Decree No. 93/2017/ND-CP dated August 07, 2017 of the Government on the financial regime applicable to credit institutions and foreign bank branches and financial supervision and assessment of efficiency of state capital investment at credit institutions with 100% state-owned charter capital and credit institutions with state capital

DECREE

On the financial regime applicable to credit institutions and foreign bank branches and financial supervision and assessment of efficiency of state capital investment at credit institutions with 100% state-owned charter capital and credit institutions with state capital[1]

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

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

Pursuant to the November 26, 2014 Law on Enterprises;

Pursuant to the November 20, 2012 Law on Cooperatives;

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

At the proposal of the Minister of Finance;

The Government promulgates the Decree on the financial regime applicable to credit institutions and foreign bank branches and financial supervision and assessment of efficiency of state capital investment at credit institutions with 100% state-owned charter capital and credit institutions with state capital.

Chapter I

GENERAL PROVISIONS

Article 1.Scope of regulation

This Decree prescribes:

1. The financial regime applicable to credit institutions and foreign bank branches.

2. The financial supervision and assessment of efficiency of state capital investment at credit institutions with 100% state-owned charter capital and credit institutions with state capital.

3. For credit institutions restructured under decisions of competent agencies, in case the law governing their restructuring has provisions different from those of this Decree, these credit institutions shall comply with the law governing their restructuring; for contents not prescribed in the law governing their restructuring, they shall comply with this Decree.

Article 2.Subjects of application

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

2. Agencies representing the owner.

3. Finance agencies.

4. Other related organizations and individuals.

Article 3.Principles of financial management

1. Credit institutions and foreign bank branches may enjoy financial autonomy, take responsibility for their business operation and fulfill their obligations and commitments in accordance with law.

2. Credit institutions and foreign bank branches shall implement financial disclosure 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 and foreign bank branches

1. Equity capital:

a/ Charter capital or allocated capital;

b/ Differences resulting from asset revaluation, exchange rate differences;

c/ Equity capital surplus;

d/ Charter capital addition reserve fund, development investment fund and financial provision;

dd/ Undistributed accumulated profit, unhandled accumulated loss;

e/ Other capital owned by credit institutions or foreign bank branches.

2. Raised capital:

a/ Capital raised from deposits of organizations and individuals; capital raised through the issuance of valuable papers;

b/ Entrusted investment capital;

c/ Loans from domestic and foreign credit institutions and financial institutions;

d/ Loans from the State Bank of Vietnam.

3. Other types of capital as prescribed by law.

Article 5.Real value of charter capital, allocated capital

1. The real value of the charter capital or allocated capitalis the charter capital or allocated capital and equity capital surplus plus (minus) undistributed accumulated profit (unhandled accumulated loss) reflected in accounting books.

2. In the course of operation, credit institutions and foreign bank branches shall maintain the real value of their charter capital or allocated capital at least equal to the legal capital prescribed by the Government.

3. When their charter capital or allocated capital is changed, credit institutions and foreign bank branches shall disclose the new charter capital or allocated capital.

Article 6.Use of capital and assets

1. Credit institutions and foreign bank branches may use their operating capital for business activities in accordance with the Law on Credit Institutions and other relevant laws, ensuring capital adequacy and development.

2. Credit institutions and foreign bank branchesmay restructure their capital and assets for business development in accordance with law.

3. A credit institution may procure and invest in fixed assets to directly serve its activities on the principle that the residual value of such fixed assets must not exceed 50% of its charter capital and charter capital addition reserve fund recorded in its accounting books. It shall fully observe the investment and construction management laws and other relevant laws. For credit institutions with 100% state-owned charter capital and credit institutions with state capital, their procurement of and investment in fixed assets must also comply with regulations applicable to state enterprises and enterprises with state capital.

The transfer of capital and assets among branches or independent member companies of a credit institution must comply with its charter.

4. A foreign bank branch may procure and invest in fixed assets to directly serve its activities on the principle that the residual value of such fixed assets must not exceed 50% of its allocated capital and allocated capital addition reserve fund recorded in its accounting books. It shall fully observe Vietnam’s investment and construction management laws and other relevant laws.

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

1. The capital contribution, share purchase and capital transfer of credit institutions must comply with the Law on Credit Institutions and other relevant laws.

2. A credit institution may only use its charter capital and reserve fund to contribute capital to and purchase shares from enterprises and other credit institutions in accordance with the Law on Credit Institutions and other relevant laws.

3. The competence to decide on plans on contribution of capital to and purchase of shares from enterprises and other credit institutions and plans on transfer of outward investments must comply with the Law on Credit Institutions, other relevant laws and charters of credit institutions. Credit institutions with 100% state-owned charter capital and credit institutions with state capital shall also comply with the law on management and use of state capital invested in production and business at enterprises.

