Circular 33/2024/TT-NHNN operation of microfinance institutions

 CIRCULAR

Regulating on the dossiers, procedures for issuing Licenses, organization, and operation of microfinance institutions

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Pursuant to the Law on the State Bank of Vietnam dated June 16, 2010;

Pursuant to the Law on Credit Institutions dated January 18, 2024:

Pursuant to the Law on Enterprises dated November 26, 2014:

Pursuant to the Government’s Decree No. 102/2022/ND-CP dated December 12, 2022 defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam;

At the request of the Chief Inspector of the Banking Supervision Agency;

The Governor of the State Bank of Vietnam promulgates the Circular regulating the dossiers, procedures for issuing Licenses, organization, and operation of microfinance institutions.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

This Circular regulates:

1. Dossiers and procedures for issuing Licenses.

2. Notification of information on the issuance of Licenses to the business registration authority.

3. Name and head office.

4. Duties and powers of the Risk Management Committee and the Personnel Committee.

5. Standards and conditions for managers, executives, and members of the Supervisory Board.

6. Dossiers and procedures for approving the proposed list of persons to be elected or appointed as members of the Members' Council, members of the Supervisory Board, General Director (Director).

7. Charter capital and ownership ratio of contributed capital.

8. Conditions for receiving the transfer of contributed capital.

9. Scope, duration, and geographical scope of operation.

Article 2. Subjects of application

1. Microfinance institutions.

2. Other organizations and individuals related to the contents specified in Article 1 of this Circular.

Article 3. Interpretation of terms

In this Circular, the following terms are construed as follows:

1. License means the License for establishment and operation of microfinance institution issued by the State Bank of Vietnam (hereinafter referred to as the State Bank). The License for establishment and operation of a microfinance institution also means the Certificate of Business Registration. The document issued by the State Bank on the amendment or supplementation of the License shall be an integral part of the License.

2. Founding members' meeting means a meeting of the founding members, with the following duties:

a) Approving the draft Charter of the microfinance institution, the Project for the establishment of the microfinance institution, and the proposed list of persons to be elected or appointed as members of the Members' Council, members of the Supervisory Board, and General Director (Director) for the first term;

b) Electing the Preparatory Committee and the Head of the Preparatory Committee from among the members participating in capital contribution, who are on the proposed list to be elected or appointed as members of the Members' Council, members of the Supervisory Board, General Director (Director) for the first term, and some other members to implement tasks related to the approval in principle of the establishment of the microfinance institution;

c) Deciding other matters related to the establishment of the microfinance institution.

3. First capital contributors' meeting means a meeting of the founding members and other capital contributors after the State Bank has approved in principle the establishment, with the following duties:

a) Approving the Charter of the microfinance institution;

b) Electing or appointing members of the Members' Council, members of the Supervisory Board, and General Director (Director) for the first term according to the list approved by the State Bank;

c) Approving the regulations on the organization and operation of the Members' Council, Supervisory Board, and General Director (Director) of the microfinance institution;

d) Deciding other matters related to the establishment of the microfinance institution.

4. Microfinance clients include the following subjects:

a) Poor households, near-poor households, individuals belonging to poor households, and individuals belonging to near-poor households as prescribed by law;

b) Low-income individuals, including:

(i) Employees working under labor contracts in urban areas with a maximum average income of VND 9 million/month at the time of applying for a loan;

(ii) Employees working under labor contracts in rural areas with a maximum average income of VND 7 million/month at the time of applying for a loan;

(iii) Self-employed individuals working independently without an employment relationship under a labor agreement with an income corresponding to the average income of the client categories specified at Points b(i) and b(ii) of this Clause;

c) Low-income households means households with an average income per person corresponding to the average income of low-income individuals in each area as prescribed at Points b(i) and b(ii) of this Clause;

d) Micro-enterprises as prescribed by law.

5. Compulsory savings means the amount of money that microfinance clients must deposit as prescribed by the microfinance institution. Microfinance institutions may only receive compulsory savings from clients who have outstanding loan balances at the microfinance institution, and the term for receiving compulsory deposits must not exceed the remaining term of the loan.  Microfinance institutions shall be responsible for regulating and publicly announcing the amount of compulsory savings and the compulsory savings interest rate.

6. Voluntary deposits means demand deposits, term deposits, and savings deposits (excluding compulsory savings), except for deposits for payment purposes of microfinance clients, organizations, and other individuals at the microfinance institution.

Article 4. Authority to decide on the issuance of Licenses

The Governor of the State Bank shall decide on the issuance of Licenses to microfinance institutions.

Article 5. License fees

1. The license fee for microfinance institutions shall comply with law on fees and charges.

2. Within 15 days from the date of issuance of the License, the microfinance institution must pay the fee at the State Bank's Transaction Office.  The form of payment shall be in accordance with the Ministry of Finance's regulations on the level of collection, collection regime, payment of fees, form, time limit for collection, payment, and declaration of fees and charges.

3. The fee specified in Clause 1 of this Article shall not be deducted from the charter capital and shall not be refunded under any circumstances.

Article 6. Preparation and submission of dossiers

1. Dossiers must be prepared in Vietnamese, in which copies of documents, diplomas, and translations of documents from foreign languages into Vietnamese must be certified in accordance with the provisions of law.

