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THE
MINISTRY OF FINANCE
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SOCIALIST
REPUBLIC OF VIET NAM
Independence - Freedom - Happiness
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No:
97/2000/TT-BTC
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Hanoi,
October 12, 2000
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CIRCULAR
GUIDING THE APPLICATION OF THE FINANCIAL REGIME TO
GRASSROOTS PEOPLES CREDIT FUNDS AND REGIONAL PEOPLES CREDIT FUNDS
In furtherance of the Government’s Decree
No.166/1999/ND-CP of November 19, 1999 on the financial regimes applicable to
credit institutions, basing itself on the scale and character of operation of
the people’s credit funds, the Finance Ministry hereby guides the application
of contents of the financial regime to credit funds as follows:
Chapter I
GENERAL PROVISIONS
1. Subject to this Circular are grassroots
people’s credit funds and regional credit funds (hereafter referred
collectively to as people’s credit funds), which are established, organized and
operate according to the provisions of the Law on Credit Institutions, the Law
on Cooperatives and the other relevant legal documents.
2. Financial operations of people’s credit funds
shall comply with the Government’s Decree No.166/1999/ND-CP of November 19,
1999 on the financial regimes applicable to credit institutions, specific
guidance in this Circular and other relevant legal documents on financial
management.
3. The people’s credit funds shall effect the
financial publicity to State management agencies, capital-contributing members,
organizations and individuals having economic relations with them.
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4. Chairpersons of managing boards and directors
of people’s credit funds shall be held responsible before law, State management
agencies and members’ congresses for the application of the financial regime by
their respective people’s credit funds.
Chapter II
SPECIFIC PROVISIONS
I. MANAGEMENT AND USE OF
CAPITAL AND ASSETS
1. Capital management
1.1. Operation capital of a people’s credit fund
includes:
a/ Charter capital, which is capital amount
contributed by the members and inscribed in the charter of such people’s credit
fund.
b/ Mobilized capital.
c/ Borrowed capital.
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e/ The charter capital-supplementing reserve
fund, professional operation development investment fund, financial reserve
fund, severance allowance reserve fund, reward fund and welfare fund.
f/ Profit left to such people’s credit fund but
not yet distributed.
g/ Other kinds of capital.
1.2. In the course of operation, the people’s
credit fund shall have to maintain the charter capital at a level not lower
than the legal capital level prescribed by the Government for people’s credit
funds.
1.3. Own capital of the people’s credit fund as
stipulated by the State Bank Governor.
2. The use of capital of people’s credit
funds: The people’s credit funds are entitled to use their capital to:
- Invest in procurement of fixed assets in
service of their operations on the principle that the such fixed assets’
residual value must not exceed 50% of the own capital of the funds. People’s
credit funds shall have to fully observe the State’s regulations on investment
and construction management.
- Provide loans to their members according to
the provisions of law.
- Contribute capital and/or purchase shares.
People’s credit funds are entitled to use their charter capital and charter
capital supplementing reserve fund to contribute capital to the Central People’s
Credit Fund according to the provisions of law.
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- Use for other purposes as specified by law.
3. The people’s credit funds shall have
to monitor the whole existing assets and capital, conduct the cost-accounting,
open and make entries in accounting books strictly according to the provisions
of the current legislation on accounting and statistics; reflect fully,
accurately and promptly the use of and changes in assets and capital, as well
as recoverable loans and debts in the course of business operation.
4. Periodically and at the end of each
fiscal year, the people’s credit funds shall have to conduct the inventory of
their existing assets and capital; accurately determine the surplus or
deficient assets, the debt situation, overdue-debts, bad debts, ascertain the
causes thereof and determine the handling responsibility. In cases where assets
are lost or damaged, the causes of such loss or damage as well as liability of
each section or individual therefor must be clearly determined.
5. Assurance of safety and development of
capital: The people’s credit funds shall have to apply measures to ensure the
safety of their capital according to the following regulations:
a/ Managing and using their capital and assets
according to the provisions of law.
b/ Maintaining all safety-assurance rates in
their operations under the State Bank’s guidance.
c/ Purchasing insurance for their assets
according to the provisions of law.
d/ Joining deposit insurance organizations or
system safety protection organizations according to the provisions of law.
e/ Accounting into their expenditures the
reserves to offset risks that may occur in their operations, and using such
reserves to offset risks according to regulations of the State Bank Governor.
