and powers of the General Director:

1. To sign, together with the Managing Board chairman, the reception of capital and other resources assigned by the State for management and use. To assign capital and other resources to affiliate companies.

2. To submit to the Managing Board for approval:

a) Amendments and supplements to the banks Charter;

b) The establishment of affiliate companies;

c) The opening of transaction centers, branches, representative offices, public-service units;

d) Decisions on the organizational structure of the managerial and executive apparatus at the head- office; the organizational structure of the executive apparatuses of the transaction centers, branches, representative offices, public-service units;

e) The appointment and dismissal of Deputy General Directors, chief accountant; directors of transaction centers, branches, representative offices or public-service units;

f) The promulgation of regulation on operations of the transaction centers, branches, representative offices, public-service units, affiliate companies;

g) Plans on business activities, plans on the use of after-tax profits;

h) The interest rates, exchange rates, commission rates, charge and fine levels applicable to customers under the provisions of law;

i) The decision on capital contribution to, purchase of shares of, enterprises and/or other credit institutions;

j) The plans on division, separation, consolidation, merger, re-purchase or dissolution of the bank and/or its transaction centers, branches, representative offices, affiliate companies and public-service units;

k) The changes prescribed in Clause 1, Article 31 of the Law on Credit Institutions;

l) Selection of independent audit organizations to audit activities of the bank;

m) The general financial reports and annual settlement of the bank;

n) The promulgation of documents guiding in detail the implementation of policies, regimes of the State and the State Bank on banking operations.

3. To appoint and dismiss heads and deputy heads of professional sections or departments at the head-office; the deputy directors, heads of the accountancy sections and heads of the internal inspection teams of the transaction centers, branches, representative offices, public-service units as well as other title holders.

4. To organize the implementation of plans on business activities, plans on the use of after-tax profits after they are approved by the Managing Board.

5. To administer and decide on matters related to the business activities of the bank strictly according to law and the decisions of the Managing Board; to take responsibility for the business results of the bank.

6. To represent the bank in international relations, legal proceedings, disputes, dissolution, bankruptcy.

7. To decide the application of measures beyond his/her competence in case of emergency (natural calamities, enemy sabotage, fires, accidents) and take responsibility for such decisions, then immediately report such to the Managing Board, the State Bank and other competent State bodies for further settlement.

8. To submit to the inspection and supervision of the Managing Board, the Control Board, the State Bank and other competent State bodies over the performance of his/her executive tasks.

9. To report to the Managing Board, the State Bank and other competent State bodies as stipulated by law on the results of the business activities of the bank.

10. Other powers and tasks as prescribed by law and decided by the Managing Board.

Article 37.-The chief accountant shall be appointed and dismissed by the State Bank Governor at the proposal of the Managing Board after obtaining the consent of the Finance Ministry. The chief accountant shall assist the General Director in directing the performance of accounting and statistical work of the bank, and have the rights and obligations as prescribed by law.

Article 38.-The professional sections or departments at the head-office shall function as advisers, assisting the Managing Board and the General Director in managing and administering the affairs of the bank. The organizational structure, functions and tasks of the professional sections or departments shall be decided by the Managing Board at the proposal of the General Director.

Section 4. INTERNAL INSPECTION, AUDIT SYSTEM

Article 39.-The internal inspection and audit system

1. The full-time internal inspection and audit system (called collectively the internal inspection system) under the managerial apparatus of the General Director from the head office to transaction centers, branches, representative offices and affiliate companies shall assist the General Director in effecting the smooth, safe and lawful administration of all professional activities of the bank. People working in the internal inspection system shall not concurrently hold other posts of the bank.

2. The internal inspection system and the personnel performing this operation (the internal inspection personnel) operate independently from the professional sections, transaction centers, branches, representative offices and affiliate companies and are independent in making evaluation, conclusions and proposals in the inspection and audit activities.

Article 40.-The internal inspection personnel

The internal inspection personnel of the bank must satisfy the common criteria of the banks personnel and all the following criteria:

1. Being knowledgeable about laws and the operations they perform.

2. Having university diploma in banking, economics or financial accountancy.

3. Having been engaged in the banking work for at least three years.

Article 41.-Tasks of the internal inspection organization

1. To regularly inspect the observance of laws, the regulations of the State Bank and the internal regulations; to directly inspect the professional operations in all domains at the head office, transaction centers, branches, representative offices, affiliate companies.

2. To audit the professional activities in each period and each domain with a view to accurately evaluating the results of business activities and the real financial situation of the bank.

3. To report in time to the General Director, the Managing Board and the Control Board on the results of the internal inspection and/or audit and to make proposals on measures to overcome shortcomings and existing problems.

4. Other tasks as prescribed by the General Director.

Article 42.-The powers of the internal inspection organization

1. To request the professional sections and personnel to explain the works already done, being done, to produce directing documents, vouchers and books as well as other relevant documents (when necessary) in operation in order to serve the inspection and audit.

2. To request the General Director (Directors) to set up inspection or re-investigation teams to perform the tasks of regular and irregular inspection and audit.

3. The head of the internal inspection section at the head office or the leaders of the internal inspection teams at transaction centers, branches, representative offices or affiliate companies may attend meetings convened by the General Director or directors.

4. To propose the General Director or directors to handle according to competence the units and/or individuals that violate laws and regulations of the State Bank and the bank.