2. In cases where the documents in the dossier are copies that are not certified copies, or copies issued from the original register, the originals must be presented for comparison when submitting the dossier. The person comparing the documents, as prescribed by law, must sign to confirm the copies and take responsibility for the accuracy of the copies compared to the originals.

3. Each dossier must include a list of documents. The dossier shall be submitted directly to the State Bank (Single-window Section) or sent through postal service.

Chapter II

SPECIFIC PROVISIONS

Section 1

DOSSIERS AND PROCEDURES FOR ISSUING LICENSES; NOTIFICATION OF INFORMATION ON THE ISSUANCE OF LICENSES TO THE BUSINESS REGISTRATION AUTHORITY

Article 7. Dossier of application for License for a microfinance institution that is a single-member limited liability company

1. Dossier for principle approval application:

a) Application for a License according to the form in Appendix No. 01 issued together with this Circular;

b) Draft Charter of the microfinance institution;

c) Project for the establishment of the microfinance institution signed by the Head of the Preparatory Committee, including at least the following contents:

(i) The necessity for establishment, objectives of operation of the microfinance institution; expected social impact of the microfinance institution in the area;

(ii) Name of the microfinance institution, expected area of operation, expected location of the head office, charter capital at the time of establishment, and scope of operation;

(iii) Products and services expected to be provided to customers;

(iv) Organizational structure;

(v) Proposed list of personnel, detailing professional qualifications and work experience that meet the requirements of each position and title:

- Members of the Members' Council; Heads of Committees under the Members' Council;

- Members of the Supervisory Board;

- General Director (Director), Deputy General Directors (Deputy Directors), Chief Accountant, and heads of affiliated units in the organizational structure;

(vi) Expected financial investment for the information technology system and the application of information technology;

(vii) Expected internal control and audit system in accordance with the provisions of the Law on Credit Institutions, including at least the operating principles, draft internal regulations specified in Clause 2, Article 101 of the Law on Credit Institutions, and draft regulations on the organization and operation of the Members' Council, Supervisory Board, and General Director (Director);

(viii) Expected business plan for the first 03 years, including at least the following contents: Market analysis, business strategy and plan; expected financial statements for each year (balance sheet, income statement, cash flow statement, minimum capital adequacy ratio, operating efficiency indicators, and explanation of the feasibility of achieving the financial indicators in each year);

d) Dossiers of persons proposed to be elected or appointed as members of the Members' Council, members of the Supervisory Board, and General Director (Director) of the microfinance institution, including:

(i) Curriculum Vitae according to the form in Appendix No. 02 issued together with this Circular;

(ii) A Criminal Record Certificate of the proposed personnel, including full information on criminal records (including expunged and non-expunged criminal records) and information on prohibitions from holding positions, establishing, or managing enterprises or cooperatives;

For personnel without Vietnamese nationality: A Criminal Record Certificate or an equivalent document (including expunged and non-expunged criminal records and information on prohibitions from holding positions, establishing, or managing enterprises or cooperatives) must be issued by the competent authority of the country where the foreigner resided before coming to Vietnam. In cases where the foreigner has been residing in Vietnam for 6 months or more, the Criminal Record Certificate shall be issued by the competent authority for criminal record certificates at the place where the foreigner is residing temporarily.

The Criminal Record Certificate or an equivalent document must be issued by the competent authority no more than 6 months before the microfinance institution submits the dossier for approval of the proposed list of personnel.

The proposed personnel to be elected or appointed may submit an electronic Criminal Record Certificate that has been issued on the VNeID electronic identification and authentication application or submit an electronic Criminal Record Certificate in accordance with the provisions of law;

(iii) Declaration of related persons with the proposed personnel to be elected or appointed according to the form in Appendix No. 04 issued together with this Circular;

(iv) Copy of passport or equivalent document for individuals who do not have Vietnamese nationality;

(v) Copies of diplomas and professional certificates;

(vi) Other documents proving that the conditions and standards prescribed in Articles 13, 14, and 15 of this Circular are met;

(vii) In cases where the person proposed to be elected or appointed as a member of the Members' Council, a member of the Supervisory Board, or General Director (Director) of the microfinance institution does not have Vietnamese nationality, in addition to the above documents, there must be a written commitment to fully meet the conditions for residing and working in Vietnam;

dd) Charter of the owner;

e) Document from the owner committing to contribute capital to the microfinance institution on schedule, the amount of capital contribution, and taking responsibility for the legality of the contributed capital source;

g) Document from the owner on the establishment of the Preparatory Committee, election or appointment of the Head of the Preparatory Committee, approval of the draft Charter, the Project for the establishment of the microfinance institution, and the list of proposed management, executive, and control positions.

2. Dossier of application for License:

a) Charter of the microfinance institution approved by the Members' Council;

b) Decision of the owner on the appointment of the Chairperson of the Members' Council, members of the Members' Council, Head of the Supervisory Board, members of the Supervisory Board, General Director (Director), Deputy General Directors (Deputy Directors), and Chief Accountant.

