Thông tư 04/2015/TT-NHNN

CIRCULAR

ON PEOPLE’S CREDIT FUNDS

Pursuant to the Law on the State bank of Vietnam No. 46/2010/QH12 dated June 16, 2010;

Pursuant to the Law on credit institutions No. 47/2010/QH12 dated June 16, 2010;

Pursuant to the Law on cooperatives No. 23/2012/QH13 dated November 20, 2012; Pursuant to the Government’s Decree No. 156/2013/ND-CP dated November 11, 2013 defining the functions, tasks, powers and organizational structure of the State bank of Vietnam;

At the proposal of the Chief of banking Inspection and supervision;

The Governor of the State bank of Vietnam promulgates the Circular on people’s credit fund.

Chapter I

GENERAL PROVISIONS

Article 1. Scope

This Circular provides guidance on licensing, operation, operation area, management, administration, control, charter capital, contributed capital, transfer of contributed capital and repayment of contributed capital, members, general members’ meeting, activities and powers, obligations of people's credit funds.

Article 2. Regulated entities

1. People’s credit funds.

2. Organizations and individuals related to the establishment, licensing, organization and activities of people's credit funds.

Article 3. Definitions

In this Circular, these terms are construed as follows:

1. “License” refers to the license for establishment of people's credit funds. The document of the State Bank on revision of the license is an integral part of the license.

2. ”Members of the people’s credit fund” refers to any natural person, household or juridical person who meets all requirements prescribed in this Circular, approves the Charter and voluntarily contributes capital for the establishment of people’s credit funds.

3. “Founding conference” refers to a conference of capital contributors (natural persons, representatives of households and juridical persons) having the following duties:

a) Pass a draft charter of the people’s credit fund; a project on the establishment of the people’s credit fund; a list of candidates/nominees for President and members of the Board of directors, Head and members of the Control board (or full-time controller) and Director of the people’s credit fund for the first tenure;

b) Elect preparatory committees, heads of preparatory committees from capital contributors in the list of candidates/nominees for President and members of the Board of directors, Head and members of the Control board (or full-time controller) and Director of the people’s credit fund for the first tenure and other members who will perform tasks related to the grant of approval for the establishment of people’s credit fund and revisions of the application for license on behalf of capital contributors on the request of a State bank of central-affiliated city or province;

c) Make decisions on other issues concerning the establishment of people’s credit funds.

4. “Branch of the state bank" refers to branches of state bank located in centrally-affiliated cities and provinces (hereinafter referred to as provinces) where the people’s credit fund located.

5. “Founding general meeting” refers to general meetings of capital contributors for the establishment of people’s credit fund held after the State bank grants approval for establishment principles, having the following duties:

a) Pass the Charter of the people’s credit fund;

b) Elect President and members of the Board of directors, Head and members of the Control board (or full-time controller) appointed for the first tenure in accordance with the planned list approved by the branch of State bank;

c) Pass regulations on organization and operation of the Board of directors and the Control board of the people’s credit fund;

d) Make decisions on other issues on the establishment of people’s credit funds.

6. “Capital contributed to establish the membership interest” refers to the minimum amount of capital that must be contributed to be eligible to become a member of the people’s credit fund.

7. “Annual contributed capital” refers to the amount of capital that a member must contribute on an annual basis to maintain its membership interest.

Article 4. Licensing authority

The Director of the branch of State bank shall consider licensing the people’s credit fund headquartered in the province.

Article 5. Duration of operation

The maximum operation duration of a people’s credit fund is 50 years. The specific duration of operation shall be proposed by the preparatory committee of the People's Credit Fund and stated in the license.

Article 6. Nature and objectives of operation

The people’s credit fund operates in accordance with the principle of voluntariness, autonomy and self-responsibility for its operation results in order to attain mutual assistance among members to effectively carry out production, business and service activities and raise the living standards.

Article 7. Name of the people’s credit fund

1. The name of the people’s credit fund shall be written in Vietnamese and may include numeric and alphabetic characters, shall be pronounceable and consist of at least 2 elements in the following order:

a) “Quỹ tín dụng nhân dân” (“People’s credit fund”);

b) The proper name, which must be set in accordance with the provisions of law and be decided by the founding conference (for people's credit funds that have just been established) or the General Members’ meeting (for people's credit funds that have been operating).

2. The name of the people’s credit fund must be inscribed or put up at its headquarter, printed or written on all transactional papers and documents released by the people’s credit fund.

Article 8. Area of operation

1. The people’s credit fund shall operate within the administrative division territory of a commune, a ward or a town (hereinafter referred to as “commune”)

2. The inter-commune operation area of a people's credit fund must be the communes adjacent to the commune in the same district where the people's credit fund is headquartered.

3. A people's credit fund may request for permission to operate in more than one commune as specified in Clause 2 of this Article if it fully:

a) has at least 300 members at the time of application;

b) has a charter capital which is at least 5 times the legal capital at the time of application;

c) has been having a profitable business for 02 consecutive years;

d) Its organizational structure, managerial, internal audit and internal control system are in accordance with the Law on Credit Institutions and this Circular;

dd) has not violated the regulations on safety limits and ratios in the operation of people's credit funds in accordance with the regulations of the State Bank for 12 consecutive months prior to the time of application;

e) implements debt classification and sets up risk provisions as prescribed in the regulations of the State bank in the year prior to the time of application;

g) has a bad debt ratio below 3% for 02 consecutive years prior to the year of application;

h) has documents proving the ability to connect communities in adjacent communes on the basis of common linkages of community interests, geographical conditions, culture, local customs, regions, line of business and other characteristics in the area;

i) is not classified as a financially-weak people's credit fund that needs to be restructured at the request of the State Bank; and

k) has a total amount of deposits received from members of the people's credit fund of at least 60% of the total deposit receipt of the people's credit fund for 2 consecutive years before the year of application.

4. The operation area of a people’s credit fund whose restructuring plan has been approved by the branch of State bank shall comply with such plan.

5. The procedures and documents for approval of operation in inter-communal areas of the people's credit fund shall comply with the State Bank's regulations on the changes which must be approved by the State Bank.

Article 9. Principles of preparing applications

1. Documents of applications for licensing must be signed by the head of the preparatory committee unless otherwise as regulated. Documents signed by the head of the preparatory committee must bear the headings “Ban trù bị thành lập và tên của quỹ tín dụng nhân dân“ (“Preparatory committees to be established and name of people’s credit fund”)

2. Application for licensing the people’s credit fund shall be made into 01 copy in Vietnamese.

3. Copies of papers and diplomas must be authenticated in accordance with law provisions.

If documents of the application are copies which are not authenticated or reproduced from the originals, the applicant shall submit the originals for comparison. The person who makes comparison shall sign to confirm the copies and take responsibility for the accuracy of the copies compared to the original ones.