5. Other rights as prescribed by the General Director.

Chapter IV

FINANCE, COST-ACCOUNTING, REPORT, AUDIT FOR BANK

Section 1. FINANCE

Article 43.-The bank follows the financial regime prescribed by the Government and guided by the Finance Ministry.

The Managing Board chairman, the General Director of the bank shall be responsible before law and before the State management bodies for the observance of the financial regime of their own bank.

Article 44.-The banks operation capital shall come from the following sources:

1. The charter capital.

2. The State-allocated capital for investment in construction and asset procurement (if any).

3. The difference amounts brought about by revaluation of property, exchange rate differences.

4. Reserve funds to supplement the charter capital, the investment fund for professional development, the financial reserve fund, the job severance allowance fund, reward fund, welfare fund.

5. Profits left for the bank and not yet distributed to various funds.

6. Capital mobilized in various forms prescribed in Article 5 of this Model Charter.

7. Other kinds of capital as prescribed by law.

Article 45.-

1. The bank may use its operation capital in service of business activities, investment in construction, procurement of fixed assets according to the provisions of law.

2. The bank may change the structure of capital and assets in service of developing of its operation according to law provisions.

3. The bank may mobilize capital and assets among its affiliate companies with legal person status and independent cost-accounting.

Article 46.-Deduction for establishment of funds

The bank may make deductions for establishment of the following funds:

1. The charter capital supplement reserve fund;

2. The financial reserve fund;

3. The investment fund for professional development;

4. The job severance allowance reserve fund;

5. The reward fund;

6. The welfare fund.

Article 47.-Financial autonomy of the bank

1. The bank is financially autonomous, self-responsible for its business activities, fulfill its obligations and commitments as provided for by law.

2. Within 120 days from the end of the fiscal year, the bank shall publicize its financial report according to the provisions of law.

Section 2. COST-ACCOUNTING, REPORTING

Article 48.-

1. The bank follows the accounting and statistical regime as prescribed by law.

2. The fiscal year of the bank starts on January 1 and ends on December 31 of the calendar year.

3. The bank implements the cost-accounting according to the system of book-keeping accounts prescribed by the State Bank.

Article 49.-

1. The bank follows the regime of financial reporting as prescribed by law regarding accountancy and statistics and periodical professional reporting as stipulated by the State Bank Governor.

2. In addition to the periodical reports, the bank shall promptly report to the State Bank on the following cases:

a) Unusual development in professional activities which may seriously affect the business situation of the bank;

b) Big changes in organization.

3. Within 90 days as from the end of the fiscal year, the bank sends its annual reports to the State Bank as provided for by law.

Section 3. AUDIT FOR THE BANK

Article 50.-

1. Within no more than 30 days before the end of the fiscal year, the bank shall select an auditing organization other than the internal audit to audit its operation. That auditing organization must be approved by the State Bank.

2. The audit of the banks operations shall comply with the provisions of the Law on Credit Institution, legislation on independent audit and guiding documents of the State Bank.

Chapter V

SPECIAL CONTROL, BANKRUPTCY, DISSOLUTION AND LIQUIDATION OF THE BANK

Article 51.-

1. Where the bank is in the danger of losing its capability to pay its customers, it must immediately report to the State Bank on its real financial situation, the causes and the remedial measures already applied and to be applied.

2. The bank may be placed in the state of special control in the following cases:

a) Where it is in the danger of insolvency;

b) Where irrecoverable debts may lead to the danger of insolvency;

c) The banks accumulative loss figure is larger than 50% of its actual charter capital amount and funds.

Article 52.-In urgent cases, in order to ensure its capability to repay the customers’deposits, the bank may be provided with special loans by other credit institutions or the State Bank. Such special loans shall be repaid with priority before all other debts of the bank.

Article 53.-Bankruptcy of the bank

The bankruptcy of the bank shall comply with the provisions in Article 98 of the Law on Credit Institutions.

Article 54.-Dissolution of the bank

1. The bank shall be dissolved in the following cases where:

a) The State deems it unnecessary to maintain it.

b) It is not permitted by the State Bank to extend its operation upon the expiry thereof.

2. The State Bank Governor shall decide the dissolution and decide the establishment of the council for the dissolution of the bank.

Article 55.-Liquidation of the bank

1. Where the bank is declared bankrupt, the liquidation of the bank shall comply with the provisions of law on bankruptcy of enterprises.

2. Upon its dissolution according to Article 54 of this Model Charter, the bank shall proceed with the liquidation under the supervision of the State Bank.

3. All expenses related to the liquidation shall be paid by the liquidated bank.

Chapter VI

INFORMATION DISCLOSURE AND CONFIDENTIALITY BY THE BANK

Article 56.-The bank shall periodically disclose information to account holders on transactions and balances on their accounts at the bank.

Article 57.-The bank may exchange information with other credit institutions on banking operations and on customers.

Article 58.-The bank has the responsibility to provide the State Bank with information relating to the granting of credits to customers at the request of the State Bank and shall be provided by the State Bank with information relating to banking operations of customers having relations with the bank.

Article 59.-

1. The bank’s employees and concerned people must not disclose the State secrets and business secrets of the bank, which they know.

2. The bank may refuse requests of organizations and/or individuals for the supply of information on customers’ deposits and/or assets as well as on the bank’s operations, except where is so requested by competent State bodies as provided for by law or so consented by the customers.

Chapter VII

IMPLEMENTATION PROVISIONS

Article 60.-The State-run commercial banks shall base themselves on this Model Charter and other relevant law provisions to make their own charters on organization and operation and submit them to the State Bank Governor for approval.