Article 8. Dossier of application for License for a microfinance institution that is a limited liability company with two or more members

1. Dossier for principle approval application:

a) Application for a License according to the form in Appendix No. 01 issued together with this Circular;

b) The dossier components specified at Points b, c, and d of Clause 1, Article 7 of this Circular;

c) List of founding members signed by the Head of the Preparatory Committee, including the following contents:

(i) Legal entity name; Establishment License number or Certificate of Business Registration or equivalent document; personal identification number (for individuals with Vietnamese nationality), passport or equivalent document, date of issue, place of issue, nationality/nationalities (for individuals without Vietnamese nationality) of the legal representative of the legal entity participating in capital contribution to establish the microfinance institution and the capital contribution representative of that legal entity at the microfinance institution;

(ii) Capital contribution amount (specifying the amount of capital in Vietnamese Dong and the contribution ratio of each member);

(iii) Capital contribution plan (specifying the method and schedule of capital contribution);

d) Dossiers of founding members, including:

(i) Establishment License or Certificate of Business Registration or equivalent document;

(ii) Written commitment of the capital contributors to contribute capital to the microfinance institution on schedule, the amount of capital contribution, and responsibility for the legality of the contributed capital source;

(iii) Charter of the legal entity contributing capital to establish the microfinance institution;

(iv) Authorization document for the capital contribution representative at the microfinance institution in accordance with the provisions of law;

(v) Copy of passport or equivalent document (for individuals without Vietnamese nationality) of the legal representative of the legal entity participating in capital contribution to establish the microfinance institution and the capital contribution representative of that legal entity at the microfinance institution;

(vi) Audited financial statements of the year immediately preceding the year of submission of the Dossier of application for License and the most recent financial statements (interim financial statements or unaudited annual reports) up to the time of submission of the Dossier of application for License;

(vii) Activity reports for the 2 years immediately preceding the year of submission of the Dossier of application for License of the capital contributor who is not an enterprise;

(viii) Documents proving past or current participation in the management of microfinance programs or projects and the effectiveness of the programs or projects;

dd) Minutes of the Founding Members' Meeting on the establishment of the Preparatory Committee, the Head of the Preparatory Committee, approval of the draft Charter, the Project for the establishment of the microfinance institution, and the list of proposed management, executive, and control positions.

2. Dossier of application for License:

a) Charter of the microfinance institution approved by the Members' Council;

b) Minutes and Resolution of the first capital contributors' meeting on the approval of the Charter, election or appointment of members of the Members' Council, members of the Supervisory Board, and regulations on the organization and operation of the Members' Council and Supervisory Board;

c) Minutes of the Members' Council meeting approving the election of the Chairperson of the Members' Council; Minutes of the Supervisory Board meeting on the election of the Head of the Supervisory Board;

d) Decision of the Members' Council on the appointment of the General Director (Director), Deputy General Directors (Deputy Directors), and Chief Accountant.

Article 9. Procedures for issuance of Licenses

1. The Preparatory Committee shall prepare 01 dossier for principle approval application as prescribed in Clause 1, Article 7 and Clause 1, Article 8 of this Circular and send it to the State Bank.

2. Within 30 days from the date of receipt of the dossier for principle approval application, the State Bank shall send a written confirmation to the Preparatory Committee confirming receipt of a complete and valid dossier; in cases where the dossier is incomplete, the State Bank shall send a written request for supplementation and completion.

3. Within 05 working days from the date of the written confirmation of receipt of the complete and valid dossier, the State Bank shall send a written request for comments to:

a) The People's Committee of the province or centrally-run city where the microfinance institution is proposed to be headquartered, regarding the establishment of the microfinance institution;

b) The People's Committee of the province or centrally-run city where the founding member has implemented microfinance programs or projects, regarding the effectiveness of the microfinance programs or projects on the development of the locality;

c) The State Bank branch where the microfinance institution is proposed to be headquartered, regarding the establishment of the microfinance institution.

4. Within 15 days from the date of receipt of the written request of the State Bank, the consulted units shall provide their comments in writing.

5. Within 45 days from the date of receipt of the complete and valid dossier, the State Bank shall issue a written approval in principle for the establishment of the microfinance institution and approve the proposed list of personnel to be elected or appointed as members of the Members' Council, members of the Supervisory Board, and General Director (Director) of the microfinance institution; in case of disapproval, the State Bank shall send a written notice to the Preparatory Committee, clearly stating the reasons.

6. Within 60 days from the date of receipt of the written approval in principle for the establishment of the microfinance institution, the Preparatory Committee shall prepare the Dossier of application for License as prescribed in Clause 2, Article 7 and Clause 2, Article 8 of this Circular and send it to the State Bank.  If the State Bank does not receive or receives an incomplete Dossier of application for License after this time limit, the written approval in principle shall no longer be valid.

Within 05 working days from the date of receipt of the complete Dossier of application for License,  the State Bank shall issue a written confirmation of receipt of the complete dossier.

Within 30 days from the date of receipt of the complete Dossier of application for License, the State Bank shall issue the License; in case of not issuing the License, the State Bank shall issue a written notice clearly stating the reasons.

7. After being issued the License, the microfinance institution shall proceed with the necessary procedures to commence operations in accordance with the provisions of law.

Article 10. Notification of information on the issuance of Licenses to the business registration authority

1. Within 15 days before the expected commencement date of operations, the microfinance institution that has been issued a License must notify the State Bank branch where the microfinance institution is headquartered of the conditions for commencement of operations as prescribed in the Law on Credit Institutions and the expected commencement date of operations.