4. A credit institution may neither contribute capital to nor purchase shares from enterprises and other credit institutions being its shareholders or capital contributors.

Article 8.Capital adequacy assurance

Credit institutions and foreign bank branches shall comply with regulations on assurance of operating capital adequacy as follows:

1. To manage and use capital and assets, distribute profits and implement the financial management and accounting regimes in accordance with this Decree and relevant laws.

2. To implement regulations on operation safety assurance in accordance with the Law on Credit Institutions and other relevant laws. In case of failing to achieve or being likely to fail to achieve the minimum capital adequacy ratio prescribed in the Law on Credit Institutions and guided by the State Bank of Vietnam, within 1 month, a credit institution or foreign bank branch shall report to the State Bank of Vietnam its remedial solutions to ensure the required minimum capital adequacy ratio, including:

a/ Transferring its outward investments;

b/ Increasing its charter capital or allocated capital;

c/ Other solutions.

3. To buy insurance for assets required to be insured.

4. To participate in deposit preservation and insurance institutions in accordance with the Law on Credit Institutions, the Law on Deposit Insurance and other relevant laws, and disclose such participation at their head offices and branches.

5. To deal with the value of lost assets under Article 12 of this Decree.

6. To account its risk provisions as expenses for business activities in accordance with the Law on Credit Institution, the law on enterprises and other relevant laws.

7. To take other capital preservation measures as prescribed by law.

Article 7.Asset inventory

1. Credit institutions and foreign bank branches shall inventory their assets in the following cases:

a/ At the end of every fiscal year;

b/ Division, split-up, merger, consolidation or transformation;

c/ After the occurrence of a natural disaster, an enemy sabotage or another event or in other cases in order to determine their asset losses according to their management requirements;

d/ As required by a competent state agency.

2. For surplus or deficient assets, it is necessary to identify causes and responsibilities of concerned persons for handling on a case-by-case basis.

Article 10.Asset revaluation

1. Credit institutions and foreign bank branches shall revaluate their assets in the following cases:

a/ Under decision of a competent state agency;

b/ Upon transformation or diversification of ownership forms;

c/ Revaluation of assets used for outward investment, in case of using assets for outward investment or recovery of assets upon termination of outward investment activities;

d/ Other cases as prescribed by law.

2. The revaluation of assets and accounting of increased or decreased value as a result of asset revaluation under Clause 1 of this Article must comply with applicable law on a case-by-case basis.

Article 11.Fixed asset depreciation

1. Credit institutions and foreign bank branches shall make fixed asset depreciation in accordance with the law on enterprises.

2. Credit institutions and foreign bank branches may use capital gained from fixed asset depreciation for reinvestment to replace or renovate fixed assets and for other business needs in accordance with law.

Article 12.Asset loss handling

For lost assets, credit institutions and foreign bank branches shall identify causes and their responsibilities and handle them as follows:

1. If the loss is due to a subjective cause, the person who causes the loss shall pay compensation. The competence to decide on compensation amounts must comply with the charter of the credit institution or foreign bank branch. The handling of persons responsible for the loss must comply with law.

2. Insured assets shall be handled under the insurance contract.

3. Using provisions set aside from expenses to cover the loss in accordance with law.

4. Any remaining loss value after being covered by compensations of individuals, collectives and/or insurers and provisions set aside from expenses shall be covered by financial provisions of credit institutions or foreign bank branches. If the financial provision is insufficient, the deficient amount shall be accounted as other expenses in the period.

Article 13.Asset lease

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

Article 14.Asset purchase, sale and transfer

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

2. The purchase, sale and transfer of assets by credit institutions and foreign bank branches must comply with the Law on Credit Institutions, other relevant laws and their charters. Credit institutions with 100% state-owned charter capital shall also comply with the law on asset sale applicable to state enterprises.

Article 15.Asset liquidation

1. Credit institutions and foreign bank branches may liquidate poor-quality assets; irreparably damaged assets; technically backward assets which are no longer needed or which are ineffectively used and cannot be sold in their current conditions; and assets which cannot be further used after their useful life expires.

2. The competence to decide to liquidate assets of credit institutions and foreign bank branches must comply with the Law on Credit Institutions, other relevant laws and their charters. Credit institutions with 100% state-owned charter capital shall also comply with the law on liquidation of assets applicable to state enterprises.

3. Upon asset liquidation, a credit institution or foreign bank branch shall set up a liquidation council. For assets that are required by law to be liquidated through auction, credit institutions and foreign bank branches shall auction such assets in accordance with law.