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- If property losses are caused subjectively by
collectives or individuals, the loss causers shall have to pay compensations
therefor.
- Lost insured assets shall be dealt with under
the insurance contracts.
- Reserves deducted into expenditures shall be
used to cover asset losses according to the provisions at Point 5, Section I,
Chapter II of this Circular.
- If the loss value, after being retrieved and
covered by the above-said sources, still remains insufficient, it shall be
covered by the financial reserve fund of people’s credit funds. If such
financial reserve fund is not enough, the deficit shall be accounted into the
expenditures arising in the period.
7. Sale and liquidation of assets
- The people’s credit funds are entitled to sell
and liquidate their redundant assets, technically obsolete assets, inferior
quality assets or irreparably damaged assets in order to retrieve capital for
use for business purposes.
- When selling or liquidating their assets, the
people’s credit funds shall have to set up councils to evaluate the real
technical state and value of the assets.
- The difference between the proceeds from the
sale or liquidation of assets and such assets’ residual value and expenses for
such sale or liquidation shall be accounted into business results of the
people’s credit funds.
8. The people’s credit funds shall have
to manage, preserve or use assets they have hired, taken as pledge or mortgage
according to the provisions of law and agreements with their customers.
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1. Turnover of a people’s credit fund
includes the actual revenues from its business activities and other activities
specified in Article 16 of the Government’s Decree No.166/1999/ND-CP of
November 19, 1999, including the following revenues:
- Collected interest on loans provided to its
customers.
- Collected deposit interest.
- Revenue from capital contribution and/or share
purchase.
- Revenue from operations entrusted by
organizations and/or individuals at home and abroad.
- Revenue from pledge service (if any).
- Other revenues, including proceeds from the
asset, sale and/or liquidation.
The people’s credit funds shall have to fully
and promptly account into their turnover charges paid by their customers for
services they have provided. It is strictly prohibited to leave revenues out of
accounting books or unaccounted into their incomes.
2. Management of expenses: Expenses of a
people’s credit fund are amounts actually spent in a period for business
activities and other activities, as guided below:
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a/ Expenses for payment of deposit interest.
b/ Expenses for payment of loan interest.
c/ Expenses for payment of interest on capital
sources entrusted by organizations and/or individuals at home and abroad.
d/ Other expenses for professional operations.
2.2. Management expenses of people’s credit
funds
a/ Expenses for officials and employees working
at the people’s credit funds
- Expenses being wages and wage allowances paid
to officials working at the people’s credit funds.
Annually, the managing board of a people’s
credit fund shall base itself on the resolution of the members’ congress to
consider and decide the wage, allowance and working mission remuneration levels
for the officials and employees in compatibility with the fund’s business
results.
If the people’s credit funds have applied the
labor contract or collective labor accord regime, the wages, remuneration’s and
other amounts of wage or remuneration nature shall be determined according to
labor contracts or collective labor accord.
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- Expenses being social insurance and medical
insurance premiums and trade union operating fund for officials personally
working in the people’s credit funds which must be contributed by the employers
according to the State’s current regulations.
- Expenses on labor protection for subjects that
need to be equipped with labor safety devices.
- Expenses for mid-shift meals for laborers,
which are provided for by the people’s credit funds in compatibility with their
business results. Expense level for each laborer must not exceed the minimum
wage level prescribed by the State for State employees.
b/ Expenses on assets
- Expenses for depreciation of fixed assets used
for business operation according to the regulations on fixed asset management,
use and depreciation deduction promulgated by the Finance Ministry to be
applicable to enterprises.
- Expenses for repairing fixed assets in order
to restore their working capacity shall be directly accounted or gradually
amortized into business costs in the year. Particularly for special fixed
assets with expenses for the repair thereof arising unequally through periods
or years, if the people’s credit funds wish to deduct in advance fixed asset
repair expenses from their business costs, they shall have to work out plans
for advance deduction of fixed asset repair expenses, then report them to the
Finance Ministry for consideration and decision. After obtaining the written
approval of the Finance Ministry, the people’s credit funds shall have to
notify the directly managing tax authorities thereof. They shall have to make
settlement of actually arising repair expenses against those deducted in
advance. If the actually arising repair expenses are larger than the already
deducted amount, the difference shall be directly accounted or gradually
amortized into the period’s expenses. If the actually arising repair expenses
are smaller than the already deducted amount, the difference shall be accounted
into the period’s incomes.