4. A list of documents must be included in each application.

Chapter II

SPECIFIC PROVISIONS

Section 1: LICENSING

Article 10. Requirements for licensing

In order to obtain the license, a people’s credit fund must:

1. has a minimum charter capital which is equal to the statutory capital prescribed by the Government on the date of submission of application.

2. has at least 30 members that satisfy the requirements in Article 31 hereof and have sufficient financial resources in order to contribute capital to establish the people’s credit fund.

3. has managers and members of the Control board who meet the standards prescribed in Article 20, 23 and 24 hereof.

4. has a Board of Directors and a Control Board that complies with the provisions of the Law on Credit Institutions and this Circular.

5. has a Charter conformable to regulations specified in the Law on Credit Institutions, the Law on Cooperatives and other relevant legislative regulations.

6. has an establishment proposals and business plans as deemed feasible within 03 initial years of its operation.

Article 11. Composition of the application for licensing

1. A written request for licensing signed by head of the preparatory committee using the form prescribed in Annex 01 hereof.

2. Draft Charter of the people’s credit fund passed by the founding conference.

3. People’s credit fund establishment proposal passed by the founding conference, which contains:

a) Necessity for establishment of the people’s credit fund;

b) Name of the people’s credit fund, area of operation, location where the headquarter is planned to be located, operation duration, initial charter capital and activities in accordance with the regulations specified in the Law on credit institutions and this Circular;

c) Organizational structure;

d) Regulations on risk management, including the types of risks that may occur during operation, methods and measures to prevent and control these types of risks;

dd) Lending policies and procedures applicable to members, persons whose deposits are placed into the people's credit fund and poor households in the locality that are not members of the people's credit fund;

e) Information Technology: expected IT system for operation management, ability to apply IT system in banking activities and investment in IT system;

g) Expected internal control and internal audit system that comply with regulations of the State bank;

h) Expected business plan in the initial 03 year in accordance with the contents and scope of operation, which analyzes and demonstrates the effectiveness and ability to implement the plan in each year.

4. List of candidates/nominees for President and members of the Board of directors, Head and members of the Control board and Director of the people’s credit fund.

5. Documents proving the qualifications of candidates/nominees for President and members of the Board of directors, Head and members of the Control board and Director of the people’s credit fund, including:

a) Resumes in accordance with forms in Annex 04 hereof;

b) Copies of IDs or passports;

c) Copies of professional diplomas or certificates;

d) Police records issued by the provincial Department of Justice;

dd) Other documents proving the satisfaction of the regulatory eligibility and qualifications requirements as prescribed in the Law on credit institutions and Article 20, 23 and 24 hereof.

6. List of capital contributors of the people’s credit fund. The list must be signed by all capital contributors at least containing:

a) Full name (if the member is a natural person or representative of a household); name, address of the headquarter (if the member is a juridical person);

b) ID number or passport number (if the member is a natural person); number of the household registration book (if the member is a household); business registration number (if the member is a juridical person);

c) The amount of contributed capital, capital contribution rate of each member.

7. Copy of ID or passport (if the member is a natural person or representative of juridical person/household). If the member is an official, he/she must obtain a written certification of the workplace and a copy of the recruitment decision of the employer.

8. Copy of the household registration book (if the member is a household).

9. Copy of the business registration certificate (if the member is a juridical person).

10. Authorization document of the juridical person for the representative of the capital contributor being juridical person.

11. Authorization document of the household for the representative of the capital contributor being household.

12. Financial statements from the year preceding the year of application for licensing and financial statements and the latest financial statement that not exceeding 90 days up to the time of signing the application for licensing (if the member is a juridical person)

13. Reports on financial resources for capital contribution for the establishment of the people’s credit fund if the member is a juridical person in accordance with Annex 06 hereof.

14. Application for membership using the forms prescribed in Annex 02A, 02B and 03 hereof.

15. The written record of the founding conference.

16. A draft of basic internal regulations in accordance with the regulations in Clause 2 Article 93 of the Law on credit institutions and regulations on the organization and operation of the Board of directors and control board of the people’s credit fund.

17. Charter of the people’s credit fund passed by the people’s credit fund founding general meeting and signed by the President of the Board of directors.

18. Written record of the people’s credit fund founding general meeting.

19. Resolution of the founding general meeting on ratification of the Charter, election of President and members of the Board of directors, Head and members of the Control board (or full-time controller) appointed for the first tenure in accordance with the planned list approved by the branch of State bank; the resolution on ratification of contents within competence of the founding general meeting must be passed on the principle of majority vote by the participating members.

20. Decision by the Board of directors of the people’s credit fund on appointment of General Director of the people’s credit fund in accordance with the planned list approved by the branch of State bank.

21. Documentary evidence of ownership or right to enjoyment of locations where the people’s credit fund is headquartered.

22. Internal provisions as prescribed in Clause 16 this Article passed by the founding general meeting.

Article 12. Procedures for licensing

1. Approval for establishment principles:

a) The preparatory committee shall prepare an application for licensing as prescribed in Clause 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15 and 16 Article 11 hereof and submit it in person or by post to the branch of State Bank;

b) Within 10 working days since receipt of the application as specified in Point a this Clause, the branch of State bank shall send the preparatory committee an acknowledgment of the application or a written request for supplements;

c) Within 10 working days since receipt of the application as specified in Point a this Clause, the branch of State bank shall:

(i) Consult the communal People’s Committee where the people’s credit fund is expected to be headquartered on the establishment of such people’s credit fund at the commune; list of candidates/nominees for President and members of the Board of directors, Head and members of the Control board and Director of the people’s credit fund;

(ii) Consult the Vietnam cooperative bank on the list of candidates/nominees for President and members of the Board of directors, Head and members of the Control board and Director of the people’s credit fund (if necessary);

(iii) Consult the Supervision Department and the banking inspection (if the people’s credit fund is established in the province or city where the banking inspection and Supervision Department is located) on the establishment of such people’s credit fund at the province; list of candidates/nominees for President and members of the Board of directors, Head and members of the Control board and Director of the people’s credit fund;

d) Within 10 working days since receipt of the written request of the branch of State bank, the Supervision Department, the communal People’s Committee where the people’s credit fund is expected to be headquartered and the Vietnam cooperative bank shall provide their opinions in writing on the requested contents. After this period, those units that do not give their opinions shall be deemed as agreeing to the list;

dd) Within 30 days since the receipt of opinions of the  of the Supervision Department, the communal People’s Committee and the Vietnam cooperative bank or since the end of the time limit for opinion provision, the branch of State bank shall issue a written approval to the preparatory committee on the principle of establishment of the people’s credit fund and the list of candidates/nominees for President and members of the Board of directors, Head and members of the Control board and Director of the people’s credit fund . If the application is rejected, the branch of State Bank shall provide explanation in writing.