2. Within 03 working days from the commencement date of operations, the microfinance institution shall send a written notice directly or through postal service to the Banking Supervision Agency to notify that it has commenced operations.

3. Within 05 working days from the date of receipt of the written notice of the microfinance institution as specified in Clause 2 of this Article, the Banking Supervision Agency shall be responsible for notifying in writing the provincial-level business registration authority where the microfinance institution is headquartered to update the national business registration information system.

Section 2

NAME, CAPITAL CONTRIBUTORS, DUTIES, AND POWERS OF THE RISK MANAGEMENT COMMITTEE AND PERSONNEL COMMITTEE

Article 11. Name and head office of the microfinance institution

1. The name of the microfinance institution must comply with the provisions of the Law on Enterprises and relevant legal regulations.  The name of the microfinance institution shall be in accordance with the corresponding legal form as follows:

a) Single-member limited liability microfinance institution and its own name;

b) Limited liability microfinance institution and its own name.

2. The head office of the microfinance institution must meet the regulations on the head office of an enterprise as prescribed in the Law on Enterprises and the following conditions:

a) It shall be the workplace of the Members' Council and the Executive Board, as stated in the License in accordance with the provisions of law, and where transactions with customers are conducted;

b) It must be located in the territory of Vietnam, with an identifiable address including the name of the building, house number, alley, lane, street, or village, hamlet, commune, ward, town, district, town, provincial city, province, or centrally-run city; telephone number, fax number, and email address (if any);

c) The microfinance institution shall have legal ownership or legal use rights;

d) It shall ensure convenient transactions with customers and have a vault that meets the technical standards prescribed by the State Bank;

dd) It shall ensure the safety of assets and is suitable for the operational requirements of the microfinance institution;

e) It shall have an information technology system connecting the head office with branches and transaction offices, and between the managing branch and transaction offices, ensuring security, confidentiality, and reporting and statistical requirements.

Article 12. Risk Management Committee and Personnel Committee

1. The Members' Council must establish a Risk Management Committee and a Personnel Committee and issue regulations on the organization and operation of these two Committees.  Within 10 days from the date of issuance, the microfinance institution must send these internal regulations to the State Bank (the Banking Supervision Agency).

2. The organizational structure of the two Committees shall be decided by the Members' Council, but each Committee must have at least two members, with the Head of the Committee being a member of the Members' Council.  A member of the Members' Council may only be the Head of one Committee.  The Head and other members of the two Committees shall be appointed and dismissed by the Members' Council in accordance with the Charter of the microfinance institution.

3. The regulations on the organization and operation of the Committees shall include at least the following contents:

a) Working regulations:

(i) Number of members of the Committee and responsibilities of each member;

(ii) Regular meetings of the Committee;

(iii) Extraordinary meetings of the Committee;

(iv) Decision-making of the Committee;

b) Duties and functions of the Committees:

(i) For the Risk Management Committee:

- Advising the Members' Council on the issuance of procedures and policies within the Committee's competence relating to risk management in the operation of the microfinance institution in accordance with the provisions of law and the Charter of the microfinance institution;

- Analyzing and issuing warnings about the safety level of the microfinance institution in the face of potential risks that may affect it, and proposing preventive measures for these risks in the short and long term;

- Reviewing and evaluating the appropriateness and effectiveness of the current risk management procedures and policies of the microfinance institution to make recommendations and proposals to the Members' Council on the requirements for changing current procedures, policies, and operating strategies;

(ii) For the Personnel Committee:

 - Advising the Members' Council on the size and structure of the Members' Council and the General Director (Director) in accordance with the scale of operations and development strategy of the microfinance institution;

- Advising the Members' Council on handling personnel issues arising in relation to the procedures for electing, appointing, dismissing, and removing members of the Members' Council, members of the Supervisory Board, and the General Director (Director) of the microfinance institution in accordance with the provisions of law and the Charter of the microfinance institution;

- Researching and advising the Members' Council on the issuance of internal regulations of the microfinance institution within the competence of the Members' Council on salary, remuneration, bonuses, recruitment regulations, training, and other incentive policies for executives, officials, and employees of the microfinance institution.

Section 3

STANDARDS AND CONDITIONS FOR MANAGERS, EXECUTIVES, AND MEMBERS OF THE SUPERVISORY BOARD

Article 13. Standards and conditions for members of the Members' Council

Members of the Members' Council must meet all of the following standards and conditions:

1. Not falling under the cases specified in Clause 1, Article 42 and Article 43 of the Law on Credit Institutions.

2. Not currently holding a management or executive position in a microfinance program or project, or in a non-governmental organization implementing a microfinance program or project.

3. Having professional ethics.

4. Having a university degree or higher.

5. Meeting one of the following conditions:

a) Having at least 02 years of experience as a manager or executive of a credit institution;

b) Having at least 03 years of experience as a manager of an enterprise operating in the field of finance, accounting, auditing, or of another enterprise with an equity capital at least equal to the legal capital of the microfinance institution as prescribed by law;

c) Having at least 05 years of direct work experience in a functional department of a credit institution or a foreign bank branch ;

d) Having at least 05 years of direct work experience in the field of microfinance or at least 05 years of direct work experience in a functional department in the areas of finance, banking, accounting, or auditing.