Chapter III

REVENUES AND EXPENSES

Article 16.Revenues

1. Revenues of credit institutions and foreign bank branches shall be determined in conformity with Vietnam’s accounting standards and relevant laws, accompanied by valid invoices or documents and fully accounted.

2. Revenues from business activities of a credit institution or foreign bank branch include:

a/ Income from interests and similar incomes: deposit interest, loan interest, profit from debit securities trading and investment, revenue from guarantee operation, profit from financial lease, profit from debt trading operation, other revenues from credit operations;

b/ Revenues from provision of services: payment service; cashiering; entrustment and agency; and other services;

c/ Revenues from foreign exchange and gold trading: revenue from foreign currency trading; revenue from exchange rate difference; revenue from gold trading; and revenue derivative from financial and monetary instruments;

d/ Revenues from trading in securities (excluding stocks);

dd/ Revenue from capital contribution or transfer of capital contributions and shares;

e/ Revenues from other activities: revenues from debts already settled with the risk provision (including written-off debts now recovered); revenue from other derivative financial instruments; revenue from debt trading operation; revenue from asset transfer and liquidation; revenue from reimbursement of the long-term investment devaluation provision; and revenues from other activities as prescribed by law;

g/ Other revenues as prescribed by law.

2. The Ministry of Finance shall assume the prime responsibility for, and coordinate with the State Bank of Vietnam in, specifying revenues of credit institutions and foreign bank branches prescribed in Clause 2 of this Article.

Article 17.Expenses

1. Expenses of credit institutions and foreign bank branches are those actually paid in relation to business activities of such credit institutions and foreign bank branches. These expenses must comply with the principle of compatibility between revenues and expenses; and be accompanied by valid invoices and documents as prescribed by law. Credit institutions and foreign bank branches may not account as expenses those expenses covered by other funding sources. The determination and accounting of expenses must comply with Vietnam’s accounting standards and relevant laws.

1. Expenses of a credit institution or foreign bank branch include:

a/ Paid interests and similar expenses: paid deposit interest; paid loan interest; paid interests for issued valuable papers; and other expenses for credit operations;

b/ Expenses for services: payment service; cashiering service; telecommunications service; entrustment and agency services; consultancy service; and commissions paid to agency, brokerage and entrustment services allowed by law;

c/ Expenses for foreign exchange and gold trading: expenses for foreign currency trading; exchange rate difference; gold trading; and derivative financial and monetary instruments;

d/ Expenses for trading in securities permitted for trading under the Law on Credit Institutions;

dd/ Expenses for capital contribution and transfer of capital contributions and shares;

e/ Expenses for other activities: interest rate swap, debt trading; financial lease; other derivative financial instruments; and other business activities;

g/ Expenses for payment of taxes, charges and fees;

h/ Payments to employees: salary, wage, remuneration, bonuses and allowances; salary-based contributions: social insurance, health insurance, employment insurance, unemployment insurance, human accident insurance, trade union dues; expenses for employees’ attire and labor protection devices; allowances; shift meal expense; medical care expense; and other expenses for employees as prescribed by law;

i/ Expenses for management and official duties: expenses for printing materials and paper; working mission allowance; expenses for skills training; scientific research and technological application; rewards for innovations that improve and increase labor productivity and for cost saving; postal and telephone costs; expenses for publication of documents, advertising, marketing and sales promotion; expenses for purchase of documents, books and newspapers; expenses for mass organizations’ activities; electricity, water and office cleaning charges; expenses for conferences, guest reception, external relations; expenses for consultancy and audit; expenses for hiring of domestic and foreign experts; expenses for fire prevention and fighting; expenses for environmental protection and other expenses;

k/ Asset-related expenses, including fixed asset depreciation; expenses for asset maintenance and repair; procurement of tools and instruments; asset insurance; and asset rent;

l/ Expenses for setting aside provisions:

Expenses for setting aside operation risk provisions under Article 131 of the Law on Credit Institutions.

Expenses for setting aside risk provisions for special bonds issued by the Vietnam Asset Management Company under Point a, Clause 2, Article 21 of the Government’s Decree No. 53/2013/ND-CP of May 18, 2013, on the establishment, organization and operation of the Vietnam Asset Management Company, and Clause 12, Article 1 of the Government’s Decree No. 34/2015/ND-CP of March 31, 2015, amending and supplementing a number of articles of Decree No. 53/2013/ND-CP; guidance of the State Bank of Vietnam and amending  and supplementing legal documents (if any).

Expenses for setting aside inventory devaluation provision, provision for loss of financial investments, provision for bad debts and other provisions (if any) under regulations applicable to enterprises.

