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Circular No. 40/2026/TT-NHNN prescribes the limits and prudential ratios in the operations of people's credit funds, covering capital adequacy, solvency, use of funds, and lending activities. What are the limits and prudential ratios applicable to people's credit funds under Circular No. 40/2026/TT-NHNN?
1. Limits and prudential ratios in the operations of people's credit funds
1.1. Limits and prudential ratios
Clause 1, Article 1 of Circular No. 40/2026/TT-NHNN provides:
“1. This Circular prescribes the restrictions, limits, and prudential ratios in the operations of people's credit funds, including:
a) Minimum capital adequacy ratio;
b) Solvency ratio;
c) Ratio of short-term funds used for medium and long-term loans;
d) Lending restrictions and limits;
dd) Ratio of total deposits to equity.”
Accordingly, the prudential requirements focus not only on funds but also on the ability to fulfil payment obligations, lending activities, and the scale of deposits received by people's credit funds. In addition to the above categories, the Circular also prescribes the handling of cases where the real value of the charter capital falls below the legal capital.
1.2. People's credit funds may be required to apply stricter prudential ratios
Clause 3, Article 1 of Circular No. 40/2026/TT-NHNN provides:
“Based on the results of supervision, inspection, and examination of the people's credit fund, in necessary cases to ensure safety in the operations of the people's credit fund, depending on the nature and level of risk, the Regional branch of the State Bank where the people's credit fund's head office is located [...] shall require the people's credit fund to maintain one or more restrictions, limits, or prudential ratios stricter than the levels prescribed in this Circular.”
Accordingly, the levels prescribed in Circular No. 40/2026/TT-NHNN are not the only applicable levels in all cases. Based on the results of supervision, inspection, and examination and the nature and level of risk, the Regional branch of the State Bank may require people's credit funds to maintain one or more stricter limits or ratios.
2. Minimum capital adequacy ratio and solvency
2.1. The minimum capital adequacy ratio is 8%
Clause 1, Article 8 of Circular No. 40/2026/TT-NHNN provides:
“The people's credit fund must maintain a minimum capital adequacy ratio of 8%.”
Pursuant to Clause 2, Article 8, the minimum capital adequacy ratio shall be determined by the following formula:
Minimum capital adequacy ratio (%) = Own capital / Total risk-weighted assets × 100
Where:
Own capital: Determined in accordance with Clause 3, Article 8 and Appendix I promulgated together with the Circular. Accordingly, own capital shall comprise total Tier 1 capital and Tier 2 capital minus deductions from own capital at the time of determining own capital.
Total risk-weighted assets: The total value of assets determined according to the risk levels specified in Clause 4, Article 8.
Clause 4, Article 8 classifies assets into four risk-weight groups:
0%: Includes cash, deposits at the State Bank, deposits at the cooperative bank, and certain secured loans as prescribed.
20%: Includes certain balances on payment accounts at commercial banks or foreign bank branches and loans secured by valuable papers in the prescribed categories.
50%: Applies to outstanding loans fully secured by housing, land use rights, or housing attached to land use rights of the borrower in accordance with the law.
100%: Includes the original cost of fixed assets of the people's credit fund and other remaining assets as prescribed.
The detailed determination of own capital and total risk-weighted assets shall be carried out in accordance with Appendix I and Appendix II promulgated together with Circular No. 40/2026/TT-NHNN.
2.2. The minimum solvency ratio is 100%
Article 9 of Circular No. 40/2026/TT-NHNN prescribes the solvency ratio of people's credit funds.
Pursuant to Clause 1, Article 9, this ratio shall be calculated as follows:
Solvency ratio (%) = Assets available for immediate payment / Payable liabilities × 100
The value of assets available for immediate payment and payable liabilities shall be determined in accordance with Appendix III promulgated together with the Circular. Clause 2, Article 9 of the Circular provides:
“At the end of a working day, the people's credit fund must maintain a solvency ratio for the next working day and a solvency ratio for the subsequent seven (7) working days of at least 100%.”
Accordingly, people's credit funds must maintain a solvency ratio of at least 100% for both periods:
The next working day;
The subsequent seven (07) working days.
Asset items and payment obligations shall be determined in accordance with the guidance in Appendix III to the Circular.
3. Limits on the use of short-term funds and receipt of deposits
3.1. Up to 30% of short-term funds may be used for medium- and long-term loans
Clause 1, Article 10 of Circular No. 40/2026/TT-NHNN provides:
“The people's credit fund must maintain a maximum ratio of short-term funds used for medium and long-term loans of 30%.”
Accordingly, the ratio of short-term funds used for medium and long-term loans of people's credit funds must not exceed 30%.
Pursuant to Clause 2, Article 10, this ratio shall be calculated by the following formula:
A (%) = (B − C) / D × 100
Where:
A: Ratio of short-term funds used for medium and long-term loans.
B: Total outstanding medium and long-term loans.
C: Total medium and long-term funds.
D: Short-term funds.
Clause 3, Article 10 specifies that total outstanding medium and long-term loans include outstanding loans with a remaining term of over one (01) year, excluding outstanding loans entrusted by the Government, organizations, and individuals as prescribed.