2. Within 90 days since the receipt of the written approval on principle of the branch of State bank:

a) The preparatory committee shall organize the founding general meeting as prescribed in Clause 5 Article 3 hereof;

b) The preparatory committee shall prepare an application for licensing as prescribed in Clause 17, 18, 19, 20, 21 and 22 Article 11 hereof and submit it in person or by post to the branch of State Bank.

The written approval for principle shall become invalid if the State Bank receives no or inadequate documents as mentioned above after the time limit.

3. Licensing:

a) Within 05 working days since receipt of the application for license as specified in Point b Clause 2 this Article, the branch of State bank shall send the people’s credit fund an acknowledgment of the application or a written request for supplements;

c) Within 60 days since the receipt of the application as specified in Point b Clause 2 this Article, the branch of State bank shall grant the license and issue a written confirmation on the registration of the Charter of the people’s credit fund. If the application is rejected, the branch of State Bank shall provide explanation in writing.

4. After being granted the license, the people's credit fund shall carry out necessary procedures for the commencement of their operation as specified in Article 15 hereof.

Article 13. Contents of the license

1. The license must at least contain:

a) license number; issue place and date;

b) Name of the people’s credit funds:

(i) Full and abbreviated name written in Vietnamese;

(ii) Transaction name (if any);

c) Location of headquarter;

d) Contents and scope of operation;

dd) Area of operation;

e) Charter capital;

g) License validity period.

2. The branch of State bank shall provide specific provisions on the contents, scope of operation, area of operation and license validity period using the form specified in Annex 07 hereof.

Article 14. Licensing fee

1. The amount of licensing fee paid by the people’s credit fund shall comply with the provisions on fees and charges.

2. Within 15 days after the date of issuance of the license, the people’s credit fund must pay the licensing fee at the branch of State bank.

3. The amount of licensing fee specified in Clause 2 this Article shall not be deducted from its charter capital and refunded in all cases.

Article 15. Commencement of operations of the people’s credit fund

1. The people’s credit fund holding the license must carry out its business registration in accordance with law provisions.

2. The people's credit fund must commence their operation within 12 months from the date of issuance of the license and may only operate from the date of commencement of operation.

3. 10 days before the commencement of operations, the people’s credit fund granted the license must post a notice at the People’s Committee at the Commune, announce on the radio or radio station of the Commune where the head office is located for 03 consecutive days and publish on a newspaper of province for 03 consecutive days on:

a) Name, location of the headquarter;

b) Number and issuance date of the license; number and issuance date of the business registration certificate; contents and scope of operation, lifespan of operation and area of operation;

c) Charter capital;

d) Legal representative;

dd) List and capital contribution portions of each founding members of the people’s credit fund;

e) Planned date of commencement of operations of the people’s credit fund.

4. Conditions for commencement of operations of the people’s credit fund

A people’s credit fund granted the license may only commence its operation if it fully:

a) has a business registration certificate; has sufficient charter capital to be deposited into the non-interest bearing blocked account opened at the branch of State bank at least 30 days before commencement of operation, the charter capital shall be released after the commencement;

b) has a headquarter meeting the asset safety assurance and operation requirements;

c) has publicized information as prescribed in Clause 3 this Article;

d) has the organizational structure, managerial, internal audit and internal control system in accordance with the contents and scope of operation; and

dd) has internal provisions as prescribed in Clause 22 Article 11 hereof.

5. At least 10 working days before the planned date of commencement of operation, the people’s credit fund granted the license must send a written notice on its operation conditions as specified in Clause 4 this Article in person or by post to the branch of State Bank. The branch of State bank shall suspend the commencement of operation of the people’s credit fund when it fails to meet the conditions specified in Clause 4 this Article.

Article 16. Use of license

1. The people’s credit fund granted the license must use the correct name, carry out the operations as specified in the license and avoid performing any lines of business not specified in the license.

2. The people’s credit fund shall not erase, purchase, sell, transfer, lease and lend the license.

3. If the license is lost, stolen, damaged, burnt or destroyed, the people’s credit fund must send a written notification of reasons directly or by post to the branch of State bank that granted the license to request its consideration of issuance of a copy of the license from the original register in accordance with law. Within 05 working days from the receipt of the written request, the branch of State bank shall consider issuing a copy of the license from the original one to the people’s credit fund.

Section 2: BOARD OF DIRECTORS, CONTROL BOARD AND DIRECTOR

Article 17. Organization and operation of the Board of directors

1. The Board of directors of the people’s credit fund is an organ entitled to act on behalf of the people’s credit fund to decide and exercise rights and fulfill obligations of the people’s credit fund, except for issues that fall within the authority of the general members’ meeting.

2. The Board of directors of the people’s credit fund is composed of the President and members of the Board of directors. The president and members of the Board of directors shall be elected or dismissed by the general members’ meeting or the founding general meeting (in case of establishment of the people’s credit fund) by mode of secret ballots. The number of the members of people’s credit fund shall be decided by the general members’ meeting but must be at least 03 members.

3. The term of the Board of directors shall be stipulated by the general members’ meeting and inscribed in the Charter which must be at least 02 years but not exceeding 05 years.

4. The president and other members of the Board of directors shall not authorize persons who are not members of the Board of directors to perform their tasks or exercise their power.

5. The Board of directors shall be operated in accordance with the collective principle and make decisions by majority vote.

Article 18. Tasks and power of the Board of directors and its president

1. The Board of directors of the people’s credit fund shall have the following tasks and powers:

a) Have tasks and powers as prescribed in Article 82 of the Law on credit institutions;

b) Convene an irregular general members’ meeting as prescribed in Article 19 hereof.

2. The President of the Board of directors is a legal representative of the people’s credit fund. The president of the Board of directors shall have the following tasks and powers:

a) Set up plans and schedules for operations of the Board of directors;

b) Assign tasks to the members of the Board of directors and monitor their performance as well as their general rights and obligations;

c) Prepare the contents, agenda, convene and preside over meetings of the Board of directors and the general members’ meeting;

d) Be accountable to the Board of directors and the general members’ meeting for the assigned tasks;

dd) Sign or authorize the signing of documents issued by the Board of directors and general members' meeting in accordance with law and Charter of the people’s credit fund;

a) Perform other tasks and powers as prescribed in the Charter of the people’s credit fund.

Article 19. Meetings of the Board of directors

1. The Board of directors shall meet at least once a month which is convened and presided over by the president of the Board of directors or a member of the Board of directors authorized by the president.

The Board of directors shall hold an irregular meeting at the request of one third of the members of the Board of directors or the president, Head of the control board, full-time controller or the director of the people’s credit fund.