Expenses for setting aside risk provisions which are deductible upon enterprise income tax determination must comply with the law on enterprise income tax.

m/ Expenses for deposit preservation and insurance:

n/ Other expenses: payment of dues to professional associations of which the credit institution or foreign bank branch is a member; expenses for party cells’ and mass organizations’ activities at the credit institution or foreign bank branch (expenses outside the budgets of party and mass organizations under regulations); expenses for the sale and liquidation of assets and residual value (if any) of liquidated or sold fixed assets; expenses for the recovery of written-off debts or collection of bad debts; expenses for dealing with the remaining asset loss after being covered by the sources specified in Clause 4, Article 12 of this Decree; expenses for amounts already accounted as revenues but actually not collected; expenses for social affairs in accordance with the tax laws; fines paid for administrative violations, excluding fines paid by individuals in accordance with law; and other expenses.

3. The Ministry of Finance shall assume the prime responsibility for, and coordinate with the State Bank of Vietnam in, specifying expenses of credit institutions and foreign bank branches prescribed in Clause 2 of this Article.

Article 18.Currency used in cost-accounting

1. Economic and financial operations shall be recorded in Vietnam dong with the national symbol of “đ” and the international symbol of “VND” in accounting books, financial statements and finalization statements.

2. An accounting unit that collects and pays monetary amounts mainly in a foreign currency may use such foreign currency for preparing accounting books and take responsibility before law. When making and presenting financial statements for use in Vietnam, such foreign currency shall be converted into Vietnam dong.

Article 19.Credit institutions and foreign bank branches shall account their revenues and expenses under regulations and take responsibility before law for the accuracy and truthfulness of their revenues and expenses, and observe the regulations on invoices and accounting documents.

Chapter IV

PROFIT DISTRIBUTION

Article 20.Incomes liable to enterprise income tax

Incomes liable to enterprise income tax of credit institutions and foreign bank branches must comply with the law on enterprise income tax.

Article 21.Profit distribution applicable to credit institutions with 100% state-owned charter capital

Profits of a credit institution, after being used to offset previous years’ losses in accordance with the Law on Enterprise Income Tax and pay enterprise income tax, shall be distributed in the following order:

1. Dividing profits to capital contributors under signed economic contracts (if any).

2. Offsetting previous years’ losses after the expiration of the period when they are allowed to be deducted from pre-enterprise income tax profit under regulations.

3. After the amounts specified in Clauses 1 and 2 of this Article are subtracted, the remaining profit shall be further distributed in the following order:

a/ Deducting 5% into the charter capital addition reserve fund. This fund must not exceed the charter capital of the credit institution;

b/ Deducting 10% into the financial provision;

c/ Deducting no more than 25% into the development investment fund;

d/ Making deductions into the reward fund and welfare fund for employees of the credit institution:

Credit institutions which are graded A under law may deduct three months’ actually paid salaries into these two funds;

Credit institutions which are graded B under law may deduct one and a half months’ actually paid salaries into these two funds;

Credit institutions which are graded C under law may deduct one month’s actually paid salaries into these two funds;

Non-graded credit institutions may not make deductions into these two funds.

dd/ Making deductions into the bonus fund for managers and controllers:

Credit institutions which are graded A under law may deduct one and a half months’ actually paid salaries of managers and controllers;

Credit institutions which are graded B under law may deduct one month’s actually paid salaries of managers and controllers;

Credit institutions which are graded C under law and non-graded credit institutions may not make deductions into this fund.

e/ After making deductions to set aside the funds specified at Points a, b, c, d and dd of this Clause, the remaining profit shall be remitted into the state budget.

Article 22.Distribution of after-enterprise income tax profits of credit institutions being cooperatives

Profits of a credit institution being a cooperative, after being used to offset previous years’ losses in accordance with the Law on Enterprise Income Tax and pay enterprise income tax, shall be distributed in the following order:

1. Deducting 5% into the charter capital addition reserve fund. This fund must not exceed the charter capital of the credit institution.

2. Deducting 10% into the financial provision.

3. Deducting at least 20% into the development investment fund.

4. After the amounts specified in Clauses 1, 2 and 3 of this Article are subtracted, the remaining profit shall be further distributed in the following order:

a/ For cooperative banks:

At least 30 days before organizing a members’ general meeting, the representative of state capital at the bank shall reach agreement with the State Bank of Vietnam on the distribution of the remaining profit before it is voted at the general meeting.

Within 15 working days after receiving a complete dossier, the State Bank of Vietnam shall reach agreement with the Ministry of Finance on the distribution of the remaining profit in order to give direction to the representative of state capital at the bank to vote at the members’ general meeting.