Article 14. Standards and conditions for members of the Supervisory Board

Members of the Supervisory Board must meet all of the following standards and conditions:

1. Not falling under the cases specified in Clause 1, Article 42 and Article 43 of the Law on Credit Institutions.

2. Having professional ethics.

3. Having a university degree or higher in one of the following fields: economics, finance, accounting, auditing, banking, business administration, or law, and having at least 01 year of work experience in a field related to microfinance; or having an intermediate degree or higher in one of the following fields: economics, finance, accounting, auditing, banking, or law, and having at least 03 years of work experience in a position related to microfinance.

4. The Head of the Supervisory Board must reside in Vietnam during their term of office.

Article 15. Standards and conditions for the General Director (Director)

The General Director (Director) must meet all of the following standards and conditions:

1. Not falling under the cases specified in Clause 1, Article 42 and Article 43 of the Law on Credit Institutions.

2. Not currently holding a management or executive position in a microfinance program or project, or in a non-governmental organization implementing a microfinance program or project.

3. Having professional ethics.

4. Having a university degree or higher in one of the following fields: economics, finance, accounting, auditing, banking, business administration, or law.

5. Having at least 02 years of experience as an executive of a credit institution, or at least 02 years of experience as a General Director (Director) of an enterprise with an equity capital at least equal to the legal capital of the microfinance institution as prescribed by law, or at least 03 years of experience working in a managerial position (from Head of Department or higher) in the field of microfinance, or at least 05 years of direct work experience in the field of finance (including microfinance), banking, accounting, or auditing.

6. Residing in Vietnam during their term of office.

Article 16. Standards and conditions for Deputy General Directors (Deputy Directors), Chief Accountant, and Branch Directors

1. Deputy General Directors (Deputy Directors) must not fall under the cases specified in Clause 1, Article 42 and Article 43 of the Law on Credit Institutions; Chief Accountants must not fall under the cases specified in Clauses 2 and 3, Article 42 of the Law on Credit Institutions; Branch Directors must not fall under the cases specified in Clause 2, Article 42 of the Law on Credit Institutions.

2. Meeting one of the following conditions:

a) Having a university degree or higher in one of the following fields: economics, finance, accounting, auditing, banking, business administration, law, or other fields relevant to their intended area of responsibility;

b) Having a university degree or higher in another field and have at least 02 years of direct work experience in the field of finance (including microfinance), banking, or other fields relevant to their intended area of responsibility.

3. Residing in Vietnam during their term of office.

4. The Chief Accountant must meet the standards and conditions prescribed by law on accounting.

Section 4

APPROVAL OF THE PROPOSED LIST OF PERSONS TO BE ELECTED OR APPOINTED AS MEMBERS OF THE MEMBERS' COUNCIL, MEMBERS OF THE SUPERVISORY BOARD, AND GENERAL DIRECTOR (DIRECTOR) OF THE MICROFINANCE INSTITUTION

Article 17. Assessment of professional ethics for personnel proposed to be elected or appointed as members of the Members' Council, members of the Supervisory Board, and General Director (Director) of the microfinance institution

1. Persons who fall under any of the following cases shall be considered to lack professional ethics:

a) Persons who are held responsible, according to inspection and examination conclusions, for violations that resulted in the credit institution or a foreign bank branch being administratively sanctioned in the field of monetary and banking at the highest fine level for violations of regulations on licenses, management, administration, shares, stocks, capital contributions, share purchases, credit extension, corporate bond purchases, or safety ratios as prescribed by the law on handling of administrative violations in the field of monetary and banking;

b) Persons named in inspection and examination conclusions as being responsible for violations that resulted in the credit institution or foreign bank branch being administratively sanctioned in the field of monetary and banking, where the credit institution or foreign bank branch has not yet fully complied with the administrative sanction decision ;

c) Persons who have been administratively sanctioned for administrative violations in the field of monetary and banking within 01 year from the date of completion of the administrative sanction decision or 01 year from the date of expiration of the enforcement period for the administrative sanction decision;

d) Persons who are personally responsible for violations of licenses, management, administration, shares, stocks, capital contributions, share purchases, credit extension, corporate bond purchases, safety ratios, asset classification, off-balance sheet commitments, or setting aside and use of risk provisions as prescribed by law, as stated in the inspection and examination conclusions of the State Bank, where the recommendations regarding such violations have not been rectified or remedied.

2. Proposed personnel who do not fall under any of the cases specified in Clause 1 of this Article must meet the following regulations:

a) Proposed personnel who have worked or are working at a credit institution or foreign bank branch must comply with the regulations on professional ethical rules and standards issued by that credit institution or foreign bank branch in accordance with the State Bank's regulations on internal control and internal audit systems applicable to credit institutions or foreign bank branches ;

b) Proposed personnel must comply with the regulations on professional ethical rules and standards issued by the microfinance institution in accordance with the State Bank's regulations on internal control and internal audit systems applicable to microfinance institutions.

3. The microfinance institution where the proposed personnel have worked or are working shall be responsible for assessing the professional ethics of the proposed personnel to be elected or appointed as members of the Board of Directors, members of the Members' Council, members of the Supervisory Board, or General Director (Director) of another credit institution or foreign bank branch upon request of the proposed personnel.