- Expenses for asset hiring shall be accounted
into the business costs according to the amounts actually paid in the year
under the rent contracts. In cases where the asset rent is paid in lump-sum for
many years, such rent shall be amortized into the business costs through the
number of years of using the rented assets.
- Expenses for asset insurance premium.
- Expenses for fixed asset sale and liquidation
(including the liquidated or sold fixed assets’ residual value).
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d/ Expenses for services purchased from outside:
- They are expenses for transportation,
electricity, water, telephone, materials, printed papers, stationery, working
tools, fire prevention and fight devices, and other services.
- The above-said expenses must be evidenced by
valid vouchers or invoices according to the Finance Ministry’s regulations.
e/ Other expenses:
- Expenses for training of officials and
employees working in the people’s credit funds including those for organizing
training courses at the people’s credit funds and those for sending officials
to training schools for training according to the regime prescribed by the
State.
- Expenses for Party organization and mass
organizations at the people’s credit funds shall be covered with the operation
funding sources of such organizations. If the operation funding sources of such
organizations are not enough, the deficit shall be accounted into the funds’
expenditures.
- Expenses for making up for asset losses, after
such losses are covered by sources defined at Point 6, Section I, Chapter II of
this Circular.
- Expenses for treasury operations.
- Expenses for guarding the office premises.
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2.3. Expenses for ensuring the safety of
operation of the people’s credit funds
a/ Deductions for setting up reserves for operation
of the people’s credit funds, made according to the provisions at Point 5,
Section I, Chapter II of this Circular.
b/ Expenses for joining the deposit insurance or
the system safety protection organization according to the provisions of law.
3. The people’s credit funds shall not be
allowed to account into their expenditures the following amounts:
- Fines for violations of traffic, taxation,
environment or labor legislation, breaches of the reporting, statistical,
financial and accounting regimes and other legislations.
- Capital construction investments, expenses for
procurement of tangible and intangible fixed assets, and support for other
organizations and individuals.
- Working mission allowances in excess of the
level prescribed by the State.
- Amounts covered by other funding sources, such
as: public-service spending already funded by the State budget, superior
agencies or other organizations; payment of interests on loans for capital
construction investment until the completion of projects, such interest amounts
shall be accounted into the capital construction investment expenses.
- Other unreasonable expenses.
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1. Profit distribution
Profits of a people’s credit fund, after paying
enterprise income tax according to the provisions of law, shall be distributed
as follows:
- To make 5% deduction therefrom for setting up
the charter capital supplementing reserve fund, the maximum level of such fund
shall not exceed the charter capital of the people’s credit fund.
- To make up for losses of the preceding year
and fines for law violations, which are not allowed to be accounted into
pre-tax profits.
- The remainder, presumed 100%, shall be further
distributed as follows:
+ A 10% deduction for setting up financial
reserve fund. The balance of this fund must not exceed 25% of the people’s
credit fund’s charter capital.
+ A minimum 30% deduction for setting up the
professional operation promotion investment fund.
+ A 5% deduction for setting up the job
severance reserve fund for employee working in the fund. The balance of this
fund must not exceed 6 months’ actually paid wage amount in the year of the
people’s credit fund.
+ Deduction for setting up reward and welfare
funds, the annual deduction level for these two funds shall be projected by the
managing board and considered and approved by the members’ congress.
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+ The remainder (if any) shall be added to the
professional operation promotion investment fund.
2. Principles for use of funds
a/ The charter capital supplement reserve fund
shall be used to supplement the charter capital.
b/ The professional operation promotion
investment fund shall be used to invest in expanding the business operation
scale, renewing facilities and equipment and improving working conditions of
the people’s credit funds.
Depending on the investment demand and
capability of the people’s credit funds, the funds’ managing boards shall
decide the investment forms and measures on the principles of efficiency,
safety and development of capital.
c/ The financial reserve fund shall be used to
make up for the asset losses and damage occurring in the business operation course,
after such losses and damage are covered by compensations of organizations
and/or individuals that have caused them, indemnity paid by insurance
organizations and risk reserves already deducted from expenditures.
d/ The job severance reserve fund shall be used
to pay severance allowances to laborers, who have worked in the people’s credit
funds for one year or more and are temporarily unemployed, according to the
provisions of law; cover expenses for professional and technical re-training of
laborers due to technological renewal or when they are transferred to new jobs,
training of sideline jobs for female laborers of the people’s credit funds and
professional skill fostering courses for officials and employees working in the
people’s credit funds.