2. The meeting of the Board of directors shall be deemed valid if it is attended by at least two-thirds of the members of the Board of directors. If the meeting of the Board of directors is not attended by sufficient number of participants as prescribed, the president of the Board of directors shall convene a second meeting within 10 working days from the expected date of the first meeting. After two postponements due to insufficient number of participants, the president shall request the Board to convene an irregular general members’ meeting within 30 days from the expected date of the second meeting to review the status of the members who have not attended the meeting and decide on the handling measure.

3. All contents of, and conclusions reached in each session of the general members' meeting must be recorded into the minute book; minutes of meetings of the Board of directors must be fully signed by the meeting chair, participating members and secretary. The meeting chair and secretary shall assume joint responsibility for accuracy and integrity of these minutes. Members of the Board of directors shall be entitled to reserve their opinions and reserved opinions shall be recorded in the meeting minutes.

4. The Board’s decisions are adopted on the principle of majority vote; each member has one vote with equal value. If the numbers of affirmative votes and negative votes are even, the presiding person shall have the casting vote.

Article 20. Conditions and standards of members of the Board of directors

1. Members of the Board of directors must meet the following requirements:

a) Is an individual member or a representative of the contributed capital of juridical persons;

b) Not belong to any cases specified in Article 33, 34 of the Law on credit institutions. Members of the Board of directors must not concurrently hold the positions of the chief accountant and treasurer of the people’s credit fund;

c) Have at least 02 years of experience in the field of economics, accounting, audit, banking and law or have a diploma (or certificate) proving that he/she has been professionally trained in the field of people's credit fund;

d) Comply with the provisions of law; not be penalized for administrative violations against regulations on the field of economics, accounting, audit and banking for 24 months preceding the time of election.

2. The president of the Board of directors must meet the following requirements:

a) Is an individual member of the people’s credit fund except for cases prescribed in Point e this Clause;

b) Meet the requirements prescribed in Point b, d Clause 1 this Article;

c) Have at least 02 years of experience in the field of economics, finance, accounting, audit, banking and law;

d) Be used to hold a position as the manager or executive officer in banking or finance institution in accordance with the Charter or equivalent documents of such institution or the leader at division level or equivalent or higher title in accordance with the regulations of the regulatory agencies, business entity, political organization and socio-political organizations for at least 01 year;

dd) Meet one of the following conditions:

(i) Have at least a bachelor’s degree in economics, finance, accounting, audit, banking or law;

(ii) Have at least a post-secondary diploma in one of the fields of economics, accounting, audit, banking, business administration and law or have a diploma (or certificate) proving that he/she has been professionally trained in the field of people's credit fund;

e) In cases of necessity when the people’s credit fund implements restructuring, any event happens that may cause impacts on safety for operations or the people’s credit fund is placed under special control, the branch of State bank shall reach an agreement with the People’s Committee where the headquarter of the people’s credit fund is located and report to the Governor of the State bank before considering and assigning personnel for the position of President of the Board of directors of the people’s credit fund.

Article 21. Organization and operation of the Control Board

1. The Head and members of the Control Board shall be elected by the general members’ meeting or the founding general meeting (in case of establishment of the people’s credit fund). The Control Board must have at least 03 members including 01 full-time member. If the people's credit fund have operating capital of VND 8 billion or less and less than 1,000 members, the election of the Control Board or the election of one full-time controller shall be decided by the general members’ meeting.

2. The Control Board shall be held accountable to the general members’ meeting for the performance of its duties and powers.

3. The Control Board shall hold at least one meeting a month which is convened and presided over by the Head.

4. The tenure of the Control Board shall be subject to that of the Board of directors.

Article 22. Tasks and power of the Control Board, Head of the Control Board, full-time controller

1. Tasks and powers of the Control Board of the people’s credit fund shall comply with Article 84 of the Law on credit institutions.

2. Head of the Control Board shall have the following tasks and powers:

a) Conduct the tasks and powers of the Control Board in accordance with Article 1 hereof;

b) Convene and preside over the meetings of the Control Board;

c) Sign documents under the authority of the Control Board on behalf of the Control Board;

d) Attend meetings of the Board of directors, give opinions in these meetings but have no right to vote.

dd) Prepare operating plans and assign tasks to members of the Control Board;

e) Authorize another member of the Control Board to control his/her tasks when he/she is absent;

g) Convene and preside over irregular general members’ meetings in accordance with Clause 6 Article 84 of the Law on credit institutions on behalf of the Control Board;

h) Perform other tasks and powers as prescribed in the Charter of the people’s credit fund.

3. If the people’s credit fund only elects one full-time controller, the full-time controller shall have the following tasks and powers:

a) Perform tasks and powers of the Control Board as prescribed in Article 84 of the Law on credit institutions;

b) Attend meetings of the Board of directors, give opinions in these meetings but have no right to vote;

c) Perform other tasks and powers as prescribed in the Charter of the people’s credit fund.

Article 23. Conditions and standards of members of the Control Board and full-time controller

1. Members of the Control Board must meet the following requirements:

a) Is an individual member or a representative of the contributed capital of juridical persons;

b) Not belong to any cases specified in Article 33, 34 of the Law on credit institutions. Members of the Control Board must not concurrently be the chief accountant, treasurer, professional staff of the people’s credit fund and not be the related person of the chief director, chief accountant and treasurer of the people’s credit fund;

c) Have a diploma (or certificate) proving that he/she has been professionally trained in the field of people's credit fund;

d) Meet the requirements prescribed in Point b, d Clause 1 Article 20 hereof.

2. Head of the Control Board and the full-time controller must meet the following requirements:

a) Is an individual member of the people’s credit fund;

b) Meet the requirements and standards prescribed in Point b, c and d Clause 1 this Article;

c) Have at least a post-secondary diploma or higher in economics, accounting, audit, banking or law.

Article 24. Conditions and standards of the Director

1. Is an individual member of the people’s credit fund (if the Board of directors appoints one of its members to act as the Director).

2. Not belong to any cases specified in Article 33, 34 of the Law on credit institutions.

3. Have at least 02 years of experience in the field of economics, finance or banking.

4. Be used to hold a position as the manager or executive officer in banking or finance institution in accordance with the Charter or equivalent documents of such institution or the leader at division level or equivalent or higher position in accordance with the regulations of the regulatory agencies, business entity, political organization and socio-political organizations for at least 01 year.

5. Reside in the area of operation of the people’s credit fund.

6. Have at least a post-secondary diploma in one of the fields of economics, finance, accounting, audit, banking, business administration and law or have a diploma (or certificate) proving that he/she has been professionally trained in the field of people's credit fund. If the Director is hired from the outside, except for the requirements and standards specified in Clause 2, 3, 4, 5 and 7 this Article, he/she must have a bachelor’s degree or more in one of the fields of economics, finance, accounting, audit, banking, business administration, law and not a member of the management system, executive system or Control Board of members being the juridical persons.