Article 18. Dossier for application for approval

1. Document from the microfinance institution to the State Bank for approval of the proposed list of personnel, which must include at least the following information:

a) Reasons for the election or appointment of personnel;

b) Proposed list of personnel, clearly stating:  full name, current title (at the microfinance institution and/or other enterprise or organization), and proposed title at the microfinance institution;

c) Current and proposed structure of the Members' Council and the Supervisory Board after the election or appointment of the microfinance institution (in the case of a request for approval of the proposed list of personnel for the positions of members of the Members' Council or members of the Supervisory Board). This should include the number of members of the Members' Council and the number of members of the Supervisory Board;

d) A commitment that the proposed personnel to be elected or appointed meet the standards and conditions as prescribed in the Law on Credit Institutions, relevant legal regulations, and the Charter of the microfinance institution.

2. Document approving the proposed list of personnel by the microfinance institution (for personnel in the Members' Council and the Supervisory Board, the term of office must be specified), specifically:

a) For a microfinance institution that is a single-member limited liability: Document from the legal representative of the owner;

b) For a microfinance institution that is a limited liability microfinance institution with two or more members:

(i) In the case of proposed appointment of members of the Members' Council or Supervisory Board:  Document appointing the person to be a member of the Members' Council or Supervisory Board, signed by the legal representative of the capital contributor;

(ii) In the case of proposed appointment of the General Director (Director):  A resolution of the Members' Council.

3. Curriculum Vitae of the proposed personnel to be elected or appointed according to the form in Appendix No. 02 issued together with this Circular.

4. Criminal Record Certificate of the proposed personnel to be elected or appointed:

a) For personnel with Vietnamese nationality: Criminal Record Certificate of the proposed personnel to be elected or appointed must include full information on criminal records (including expunged and non-expunged criminal records) and information on prohibitions from holding positions, establishing, or managing enterprises or cooperatives;

b) For personnel without Vietnamese nationality: Criminal Record Certificate or an equivalent document (including expunged and non-expunged criminal records and information on prohibitions from holding positions, establishing, or managing enterprises or cooperatives) must be issued by the competent authority of the country where the foreigner resided before coming to Vietnam. In cases where the foreigner has been residing in Vietnam for 6 months or more, the Criminal Record Certificate shall be issued by the competent authority for criminal record certificates at the place where the foreigner is residing temporarily.

The Criminal Record Certificate or an equivalent document must be issued by the competent authority no more than 6 months before the microfinance institution submits the dossier for approval of the proposed list of personnel.

Proposed personnel to be elected or appointed may submit an electronic Criminal Record Certificate that has been issued on the VNeID electronic identification and authentication application or submit an electronic Criminal Record Certificate in accordance with the provisions of law.

5. Declaration of related persons with the proposed personnel to be elected or appointed according to the form in Appendix No. 04 issued together with this Circular.

6. Other documents proving that the personnel standards and conditions prescribed in Articles 13, 14, and 15 of this Circular are met, which may include one or more of the following documents:

a) Diplomas and certificates proving the professional qualifications of the proposed personnel to be elected or appointed, in which diplomas of Vietnamese personnel issued by foreign educational institutions must be recognized by the competent authority of Vietnam in accordance with relevant legal regulations;

b) Document from the competent authority appointing the person as the representative to manage the State's capital contribution in the microfinance institution in accordance with the provisions of law, in cases where the proposed personnel to be elected or appointed are officials, civil servants, managers from the department level or higher in enterprises in which the State holds 50% or more of the charter capital, or officers, non-commissioned officers, professional soldiers, or defense workers in agencies or units under the Vietnam People's Army; officers or professional non-commissioned officers in agencies or units under the Vietnam People's Public Security;

c) Certificate of Business Registration and audited financial statements by an independent audit firm of the enterprise where the proposed personnel to be elected or appointed as General Director (Director) of the microfinance institution have worked (if the equity capital is at least equal to the legal capital for microfinance institutions as prescribed by law).

7. Assessment document from the microfinance institution; from other credit institutions or foreign bank branches where the proposed personnel have worked or are working, as prescribed in Clause 2, Article 17 of this Circular, according to the form in Appendix No. 05 issued together with this Circular.

Article 19. Implementation procedures

1. The microfinance institution shall prepare 01 dossier in accordance with Article 18 of this Circular and submit it to the State Bank (Banking Supervision Agency) for approval of the proposed list of personnel.

2. In cases where the dossier is incomplete or invalid, within 15 days from the date of receipt of the dossier, the State Bank (Banking Supervision Agency) shall issue a written request to the microfinance institution to supplement the dossier.

Within 20 days from the date of receipt of the complete dossier from the microfinance institution, the State Bank shall issue a written approval of the proposed list of personnel of the microfinance institution.  In case of disapproval, the State Bank must issue a written response clearly stating the reasons.

3. The microfinance institution must notify the State Bank (Banking Supervision Agency) of the list of persons elected or appointed as members of the Members' Council, members of the Supervisory Board, and General Director (Director) within 10 working days from the date of election or appointment.

4. Within 05 working days from the date of receipt of the written notice from the microfinance institution, the State Bank (Banking Supervision Agency) shall be responsible for notifying in writing the provincial-level business registration authority where the microfinance institution is headquartered of the information related to the legal representative of the microfinance institution (if there is any changes) for updating into the national business registration information system.