In addition, Clause 6, Article 10 provides:
“In cases where the people's credit fund has total outstanding medium and long-term loans as prescribed in Clause 3 of this Article smaller than the total medium and long-term funds as prescribed in Clause 4 of this Article, when calculating the ratio of short-term funds used for medium and long-term loans, this ratio shall have a value of 0.”
Accordingly, if total outstanding medium and long-term loans are smaller than total medium and long-term funds when calculated as prescribed, the ratio shall be determined as 0%.
3.2. Total deposits must not exceed 20 times equity
Clause 1, Article 11 of Circular No. 40/2026/TT-NHNN provides:
“The people's credit fund must maintain a ratio of total deposits to equity not exceeding 20 times.”
Accordingly, total deposits of people's credit funds must not exceed 20 times equity.
Pursuant to Clause 2, Article 11, this ratio shall be calculated by dividing total deposits by equity. In addition, Clause 3, Article 11 of the Circular provides that total deposits shall be determined on the accounting balance sheet at the time of calculating the ratio, including:
Demand deposits;
Term deposits;
Savings deposits of members, organizations, and individuals in Vietnamese Dong.
4. Lending restrictions and limits of people's credit funds
4.1. Lending limits shall be determined on the basis of own capital
Clause 1, Article 12 of Circular No. 40/2026/TT-NHNN provides:
“The people's credit fund shall base on its own capital determined in accordance with the Clause 3, Article 8 of this Circular at the end of the nearest working day to determine:
a) Lending restrictions for organizations and individuals in accordance with Article 135 of the Law on Credit Institutions;
b) Lending limits for a single customer, and a single customer and their related persons in accordance with Article 136 of the Law on Credit Institutions.”
Accordingly, own capital at the end of the nearest working day serves as the basis for people's credit funds to determine lending restrictions and limits. Specifically, for loans to appraisers and loan approvers at the people's credit fund, Clause 2, Article 12 provides that the Board of Directors shall approve loans with a value of VND 100 million or more, or a lower value in accordance with the fund's internal regulations.
4.2. Lending limits for members and non-member customers
Clause 4, Article 12 of Circular No. 40/2026/TT-NHNN provides:
“The total amount of outstanding loans for a member that is a legal entity must not exceed the total contributed capital and deposit balance of that legal entity at the people's credit fund at any time.”
Accordingly, for a member that is a legal entity, outstanding loans must not exceed the total contributed capital and deposit balance of that legal entity at the fund.
For non-member customers, Clause 5, Article 12 provides:
“The total amount of outstanding loans for non-member legal entity or individual customers must not exceed the balance of their deposit contracts or savings books at any time.”
In addition, Clause 6, Article 12 provides that the lending limits for a single customer, and a single customer and their related persons specified at Point b, Clause 1, Article 12 do not apply to:
Loans from the entrusted funds of organizations and individuals where the entrusted people's credit fund bears no risk;
Loans fully secured by deposits at the people's credit fund itself.
5. Responsibilities for maintaining limits and prudential ratios
5.1. People's credit funds must promulgate internal regulations
Clause 1, Article 5 of Circular No. 40/2026/TT-NHNN provides:
“The people's credit fund must have internal regulations on the management of the minimum capital adequacy ratio, liquidity management (solvency ratio, ratio of short-term funds used for medium and long-term loans, ratio of total deposits to equity), lending, and loan management in accordance with this Circular and relevant laws.”
Pursuant to Clause 2, Article 5, internal regulation documents and the documents amending or supplementing the internal regulations must be promulgated by the Board of Directors of the people's credit fund.
In addition, people's credit funds shall be responsible for:
Reviewing, re-evaluating, amending, and supplementing their internal regulations periodically, at least once (01) a year and when necessary.
Submitting the promulgated, amended, supplemented, or replaced internal regulations to the Regional branch of the State Bank within ten (10) days in accordance with Clause 7, Article 5.
Article 4 of the Circular also requires people's credit funds to have an information technology system to monitor items of capital, assets, and liabilities and to calculate, manage, and supervise limits and prudential ratios.
5.2. Handling when charter capital falls below the legal capital
Article 7 of Circular No. 40/2026/TT-NHNN prescribes the handling of cases where the real value of the charter capital falls below the legal capital.
Pursuant to Clause 1, Article 7, when this occurs, people's credit funds must:
Formulate and implement a handling plan to ensure the real value of the charter capital is at least equal to the legal capital.
Within a maximum period of 30 days from the date the real value of the charter capital falls below the legal capital, submit a written report accompanied by the handling plan and a commitment to implement the handling plan to the Regional branch of the State Bank.
Organize the implementation of handling measures upon the request of the Regional branch of the State Bank (if any).
Where the real value of the charter capital falls below 80% of the legal capital, Point d, Clause 2, Article 7 provides that the Regional branch of the State Bank shall consider applying measures such as restricting dividend distribution, restricting the expansion of the scope of operations, requiring an increase in charter capital, or applying prudential ratios stricter than the prescribed levels.
The above provides information on the limits and prudential ratios applicable to people's credit funds under Circular No. 40/2026/TT-NHNN. Please refer to Circular No. 40/2026/TT-NHNN on LuatVietnam.vn for details and related features such as: Validity Status, Document Relationship Diagram, etc.