Within 15 working days after receiving a complete dossier, the Ministry of Finance shall give its official opinion in writing to the State Bank of Vietnam.

Particularly, the profit amount distributed to the member being the State shall be used to increase the charter capital (as support from the State).

b/ For people’s credit funds: The distribution of remaining profits must comply with the Law on Cooperatives and their charters.

Article 23.Distribution of after-enterprise income tax profits applicable to other credit institutions and foreign bank branches

Profits of a credit institution or foreign bank branch, after being used to offset previous years’ losses in accordance with the Law on Enterprise Income Tax and pay enterprise income tax, shall be distributed in the following order:

1. Dividing profits to capital contributors under signed economic contracts (if any).

2. Offsetting previous years’ losses after the expiration of the period when they are allowed to be deducted from pre-enterprise income tax profits under regulations.

3. Deducting 5% into the charter capital addition reserve fund of the credit institution or into the allocated capital addition reserve fund of the foreign bank branch. This fund must not exceed the charter capital of the credit institution or the allocated capital of the foreign bank branch.

4. Deducting 10% into the financial provision.

5. Credit institutions and foreign bank branches may decide by themselves on the division of the remaining profit. For a credit institution being a joint-stock commercial bank with over 50% of its charter capital owned by the State, at least 30 days before organizing a General Meeting of Shareholders, the representative of state capital at this bank shall obtain opinions of the State Bank of Vietnam on the division of the remaining profit before voting at the General Meeting of Shareholders.

Within 15 working days after receiving a complete dossier, the State Bank of Vietnam shall reach agreement with the Ministry of Finance on the distribution of the remaining profit in order to give direction to the representative of state capital at the bank to vote at the General Meeting of Shareholders.

Within 15 working days after receiving a complete dossier, the Ministry of Finance shall give its official opinions in writing to the State Bank of Vietnam.

Article 24.Management and use of funds

1. The charter capital or allocated capital addition reserve fund shall be used for increasing the charter capital or allocated capital.

2. The financial provision shall be used for offsetting the remaining asset loss or damage occurring in the course of business operation after being covered by the compensations paid by organizations and individuals causing such loss or damage, the indemnities of insurers and the provisions set aside as expenses; and used for other purposes prescribed by law.

3. The development investment fund shall be used for expanding business scale, renewing technologies and equipment, improving working conditions of the credit institution and increasing charter capital of the credit institution. Based on its investment needs and the fund’s capacity, a credit institution may decide on the form and measure of investment in order to ensure capital efficiency, adequacy and development.

4. The bonus fund for managers and controllers of a credit institution shall be used for:

a/ Giving bonuses to the chairperson and members of the Board of Directors/ Members’ Council, the director general, director, deputy directors general, deputy directors, controllers and chief accountant;

b/ The bonus level shall be decided by the General Meeting of Members/owner’s representative based on the business efficiency of the credit institution and the performance of assigned tasks at the proposal of the chairperson of its Board of Directors/Members’ Council.

5. The reward fund shall be used for:

a/ Giving year-end or regular rewards to employees of the credit institution. The reward levels shall be decided by the Board of Directors/Members’ Council of the credit institution at the proposal of the director general (director) and the trade union of the credit institution based on the labor productivity and performance of each employee in the credit institution;

b/ Giving extraordinary rewards to individuals and collectives in the credit institution that have innovations to improve techniques and operation processes, bringing about business efficiency. The reward levels shall be decided by the Board of Directors/Members’ Council of the credit institution;

c/ Giving rewards to individuals and units outside the credit institution that have economic relations with the credit institution and have fulfilled the contractual terms and effectively contributed to the business operation of the credit institution. The reward levels shall be decided by the Board of Directors/Members’ Council of the credit institution.

6. The welfare fund shall be used for:

b/ Building or repairing and adding capital for building welfare facilities of the credit institution, contributing capital to building common welfare facilities in the sector or joining other units in building welfare facilities under agreed contracts;

b/ Funding sports, cultural and public welfare activities of employees of the credit institution;

c/ Paying regular or extraordinary difficulty allowances for employees of the credit institution, including those who have retired on pension or for loss of working capacity;

d/ Funding other welfare activities.

The Board of Directors/Members’ Council and director general (director) of the credit institution shall coordinate with the trade union’s executive board in managing and using this fund.