Article 20. Validity period of the written approval of the proposed list of personnel

The document from the Governor of the State Bank approving the proposed list of personnel of the microfinance institution shall be valid for 06 months from the date of signing.

Section 5

CHARTER CAPITAL, OWNERSHIP RATIO OF CONTRIBUTED CAPITAL, CONDITIONS FOR TRANSFERRING CONTRIBUTED CAPITAL

Article 21. Charter capital

1. The charter capital of a microfinance institution shall be the capital that has been actually contributed by the owner or actually contributed by the capital contributors and recorded in the Charter.

2. The owner or capital contributors shall not use entrusted capital, mobilized capital, or borrowed capital in any form to contribute capital to the microfinance institution and must commit to and take responsibility for the legality of the contributed capital source.

3. The charter capital of the microfinance institution shall be contributed in Vietnamese Dong.

Article 22. Ownership ratio of contributed capital

1. The ownership ratio of contributed capital of all capital contributors who are socio-political organizations must reach a minimum of 25% of the charter capital of the microfinance institution.

2. The ownership ratio of contributed capital of capital contributors who are not socio-political organizations must not exceed the ownership ratio of contributed capital of socio-political organizations.

3. The ownership ratio of contributed capital of a capital contributor and related persons must not exceed 50% of the charter capital of the microfinance institution.

Article 23. Transfer of contributed capital

1. The transfer of contributed capital must comply with the provisions of Article 22 of this Circular, the Law on Enterprises, and relevant legal regulations.

2. Within 05 years from the date of issuance of the License, founding members may only transfer their contributed capital to other founding members, provided that the ownership ratios of contributed capital prescribed in Article 22 of this Circular are maintained.

3. For microfinance institutions that are limited liability companies with two or more members, capital contributors may transfer part or all of their contributed capital to other capital contributors or legal entities. The transfer of contributed capital by a member must ensure:

a) It shall not change the legal form of the microfinance institution;

b) The transfer of capital shall be given priority to the remaining members in proportion to their contributed capital, under the same conditions;

c) The transfer of contributed capital to other legal entities shall be only carried out if  the remaining capital contributors do not purchase or do not fully purchase within 30 days from the offering date, and shall be carried out under no more favorable conditions than those offered to to the remaining capital contributors in the microfinance institution;

d) The legal entity receiving the transfer of contributed capital from a member must meet the conditions prescribed by the Government for founding members.

Section 6

ACTIVITIES OF MICROFINANCE INSTITUTIONS

Article 24. Scope of operations

1. Microfinance institutions may conduct the following capital mobilization activities:

a) Receiving deposits in Vietnamese Dong in the following forms:

(i) Compulsory savings;

(ii) Deposits from organizations and individuals, including voluntary deposits from microfinance clients, except for deposits for payment purposes;

b) Borrowing and receiving deposits from credit institutions and foreign bank branches;

c) Borrowing from abroad in accordance with the provisions of law.

2. Microfinance institutions may deposit money at credit institutions and foreign bank branches.

3. Microfinance institutions may only provide loans in Vietnamese Dong to microfinance clients for income-generating activities and improving living conditions. Microfinance institutions must not provide loans to clients for the purpose of purchasing or investing in securities.

Loans from microfinance institutions may be secured by compulsory savings or by guarantees from groups of savings and loan clients (hereinafter referred to as loan groups) as prescribed by the microfinance institution.

Loans from microfinance institutions to poor households, near-poor households, and low-income households shall be made through a representative of the household.  The representative of the household must be a member of the household and must be authorized in writing by the members of the household in accordance with the provisions of law.

4. The total outstanding loan balance of a microfinance institution to a microfinance client who is a micro-enterprise, a poor household, or a near-poor household must not exceed VND 100 million.

Loans to poor households and near-poor households must comply with the following requirements:

a) Poor households and near-poor households must legally reside in the area where the loan is made;

b) They shall be included in the list of poor households and near-poor households in the commune, ward, or township according to regulations on multidimensional poverty standards.

5. The total outstanding loan balance of a microfinance institution to a microfinance client who is an individual belonging to a poor household, an individual belonging to a near-poor household, a low-income individual, or a low-income household must not exceed VND 50 million.

6. Clients who are individuals belonging to poor households, individuals belonging to near-poor households, self-employed workers as defined at point b(iii) of Clause 4, Article 3 of this Circular, and low-income households may only borrow through loan groups and must be on the list approved or introduced to the microfinance institution by socio-political organizations or local authorities at all levels.

7. Microfinance institutions may open payment accounts at the State Bank, commercial banks, or foreign bank branches. Microfinance institutions may not open payment accounts for customers.

8. Insurance agency in accordance with the following regulations:

a) When the License issued by the State Bank to the microfinance institution includes insurance agency activities, the microfinance institution may carry out insurance agency activities for the types of insurance as prescribed in the Law on Insurance Business;

b) When carrying out insurance agency activities, the microfinance institution must comply with the provisions of law on insurance business and other relevant legal regulations.

9. Microfinance institutions may carry out other business activities as prescribed at Points a, b, c, and dd of Clause 1, Article 130 of the Law on Credit Institutions.