The severance allowance level for each specific
case shall be decided by the managing boards of the people’s credit funds.
e/ The reward fund shall be used to:
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Give irregular rewards to individuals and/or
collectives in the people’s credit funds that make technical innovations or
professional operation process improvements, which yield efficiency in the
funds’ business activities. The irregular reward level shall be decided by the
managing boards of the people’s credit funds.
Reward the funds’ members; outside units and
individuals that have economic relations with the funds and have well performed
contractual terms, thus efficiently contributing to business operations of the
people’s credit funds. The reward level shall be decided by the managing boards
of the people’s credit fund.
e/ The welfare fund shall be used to:
Invest in construction or repair, supplement
construction fund for welfare projects of the people’s credit funds.
Fund sport, cultural and public welfare
activities of the collective of officials and employees and members of the
people’s credit funds.
Contribute to the social welfare fund.
Pay regular and irregular difficulty allowances
to officials, employees and members of the people’s credit funds.
Cover other welfare activities.
The people’s credit funds’ directors shall
coordinate with the funds’ trade union executive committees (if any) in
managing and using this fund.
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1. The people’s credit funds shall
implement the accounting and statistical regime prescribed by law, fully record
initial vouchers, update accounting books and reflect financial activities in
an adequate, prompt, truthful, accurate and objective manner.
2. A fiscal year of the people’s credit
fund starts on January 1 and ends on December 31 of the calendar year.
3. The people’s credit funds shall make
the financial settlement, fully observe the regulations on financial reports,
make and submit them to the State finance, statistics and taxation agencies and
the State Bank according to the provisions of the legislation on accounting and
statistics and the provisions of this Circular.
3.1. A financial report contains:
- An account balance sheet and an asset balance
sheet of the people’s credit fund.
- A report on business results and situation of
remittance to the State budget.
3.2. The chairman of the managing board and the
director of the people’s credit fund shall be responsible for the accuracy and
truthfulness of these reports.
3.3. Reporting time limit
- A quarterly report shall be sent within 45
days after the end of a quarter.
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3.4. Report receiving agencies
The people’s credit funds shall send their
financial reports to the provincial/municipal Finance-Pricing Services,
statistical agency, directly managing tax agencies and the State Bank.
4. Auditing work
The people’s credit funds shall organize
internal auditing by themselves to audit their own financial reports in
compliance with provisions of the Law on Credit Institutions and in
compatibility with their own operation scope and scale.
5. Financial publicity by people’s credit funds
- At the end of a fiscal year, besides making
and sending financial reports to the State management agencies defined in Point
3 above, the people’s credit funds shall publicize their finance to local
administrations and their capital-contributing members.
- The financial publicity’s content includes the
following indicators:
+ The state of the charter capital, funds,
mobilized capital, payable debts...
+ The capital use situation: fixed assets, loan
debit balance, debt recovery situation...
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+ Labor and incomes of officials and employees
in people’s credit funds, the application of thrift practice, wastefulness and
corruption combat measures in people’s credit funds.
- Financial publicity time limit: 120 days after
the end of a fiscal year
V. FINANCIAL EXAMINATION AND
INSPECTION AND HANDLING OF VIOLATIONS COMMITTED BY PEOPLE’S CREDIT FUNDS
1. The people’s credit funds shall take
self-responsibility for the accuracy and truthfulness of their financial
reports, the provincial/municipal finance and pricing services shall have to
inspect the observance of the financial regime by people’s credit funds. The
financial inspection shall be conducted in the following forms:
- Regular or irregular financial inspection.
- Inspection upon each specialized subject
according to the requirements of the financial management work.
When deeming it necessary, the Finance Ministry
shall conduct the inspection of observance of the financial regime by people’s
credit fund according to the requirements of the State financial management
work.
2. Handling of violations
- People’s credit funds that violate the State’s
financial regime shall be handled according to the provisions of law.
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Chapter III
ORGANIZATION OF
IMPLEMENTATION
This Circular takes effect 15 days after its
signing. All previous stipulations on financial management of people’s credit
funds, which are contrary to this Circular, are now annulled.
Any problems arising in the course of
implementation should be reported to the Finance Ministry for study,
consideration and settlement.
FOR
THE FINANCE MINISTER
VICE MINISTER
Le Thi Bang Tam