Chapter V

FINANCIAL PLANS, REPORTING REGIME, AUDIT AND FINANCIAL SUPERVISION, ASSESSMENT OF EFFICIENCY OF STATE CAPITAL INVESTMENT IN ENTERPRISES BEING CREDIT INSTITUTIONS WITH 100% STATE-OWNED CHARTER CAPITAL AND CREDIT INSTITUTIONS WITH STATE CAPITAL

Article 25.Financial plans

1. Annual financial plans of a credit institution or foreign bank branch include:

a/ Plan on capital sources and capital use;

b/ Plan on income, expenses, business results and state budget remittance target;

c/ Labor and salary plan.

2. Making of financial plans

a/ For a credit institution with 100% state-owned charter capital

Before July 31 every year, the credit institution shall make a financial plan for the subsequent year and send it to the Ministry of Finance and the State Bank of Vietnam for making state budget estimation.

Before March 1 of the plan year, based on the previous year’s business result, the credit institution shall review and finalize its financial plan and send it to the Ministry of Finance and the State Bank of Vietnam to serve financial supervision and assessment of business efficiency of the credit institution.

The State Bank of Vietnam shall assume the prime responsibility for, and coordinate with the Ministry of Finance in, reviewing and giving official written opinions on financial plans of credit institutions, and assign targets for assessment and classification of credit institutions before April 30 of the plan year.

b/ For a credit institution with over 50% state-owned charter capital

Before July 31 every year, the credit institution shall make a financial plan for the subsequent year and send it to the Ministry of Finance and the State Bank of Vietnam for making state budget estimation.

Before March 1 of the plan year, based on the previous year’s business result, the credit institution shall review and finalize its financial plan and send it to the Ministry of Finance and the State Bank of Vietnam to serve financial supervision and assessment of the efficiency of state capital investment at the credit institution.

The State Bank of Vietnam shall assume the prime responsibility for, and coordinate with the Ministry of Finance in, reviewing financial plans of credit institutions, and determine assessment criteria for assigning tasks to the state capital representative at credit institutions before April 30 of the plan year.

c/ For other credit institutions and foreign bank branches, the making of financial plans must comply with their charters.

Article 26.Reporting regime

1. At the end of an accounting period, a credit institution or foreign bank branch shall make and send financial statements in accordance with law.

2. The Ministry of Finance shall provide specific guidance on contents, forms and period of reporting, deadlines for sending financial statements, methods of making written and electronic statements, and senders and recipients of statements.

3. The Board of Directors or its chairperson, the Members’ Council or its chairperson, or the director general (director) of a credit institution or foreign bank branch shall take responsibility for the accuracy and truthfulness of these statements.

Article 27.Audit

1. Credit institutions shall organize internal audit under Article 41 of the Law on Credit Institutions and other relevant laws.

2. Audit of financial statements of a credit institution or foreign bank branch must comply with the current law on audit. Audit results of financial statements of a credit institution shall be sent to the Ministry of Finance and the State Bank of Vietnam.

Article 28.Financial regulations

Based on documents guiding the financial regime, credit institutions and foreign bank branches shall develop their financial regulations and submit them to their General Meeting of Shareholders or Boards of Directors (if authorized by the General Meeting of Shareholders) or Members’ Councils for approval as a basis for implementation.

Article 29.Financial supervision of enterprises being credit institutions with 100% state-owned charter capital and credit institutions with state capital

1. The financial supervision of enterprises being credit institutions with 100% state-owned charter capital, financial supervision of subsidiary companies and associated companies, capital supervision of credit institutions making offshore investment, special financial supervision of enterprises being credit institutions with 100% state-owned charter capital must comply with general regulations applicable to state enterprises and the provisions of this Decree.

2. For enterprises being credit institutions with state capital, their financial supervision contents, methods and reporting regime must comply with regulations on financial supervision of enterprises with state capital and the provisions of this Decree.

Article 30.Criteria for assessment of efficiency of state capital investment at credit institutions with 100% state-owned charter capital and credit institutions with state capital

1. Criteria for assessment of the efficiency of state capital investment at credit institutions with 100% state-owned charter capital and credit institutions with state capital include:

a/ Criterion 1. Revenue;

b/ Criterion 2. After-tax profit and after-tax profit ratio;

c/ Criterion 3. Bad debt rate and irrecoverable debt rate;

d/ Criterion 4. The credit institution’s compliance with the laws on investment, management and use of state capital in credit institutions, law on taxes and other budget remittances, regulations on financial statements and reports for financial supervision;

dd/ Criterion 5. Provision of public products and services (if any).

2. The criteria specified in Clause 1 of this Article shall be determined and calculated based on data in audited annual financial statements and periodical statistics reports as prescribed by law.