7. Meet the requirements prescribed in Point b, d Clause 1 Article 20 hereof.

Article 25. Approval of the list of candidates/nominees for President and members of the Board of directors, Head and members of the Control board, full-time controller and Director

1. Candidates/nominees for President and members of the Board of directors, Head and members of the Control board, full-time controller and Director of the people’s credit fund shall meet the requirements and standards specified in Article 20, 23 and 24 hereof.

2. The list of candidates/nominees for President and members of the Board of directors, Head and members of the Control board, full-time controller and Director of the people’s credit fund shall be approved in written by the branch of State bank before the election or appointment takes place. Those who are elected or appointed to become the President and members of the Board of directors, Head and members of the Control board, full-time controller and Director of the people’s credit fund must be presented in the list approved by the branch of State bank.

3. Procedures and dossiers for approval of the recommended list specified in Clause 2 this Article shall comply with the regulations of the State bank.

4. The people’s credit fund must send a written notification to the branch of State Bank of the list of candidates/nominees for positions specified in Clause 2 this Article within 10 working days after the date of election or appointment.

Section 3: CHARTER CAPITAL, CONTRIBUTED CAPITAL, TRANSFER AND RETURN OF CONTRIBUTED CAPITAL

Article 26. Charter capital

1. The charter capital of the people’s credit fund is the total capital amount contributed by members and is indicated in its Charter, accounted in VND.

2. The adjustment of the charter capital shall comply with the State Bank's regulations on the adjustments which must be approved by the State Bank.

3. Members shall not use trust or borrowed funds in any form for contributing capital to the people’s credit fund and must bear responsibility for legality of the contributed capital.

4. Juridical persons contributing capital to the people’s credit fund must comply with the provisions of law on capital contribution

Article 27. Form of capital contribution to the charter capital

1. The charter capital of the people’s credit fund shall be contributed in VND, other assets are necessary assets in operation of the people’s credit fund.

2. Other kinds of asset used as contributions to the charter capital must be those assets of which the right of ownership and use is proven by legal certificates. Valuation and transfer of the right to own assets provided as capital contribution shall comply with applicable laws and regulations.

Article 28. Capital contribution made by the members

1. The capital contributed by members includes capital contributed to establish membership interest and annual contributed capital.

a) The minimum amount of capital contributed to establish membership interest is VND 300,000;

b) The minimum annual amount of contributed capital is VND 100,000. The members of the people’s credit fund shall be exempted from paying annual contributed capital in the first financial year after joining the people’s credit fund. Annual contributed capital may be paid in lump sum or in installments within the financial year; the annual contributed capital shall begin to take effect from the fiscal year of 2016.

2. The total maximum contributed capital of a member of the people’s credit fund shall not exceed 10% of the charter capital of the people’s credit fund at the date of capital contribution.

3. The capital contribution of members of the people’s credit fund is specified in the Charter of the people’s credit fund. The general members’ meeting of the people’s credit fund shall decide in detail the amount of capital contributed to establish membership interest, the annual capital contribution and the method of payment, the maximum amount of contributed capital of one member in accordance with the provisions in Clause 1 and 2 this Article.

4. From the effective date of this Circular to the nearest general members’ meeting which will decide on the amount of capital contributed to establish membership interest as specified in Point a, Clause 1 of this Article, the amount of capital contributed to establish membership interest is VND 300,000.

5. When contributing capital to establish membership interest, members shall be entitled to receive the written amount of capital contribution printed by the people's credit fund using the form in Appendix 05 hereof and the membership cards made using the form guided in uniform by the Vietnam Cooperative Bank throughout the system of people’s credit funds.

6. People's Credit Funds must open a register to monitor the capital contributed to establish membership interest, annual contributed capital, transfer and receipt of capital contribution transfer of capital contributing members.

Article 29. Profit distribution

Members of the People's Credit Fund shall be distributed profits based on the total capital contributed, level of use of products and services by members of the people's credit funds and decided by the general members’ meeting of the people's credit fund in accordance with the provisions of law.

Article 30: Transfer and return of contributed capital

1. Members may transfer either all or part of their contributed capital to other members or to individual, household and juridical persons who are not members but still meet the requirements specified in Article 31 hereof. The transfer and return of contributed capital of members must ensure that:

a) The remained contributed capital (in cases of transfer of return of contributed capital) shall comply with the regulations on the amount of capital contributed to establish membership interest and amount of annual contributed capital as specified in Clause 1 Article 28 hereof;

b) The transfer of all of a member’s contributed capital shall be implemented only after the member has fulfilled his/her debt-payment obligations and other financial obligations toward the people’s credit fund in accordance with the Charter of the people’s credit fund;

c) The members received the contributed capital transfer must comply with the regulations on the total maximum contributed capital of a member specified in Clause 2 Article 28 this hereof.

2. The return of contributed capital to members must fulfill the following conditions:

a) Members: the member has fulfilled his/her financial obligations toward the people’s credit fund, including:

(i) Debts (both principal and interest) of the member;

(ii) Losses to which the member is responsible for compensation;

(iii) Business losses and risks in proportion with the amount of contributed capital for which it assume joint liability under the decision made by the General Members' Meeting;

b) People’s credit funds:

(i) The return of contributed capital does not reduce the net worth of the charter capital of the people's credit fund lower than the legal capital;

(ii) The capital adequacy ratio of the people’s credit fund is ensured in accordance with the regulations of the State Bank prior to and after the return of contributed capital;

The amount of contributed capital returned to a member shall be determined in accordance with the member's capital contribution ratio against the charter capital of the people's credit fund at the time of approval of termination of membership.

3. The return and transfer of all of a member’s contributed capital shall be subject to ratification by the General Members’ Meeting or the Board of directors in accordance with the Charter of the people’s credit fund.

Section 4: MEMBERS

Article 31. Conditions for becoming a member

1. For individual:

a) Vietnamese citizens aged 18 or older who are capable of civil acts and have permanent residence registered in the area of operation of the people's credit fund;

b) Officials working at organizations and agencies which are headquartered in the geographic scope of the people’s credit fund. Members of the people's credit fund who are officials are not allowed to hold the positions of President and members of the board of directors; Head and members of the Control Board; Director, Deputy Director; Chief accountant and other professional titles, except for cases prescribed at Point f, Clause 2, Article 20 hereof;

c) He/she is not the subject specified below:

(i) Those that are liable to criminal prosecution, serving criminal sentences or decisions of the court; those who are convicted of at least a felony whose criminal records have not been written off;

(ii) Officials working in branches and lines of business related to state secrets in accordance with law provisions;

(iii) Officers, non-commissioned officers, professional army men in the people’s armed force units;

d) Other conditions as prescribed in the Charter of the people’s credit fund.