Article 25. Internal regulations on lending

Microfinance institutions must develop internal regulations on lending to clients as specified in Clauses 4, 5, and 6 of Article 24 of this Circular, including at least the following contents:

1. Criteria for determining clients who are self-employed workers as defined at Point b(iii), Clause 4, Article 3 of this Circular. Microfinance institutions shall refer to regulations on individuals residing in at commune-level administrative units in disadvantaged areas; regular income not subject to personal income tax; average monthly income per capita of the household; average income per capita by region/area; minimum wage by region as announced by competent state authorities; and other relevant criteria to develop and issue criteria for clients who are self-employed workers.

2. Specific regulations on loan groups, which must include at least the following contents:

a) Purpose of establishing loan groups;

b) Number of members participating in loan groups; in which the minimum number of members in a loan group shall be 05 and the maximum shall be 60, legally residing in residential areas within the commune, ward, or township administrative unit;

c) Loan group operating procedures, including at least the following contents:

(i) Regular meetings: at least monthly;

(ii) Minimum number of members participating in regular meetings;

d) Procedures for review and selection of members for loan disbursement;

dd) Standards and conditions for the head of the loan group;

e) Rights and responsibilities of the head and members of the loan group;

g) Relationship of the loan group with local authorities and socio-political organizations.

3. Loan approval and disbursement procedure.

4. Control, management, and supervision procedures to ensure the proper use of loan amounts.

Article 26. Duration and geographical scope of operation

1. The duration of operation of a microfinance institution, as stated in the License, shall not exceed 50 years.

2. The geographical scope of operation of a microfinance institution shall be specified in the License.

3. The microfinance institution shall expand its operational network outside the province or centrally-run city where its head office is located in accordance with the State Bank's regulations on the operational network of microfinance institutions.

Chapter III

RESPONSIBILITIES OF UNITS

Article 27. Banking Supervision Agency

1. Acting as the focal point for appraising dossiers for License application; submitting to the Governor for consideration and decision on issuing Licenses, approving the proposed list of persons to be elected or appointed as members of the Members' Council, members of the Supervisory Board, and General Director (Director) of the microfinance institution.

2. Inspecting, supervising, and handling violations of microfinance institutions in implementing the provisions of this Circular and relevant legal regulations.

3. Assuming the prime responsibility for, and coordinating with Departments and Agencies under the State Bank in, submitting to the Governor of the State Bank for consideration of issues related to the establishment, organization, and operation of microfinance institutions.

4. Resolving difficulties arising in the process of implementing this Circular.

Article 28. State Bank branches

1. Inspecting, supervising, and handling violations of affiliated units of microfinance institutions in the areas in accordance with the provisions of law.

2. Providing opinions to the State Bank (Banking Supervision Agency) as prescribed at Point c, Clause 3, Article 9 of this Circular.

3. Checking, directing, and supervising microfinance institutions to ensure compliance with and fulfillment of the conditions prescribed by law and the State Bank before commencing operations, and reporting to the State Bank (Banking Supervision Agency) on the conditions and progress of the commencement of operations of the microfinance institution.

4. Directing, guiding, supervising, and checking microfinance institutions operating in the areas in implementing the provisions of this Circular.

Chapter IV

IMPLEMENTATION PROVISIONS

Article 29. Transitional provisions

1. Microfinance institutions established and operating under a License issued by the State Bank before the effective date of this Circular shall not be required to reapply for a License or adjust their capital contributors.

2. For loan contracts signed before the effective date of this Circular and in accordance with the law at the time of signing, the microfinance institution and other customers may continue to perform under the signed agreements until the end of the loan term or amend and supplement them in accordance with the provisions of this Circular.

3. For savings deposit contracts and agreements (including both voluntary deposits and compulsory savings) signed before the effective date of this Circular, the microfinance institution and customers may continue to perform under the signed contracts and agreements until the end of their terms. Amendments, supplements, or renewals of contracts and agreements may only be made if the amended, supplemented, or renewed contents comply with the provisions of this Circular.

4. Managers, executives, and members of the Supervisory Board of microfinance institutions who were elected or appointed before the effective date of this Circular and who do not meet the provisions of Articles 13, 14, 15, and 16 of this Circular may continue to hold their positions until the end of their term or until the end of their appointed term.

Article 30. Implementation provisions

1. This Circular takes effect from July 01, 2024, except for Clause 2 of this Article.

2. Clause 6, Article 24, and Article 25 of this Circular take effect from August 15, 2024.

3. This Circular annuls the following regulations:

a) Circular No. 03/2018/TT-NHNN dated February 23, 2018, of the Governor of the State Bank of Vietnam regulating the issuance of Licenses, organization, and operation of microfinance institutions;

b) Article 1 of Circular No. 13/2019/TT-NHNN dated August 21, 2019, of the Governor of the State Bank of Vietnam amending and supplementing a number of articles of the Circulars related to the issuance of licenses, organization, and operation of credit institutions and foreign bank branches ;

c) Article 3 of Circular No. 24/2023/TT-NHNN dated December 29, 2023, of the Governor of the State Bank of Vietnam amending and supplementing a number of articles of the Circulars related to the submission, presentation, and provision of information and documents on residents when carrying out administrative procedures in the field of establishment and operation of banks.

Article 31. Responsibility for implementation

The Chief of Office, the Chief Inspector of Banking Supervision Agency, the Heads of units under the State Bank of Vietnam, and microfinance institutions shall be responsible for the implementation of this Circular./.

* All Appendices are not translated herein.