When calculating criteria 1, 2, 4 and 5 specified in Clause 1 of this Article, the following influential factors may be considered and excluded:

a/ Natural disaster, fire, epidemic, war and other objective andforce majeureevents;

b/ Investment to expand business under plan, depreciation increase for quick capital recovery approved by competent authorities, implementation of social security programs under the Government’s regulations;

c/ Price adjustments by the State (for products and services priced by the State) which affect the credit institution’s revenues or achievement of socio-economic targets as directed by the Government or Prime Minister.

3. The assessment of performance of managers of a credit institution must comply with the Government’s regulations and the following criteria:

a/ The level of fulfillment of the targets assigned by the State Bank of Vietnam regarding after-tax profit and the after-tax profit-equity ratio;

b/ Rating of the credit institution;

c/ The level of fulfillment of the plan on supply of public products and services (for credit institutions engaged in supplying public products and services).

4. The Ministry of Finance shall assume the prime responsibility for, and coordinate with the State Bank of Vietnam in, guiding the method of determining assessment criteria suitable to the operation characteristics of credit institutions.

Article 31.Assessment of operation efficiency and classification of state enterprises being credit institutions with 100% state-owned capital

1. The assessment of operation efficiency and classification of state enterprises being credit institutions with 100% state-owned capital must comply with regulations applicable to state enterprises and specific provisions of this Decree.

2. The State Bank of Vietnam shall assume the prime responsibility for, and coordinate with the Ministry of Finance in, reviewing financial plans in order to assign assessment and classification indicators to credit institutions with 100% state-owned capital which are suitable to their business characteristics. These indicators shall be assigned in writing to credit institutions before April 30 of the plan year and may not be adjusted during the plan period, except forforce majeurecases.

3. The Ministry of Finance shall assume the prime responsibility for, and coordinate with the State Bank of Vietnam in, specifically guiding the methods of efficiency assessment and classification of credit institutions under this Decree which are suitable to their operation characteristics.

Article 32.Assessment of efficiency of state capital investment at enterprises being joint-stock credit institutions with over 50% state-owned charter capital

1. The assessment of efficiency of state capital investment at enterprises being joint-stock credit institutions with over 50% state-owned charter capital must comply with the provisions of this Decree applicable to credit institutions with 100% state-owned charter capital.

2. Before a joint-stock credit institution with over 50% state-owned charter capital organizes a General Meeting of Shareholders, the State Bank of Vietnam shall assume the prime responsibility for, and coordinate with the Ministry of Finance in, reviewing financial plans in order to assign assessment indicators for the credit institution in order to assign in writing tasks to the state capital representative in such credit institution before April 30 of the plan year. These assessment indicators may not be adjusted during the plan period, except forforce majeurecases.

3. The State Bank of Vietnam shall base itself on the result of assessment of efficiency of state capital investment at joint-stock credit institutions with over 50% state-owned charter capital and their operation results to assess and reward state capital representatives in these credit institutions and to make plans and assign tasks to these representatives in the following year; and concurrently report to the Prime Minister for consideration and decision the investment continuation or expansion or divestment of state capital from these credit institutions.

Chapter VI

RESPONSIBILITIES OF BOARDS OF DIRECTORS, MEMBERS’ COUNCILS, DIRECTORS GENERAL, DIRECTORS AND REPRESENTATIVES IN CREDIT INSTITUTIONS AND FOREIGN BANK BRANCHES

Article 33.Responsibilities of Boards of Directors or Members’ Councils of credit institutions

1. To conduct, examine and supervise financial activities of their credit institutions within the ambit of their competence prescribed by the Law on Credit Institutions and other relevant laws.

2. To receive capital, land, natural resources and other resources allocated by the State, owners and capital contributors to their credit institutions for use.

3. To decide or approve within the ambit of their competence prescribed by the Law on Credit Institutions and other relevant laws and their charters the following:

a/ Capital raising plans;

b/ Plans on capital use, preservation and development, projects to invest, purchase and sell assets of credit institutions; plans on contribution of capital to and purchase of shares from businesses and other credit institutions; plans on transfer of outward investments;

c/ Annual financial statements and long-term and annual financial plans of their credit institutions;

d/ Annual financial statements of their credit institutions’ independent member companies;

dd/ Appointment of representatives of their credit institutions’ capital amounts invested in other businesses.

4. To disclose financial statements in accordance with the Law on Credit Institutions.

5. To examine and supervise their directors general (directors) and directors of their independent member companies in using, preserving and developing capital, conducting business under approved plans and fulfilling the obligation toward the state budget.

6. To take responsibility for the accuracy and truthfulness of financial statements of their credit institutions.

7. To perform other responsibilities prescribed by law and the charters of their credit institutions.

Article 34.Responsibilities of directors general (directors) of credit institutions

1. To administer operation of their credit institutions and take responsibility before the Boards of Directors or Members’ Councils and law for such administration.