2. For household:

a) Household with permanent residence in the area of operation of the people’s credit fund; household members shall have the same property to serve production and business services of such household;

b) The representative of the household must be authorized in written by the members of the household in accordance with the provisions of law and must comply with the regulations specified in Clause 1 this Article.

3. For juridical person:

a) Juridical person (except for Social Fund and Charity Fund) which is operating normally and is headquartered in the area of operation of the people's credit fund;

b) The person signing the application for capital contribution to the people's credit fund must be the legal representative of the juridical person. The legal representative of a juridical person may authorize another individual to act as a representative at the people's credit fund in accordance with relevant laws.

4. Individuals, households and juridical persons must submit voluntary applications to become members of the people's credit fund using the form specified in Annex No. 02A, Annex No. 02B and Annex No. 03 enclosed hereof, agree with the Charter and contribute enough capital in accordance with Article 28 hereof.

5. Each entity specified in Clause 1, 2 and 3 this Article may be a member of 01 people’s credit fund.

Article 32. Termination of membership

1. A membership of a member of the people’s credit fund shall be terminated in one of the following cases:

a) Automatic loss of status: the member is an individual who has died, gone missing, lost his/her civil act capacity or been restricted civil act capacity; the member is a household that does not have a qualified representative as specified in Clause 2, Article 31 hereof; the member is a juridical person which is dissolved, bankrupted or has no eligible person to appoint as a representative as specified in Clause 3, Article 31 hereof; the member has transferred all of his/her contributed capital to other person in accordance with law provisions and the Charter of the people’s credit fund.

b) Voluntary loss of status: The member voluntarily has its/his/her people’s credit fund membership terminated which is approved by the Board of directors and is ratified by the general members' meeting in accordance with the provisions of law and the Charter of the people’s credit fund.

c) Expulsion of members: Members are expelled from the People's Credit Fund by the general members' meeting due to:

(i) Insufficient contributed capital as prescribed in Clause 1 Article 28 hereof;

(ii) Forging of the member dossiers;

(iii) Other cases as prescribed in the Charter of the people’s credit fund.

2. The handling of contributed capital of the members terminated the membership in accordance with Clause 1 this Article shall be implemented as follows:

a) If the membership is terminated as prescribed in Point a Clause 1 this Article:

(i) The member is an individual who has died, gone missing, lost his/her civil act capacity or been restricted civil act capacity; the member is a household that does not have a qualified representative as specified in Clause 2, Article 31 hereof: Comply with the laws on inheritance, loss of civil act capacity, restriction of civil act capacity and other related laws;

(ii) The member is a juridical person which is dissolved, bankrupted: Comply with the laws on dissolution and bankrupt;

b) If the membership is terminated as prescribed in Point b Clause 1 this Article: The member may transfer his/her contributed capital as prescribed in Clause 1 Article 30 hereof or be returned his/her contributed capital as prescribed in Clause 2 Article 30 hereof;

c) If the membership is terminated as prescribed in Point c Clause 1 this Article: The member shall not transfer his/her contributed capital. The return of his/her contributed capital shall comply with the regulations prescribed in Clause 2 Article 30 hereof.

3. Members who terminate their membership shall be entitled to other benefits from the reward fund and welfare fund (if any) in accordance with decisions of the general members’ meeting of the people's credit fund after fulfilling their financial obligations as stipulated in the Charter of the people's credit fund.

Section 5: GENERAL MEMBERS' MEETING

Article 33. Notice to convene the general members’ meeting

The general members’ meeting shall be convened by written notices which must be sent to each member or representative of the member within 07 business days before opening of the general meeting if the Charter of the people’s credit fund does not provide for specific time limit. The notice must specify the meeting time, venue, contents and agenda with related documents enclosed.

Article 34. General members' meeting

1. Comply with the regulations specified in Article 80 of the Law on credit institutions.

2. The general members’ meeting must be held once a year within a period of 90 days from the last date of a given financial year and convened by the Board of directors.

3. An irregular general members’ meeting shall be held in the following cases:

a) The Board of director convenes such meeting if it is necessary for the benefits of the people’s credit fund;

b) The President of the Board of director convenes such meeting in accordance with Clause 2 Article 19 hereof;

c) The Head of the Control Board and full-time controller convene such meeting in accordance with Clause 6 Article 84 of the Law on credit institutions;

d) Upon the request for general members’ meeting of at least one third of the members.

If the irregular general members’ meeting is held upon the request of at least one third of the members of the people’s credit fund, the Board of directors must convene the irregular general members’ meeting within 10 business days after the receipt of the written request. Upon the expiry of the abovementioned time limit, members requesting that meeting shall request the branch of State bank in writing to request the people’s credit fund to convene such irregular general members’ meeting;

dd) The meeting is held upon the request of the State Bank in case there is any event that may cause impacts on safety for operations of the people’s credit fund;

e) Other cases as prescribed in the Charter of the people’s credit fund.

Article 35. Conditions on the number of members and casting votes at the general members’ meeting

1. The general members’ meeting of the people’s credit fund can be held in the form of a plenary meeting or a meeting of representatives of members (hereinafter referred to as general members’ meeting). The plenary meeting or the meeting of representatives of members shall have the same tasks and powers.

2. The people’s credit fund with more than 100 members may convene the meeting of representatives of members.

3. Criteria of representatives and the order and procedures for the election of representatives to participate in the general meeting of representatives of members shall be specified by the Charter of the people’s credit fund. The election of representatives to participate in the general meeting of representatives of members must be based on the principles of democracy and equality among the members. The elected representatives of members shall not delegate other person to participate in the general meeting.

4. The number of representatives participating in a meeting of representatives of members shall be specified by the Charter of the people’s credit fund but is attended by:

a) At least 30% of the total members if the people’s credit fund have between 100 and 300 members;

b) At least 20% of the total members if the people’s credit fund have between 300 and 1,000 members;

c) At least 200 representatives if the people’s credit fund have more than 1,000 members.

5. The General Members’ Meeting shall be deemed valid if at least three fourths of the members or representatives of members are present:

6. If the number of members or representatives of members present is not sufficient in accordance with Clause 5 of this Article, the Board of directors or Control Board (in case of holding the irregular general members' meeting upon the assembly of the Control Board) must postpone the general members' meeting and re-invite them within a period of 30 days from the date of postponement (with respect to the annual general members’ meeting, the time limit for postponement and re-invitation shall not exceed the time limit for holding of the general members’ meeting as stipulated in Clause 2 Article 34 hereof).

7. Decision to amend or supplement the Charter, full divide, partial divide, consolidate, merge, dissolute and file for bankruptcy of the people’s credit fund shall be approved at the general members’ meeting only if more than three fourths of the members or representatives of members present at the general members’ meeting vote in favor of that decision.

8. Decisions to handle other issues shall be approved at the general members’ meeting only if more than a half of the members present at the general members' meeting vote in favor of these decisions.

9. Each member or representative participating in the general members’ meeting shall be given one vote. All votes are of equal validity, regardless of the amount of contributed capital or positions of members or representatives of members.

Section 6: OPERATIONS OF THE PEOPLE’S CREDIT FUND

Article 36. Mobilization of capital

1. Receive demand deposits, term deposits and saving deposits of members and other organizations and individuals in VND.

2. The total amount of deposits received from members of the people's credit fund is at least equal to 50% of the total deposit receipt of the people's credit fund.

3. Borrow capital for trade-off purposes in accordance with regulations promulgated by the Vietnam Cooperative Bank in accordance with the provisions of law.

4. Borrow capital from other credit institutions (except for other people's credit funds), other financial institutions.

5. Borrow capital from the Vietnam Cooperative Bank.

6. Receive capital entrusted by the Government, domestic organizations and individuals.

Article 37. Lending

1. The lending of the people’s credit fund mainly aims to attain mutual assistance among members to effectively carry out production, business and service activities and raise living standards of members of the people’s credit fund.

2. The people’s credit fund shall provide finances in VND in accordance with the law on lending by credit institutions to their customers and take responsibilities for its decisions. The people’s credit fund shall not provide secured loans by the member's contributed capital.

3. The total lending amount of a people's credit fund to a member who is a juridical person must not exceed the total contributed capital and deposit balance of that juridical person at the people's credit fund at the time of lending decision and must not exceed the remaining term of the deposit

4. The people’s credit fund provides loans to organizations and individuals other than its members that have deposits at the people's credit fund based on the guarantee by the deposits provided by the people's credit fund. The total amount of the loan must not exceed the balance of the deposit at the time of lending decision and the loan term must not exceed the remaining term of the deposit amount.

5. The people’s credit fund provides loans to poor households other than its members that have permanent residence registered in the area of operation of the people's credit fund. The poor household must belong to the list of poor households approved by the People’s Committee at the district. The procedures and applications for lending to poor households shall comply with the effective credit regime applicable to members.

6. The people's credit fund must report the loans provided to the President and other members of the Board of Directors, Head and other members of the Control Board and Directors of the people's credit fund to the general members’ meeting occurred before the general members' meeting; report to the branch of State Bank when providing loans to these entities.

7. Provide syndicated loans to members of people's credit funds with the Vietnam Cooperative Bank in accordance with the provisions of law.

Article 38. Management of lending

The people's credit fund must issue an internal regulation on lending and management of loans to ensure the proper use of the loan, which must include at least the following contents:

1. Specific provisions on provision of loans to members who are individuals, households, juridical persons and non-member poor households including:

a) The process of appraisal and assessment of the needs and purposes of capital borrowing of members (for serving production, business, service and life improvement); the feasibility of the production, service and business activities and ability to repay loans from production, service and business efficiency; the needs of life improvement; responsibilities and powers of each section and individual relevant in the process of loan appraisal, approval and restructure of repayment term;

b) Loan approval process and approval, decision on debt repayment term restructuring (including debt rescheduling and debt term adjustment);

c) Loan approval process applied to poor households that are not members;

d) Loans disbursement process in accordance with the progress of production, business and service project;

dd) The process of control, management, supervision to ensure the proper use of loans, at the same time serve as a basis for debt classification and risk provision.

e) Regulations on security assets as prescribed by law (if any), methods of determining the value of security assets and the handling of security assets in order to recover loans in accordance with the provisions of law;

g) Interest rates, loan rates.

2. Specific provisions on the guarantee for loans in accordance with this Circular and relevant law provisions.

3. Specific provisions on debt rescheduling, repayment term adjustment and credit quality management for the debts rescheduled or adjusted repayment term.

4. Specific provisions on syndication loans in accordance with Clause 7, Article 37 hereof.

Article 39. Other activities

1. Open deposit accounts at the State Bank.

2. Open payment accounts at commercial banks or branches of foreign bank.

3. Deposit money at the Vietnam Cooperative Bank to regulate capital; open a payment account to use payment services at the Vietnam Cooperative Bank.

4. Provide money transfer services, implement collection and payment operations on behalf of members.

5. Provide banking and financial consultancy services to their members.

6. Accept entrustment and act as agents in some sectors relating to banking operations and asset management under the State Bank's regulations.

7. Act as an insurance agency.

8. Contribute capital to establish the Vietnam Cooperative Bank.

Section 7: RIGHTS AND RESPONSIBILITIES OF THE PEOPLE’S CREDIT FUND

Article 40. Rights of the people’s credit fund

1. Receive guidance and training in banking and information technology practices by the Vietnam Cooperative Bank.

2. Receive assistance in banking activities by the Vietnam Cooperative Bank in accordance with the provisions of law.

3. Receive assistance in carrying out internal audits by the Vietnam Cooperative Bank in accordance with the provisions of law.

4. Receive funding from the State, organizations and individuals domestically and abroad.

5. Request lenders to provide documents on production, business and service activities related to the loans.

6. Decide on income distribution and handle losses in accordance with law provisions and the Charter of the people’s credit fund.

7. Reject requests of organizations or individuals which are contrary to the provisions of law.

8. Lodge complaints and file lawsuits against organizations or individuals that violate legitimate rights and interests of the people's credit fund.

9. Perform other rights in accordance with the provisions of law.

Article 41. Responsibilities of the people’s credit fund

1. Conduct business activities in accordance with granted licenses. Comply with the laws on money, credit and banking services.

2. Comply with the laws on accounting, statistics and auditing.

3. Bear financial obligations within the scope of charter capital and other sources of capital of the people's credit fund in accordance with the provisions of law.

4. Pay taxes and perform other financial obligations in accordance with the provisions of law.

5. Contribute capital to establish membership interest and annual capital at the Vietnam Cooperative Bank.

6. Deposit idle capital into the deposit account used for trade-off purposes at the Vietnam Cooperative Bank in accordance with the provisions of law.

7. Participate in the Fund for assuring the safety of the people's credit fund system in accordance with the regulations of the State bank.

8. Provide reports to the Vietnam Cooperative Bank for the purpose of capital trade-off, monitoring the system security and managing the Fund for assuring the safety of the people's credit fund system in accordance with the provisions of the Regulation on capital trade-off, Regulation on the management and use of funds for ensuring system security of the people's credit fund promulgated by the Vietnam Cooperative Bank in accordance with the provisions of law.

9. Adopt preferential policies, physical and spiritual welfare for members in order to create cohesion and enhance the link among members.

10. Participate in deposit insurance in accordance with the provisions of law and publicize at the headquarter on the deposit insurance participation.