2. To administer the use of capital in business activities under capital use, preservation and development plans approved by the Boards of Directors or Members’ Councils; to distribute profits after fulfilling tax and other financial obligations.

3. To raise and use capital sources for business activities; to take material responsibility for damage caused due to their own errors to their credit institutions.

4. To set expense limits suitable to business conditions of their credit institutions.

5. To make and submit financial statements to the Boards of Directors or Members’ Councils for approval; to take responsibility for the accuracy and truthfulness of financial statements, statistical reports, finalization data and other financial information.

6. To make annual financial plans conformable with business plans and submit them to the Boards of Directors or Members’ Councils for approval.

7. To decide on investment projects in, contribution of capital to and purchase of shares from businesses and other credit institutions and transfer of outward investments as decentralized or authorized by the Boards of Directors or Members’ Councils of their credit institutions.

8. To perform other responsibilities as prescribed by law and the charters of their credit institutions.

Article 35.Responsibilities of directors general (directors) of foreign bank branches

1. To represent their foreign bank branches before law and take responsibility for all activities of their foreign bank branches and administer daily activities within the ambit of their rights and obligations in accordance with current laws.

2. A foreign bank that has two or more branches operating in Vietnam and applies regulations on finance, accounting and consolidated statements shall authorize a director general (director) of one of these branches to take responsibility before law for activities of all branches in Vietnam.

Article 36.Responsibilities of representatives of state capital in credit institutions

Responsibilities of representatives of state capital in credit institutions shall fully exercise their rights and perform their responsibilities related to the financial management, financial supervision and assessment of the efficiency of state capital investment in credit institutions in accordance with this Decree, the law on management and use of state capital invested in production and business activities in enterprises and other relevant laws.

Chapter VII

RESPONSIBILITIES OF MANAGEMENT AGENCIES

Article 37.Responsibilities of the Ministry of Finance

1. To assume the prime responsibility for guiding the contents assigned in Articles 16, 17, 26, 30 and 31 of this Decree and other necessary contents relating to the financial management of credit institutions and foreign bank branches in order to  implement this Decree.

2. To review and evaluate the implementation of this Decree in order to submit to the Government amending, supplementing or replacing decrees in case of necessity.

3. To coordinate with the State Bank of Vietnam in making and implementing plans for supervision of credit institutions with 100% state-owned charter capital and credit institutions with state capital; and for specialized supervision or for supervision requested by the Government or Prime Minister.

3. To coordinate with the State Bank of Vietnam in handling financial matters of credit institutions with 100% state-owned charter capital and credit institutions with over 50% state-owned charter capital.

Article 38.Responsibilities of the State Bank of Vietnam

1. To coordinate with the Ministry of Finance in guiding this Decree.

2. To examine, inspect and supervise activities of credit institutions and foreign bank branches; to biannually and annually notify the Ministry of Finance of the financial status of credit institutions and foreign bank branches and their violations of the financial regime detected through inspection, examination or supervision, for coordinating in taking timely handling measures.

3. To act as the representative of the state capital owner at credit institutions with state capital as assigned by the Government.

a/ To make decisions and take responsibility therefor within the ambit of competence of the representative of the state capital owner;

b/ To assume the prime responsibility for, and coordinate with the Ministry of Finance in, making and implementing plans on supervision of credit institutions with 100% state-owned charter capital and credit institutions with state capital in accordance with this Decree and other relevant laws;

c/ To send reports on results of financial supervision and classification of credit institutions with 100% state-owned charter capital; and reports on results of financial supervision of credit institutions with state capital to the Ministry of Finance.

Chapter VIII

ORGANIZATION OF IMPLEMENTATION

Article 39.Transitional provisions

For financial activities arising before the effective date of this Decree on which the Government’s Decree No. 57/2012/ND-CP of July 20, 2012, on the financial regime applicable to credit institutions and foreign bank branches, has provisions different from those of this Decree, the provisions of Decree No. 57/2012/ND-CP shall prevail.

Article 40.Effect

1. This Decree takes effect on September 25, 2017. The provisions on supervision and assessment of efficiency of state capital investment at credit institutions with 100% state-owned charter capital and credit institutions with state capital will take effect from 2018.

2. This Decree replaces Decree No. 57/2012/ND-CP of July 20, 2012, on the financial regime applicable to credit institutions and foreign bank branches.

Article 41.Organization of implementation

Ministers, heads of ministerial-level agencies, heads of government-attached agencies and chairpersons of provincial-level People’s Committees shall implement this Decree.-

On behalf of the Government
Prime Minister
NGUYEN XUAN PHUC