11. Perform other financial obligations in accordance with the provisions of law.

Chapter III

FINANCE, ACCOUNTING, REPORTING AND HANDLING VIOLATIONS

Article 42. Financial and accounting standards

The people’s credit fund shall apply the financial and accounting standards in accordance with the provisions of law.

Article 43. Reporting

1. The people's credit fund shall apply the accounting and statistics reporting standards in accordance with the provisions of law and periodical operation reporting in accordance with regulations of the State Bank.

2. In addition to the reports prescribed in Clause 1 of this Article, the people's credit fund shall promptly report in writing to the branch of State Bank as specified in Clause 2, Article 141 of the Law on credit institutions.

Article 44. Violations handling

Organizations and individuals related to the establishment, organization and operation of people's credit funds that commit acts in violation of this Circular, depending on nature and severity of the violation, shall be sanctioned in accordance with the provisions of law.

Chapter IV

TRANSITIONAL PROVISIONS

Article 45. General provisions

1. With regard to any lending contract which has been signed before the effective date of this Circular and considered accordant with law at the signing time, the people’s credit fund and client are entitled to keep adhering to the contract for the rest of its term or amend the contract in accordance with the provisions hereof.

2. From the effective date of this Circular, the election, appointment or replacement of members of the Board of Directors, members of the Control Board and the director of the people's credit fund must comply with Article 17, 20, 21, 23, 24 and 25 hereof.

3. The transition applied to people’s credit funds that not ensure the regulations on area of operation; maximum capital contribution of a member; members registered permanent residence outside the area of operation; the total amount of deposits received from members shall comply with Article 47, 48, 49 and 50 hereof.

Article 46. Obligations of the people’s credit fund

1. By the time when this Circular comes into force, people’s credit funds that have yet to comply with the regulations on area of operation; capital contribution proportion of a member; members registered permanent residence outside the area of operation; the total amount of deposits received from members shall develop handling methods and take initiative in applying handling methods to ensure the compliance with laws.

2. Within a maximum of 60 days after the date on which this Circular comes into force, the people’s credit fund must send a handling plan in accordance with Clause 2 and 4 Article 47, Article 48, 49 and 50 hereof directly or by post to the branch of State bank at the province without the Bank Supervision and Inspection Department or to the Bank Supervision and Inspection Department at the province where the people’s credit fund headquartered. Within a maximum of 60 days after the maximum handling time limit prescribed in Clause 2 of Article 47, the people’s credit fund must send a handling plan in accordance with Clause 3 Article 47 hereof directly or by post to the branch of State bank at the province without the Bank Supervision and Inspection Department or to the Bank Supervision and Inspection Department at the province where the people’s credit fund headquartered.

Within a maximum of 20 days after the receipt of the handling plan of the people's credit fund, the branch of State bank at the province without the Bank Supervision and Inspection Department or the Bank Supervision and Inspection Department at the province where the people’s credit fund headquartered must send a written request to the people’s credit fund for revisions of the handling plan if it does not meet the requirements.

In cases the branch of State bank or the Bank Supervision and Inspection Department requests such plan to be revised, within a maximum of 30 days after the date the State Bank branch or the Banking Inspection and Supervision Department issues a written request for amendment, the people’s credit fund must complete and send a revised plan directly or by post to the branch of State Bank or the Banking Inspection and Supervision Department.

Within a maximum of 20 days after the receipt of the handling plan (including the revised plan), the branch of State Bank or the Banking Inspection and Supervision Department issues a written approval on the handling plan of the people’s credit fund.

3. The people’s credit fund shall be responsible for providing additional controlling measures as mentioned in Clause 2 of this Article and any supplement to the execution progress of plans for organization and operation restructuring for people’s credit funds in order to ensure the consistent practice of the branch of State Bank or the Banking Inspection and Supervision Department.

4. The people’s credit fund shall quarterly send a written report on the implementation progress of the handling plan approved by the branch of State Bank or the Banking Inspection and Supervision Department directly or by post to the branch of State Bank or the Banking Inspection and Supervision Department no later than the 15^th of the next month.

Article 47. Transitional provisions applied to the area of operation

1. By the time when this Circular comes into force, people's credit funds operating in communes adjacent to communes where their headquarters are located within a province that are approved by the branch of State Bank shall continue to operate in the area. Within 30 days after the date on which this Circular comes into force, the people’s credit fund must send a written report on meeting the conditions for inter-communal operation to the branch of State bank at the province without the Bank Supervision and Inspection Department or the Bank Supervision and Inspection Department at the province where the people’s credit fund headquartered in accordance with Clause 3 Article 8 hereof.

2. By the time when this Circular comes into force, if the people's credit fund operating in communes adjacent to the commune where its headquarter is located cannot meet the conditions for inter-communal operation as prescribed in Clause 3 Article 8 hereof, it then must formulate a handling plan in which the following contents must be provided:

a) Situation of the inter-communal operation area;

b) The level of satisfaction for each inter-communal operation condition stipulated in Clause 3 Article 8 hereof;

c) Handling measures, plans and commitments to ensure that, after a maximum of 24 months from the effective date of this Circular, the conditions for inter-communal operation shall be fulfilled as specified in Clause 3, Article 8 hereof.

3. After the maximum handling time limit prescribed in Clause 2 this Article has passed, if the people's credit fund still cannot meet the conditions for inter-communal operation, it then must formulate a handling plan in which the following contents must be provided:

a) Situation of the inter-communal operation area;

b) The level of satisfaction for each inter-communal operation condition stipulated in Clause 3 Article 8 hereof;

c) Handling measures, plans and commitments to ensure that, after a maximum of 12 months from the expiry date of the handling plan specified in Clause 2 this Article, the people’s credit fund shall terminate the operation in adjoining communes and adjust the area of operation to the commune where the headquarter is located.

4. By the time when this Circular comes into force, the people's credit fund operating in communes not adjacent to the commune where its headquarter is located must formulate a handling plan in which the following contents must be provided:

a) Situation of the inter-communal operation area of the people’s credit fund;

b) The level of satisfaction for each inter-communal operation condition stipulated in Clause 3 Article 8 hereof;

c) Handling plans and measures, including reorganization by full division or partial division in accordance with the law and commitments to ensure that after 36 months from the effective date of this Circular, the people’s credit fund will not operate in non-adjacent communes.

Article 48. Transitional provisions applied to members registered permanent residence outside the area of operation

By the time when this Circular comes into force, the people's credit fund that has members registered permanent residence outside its area of operation as prescribed in Point a Clause 1 Article 31 hereof must formulate a handling plan in which at least the following contents must be provided:

1. The number of members that are not registered residence in the area of operation of the people's credit fund.

2. The total amount of contribute capital and the amount of contributed capital of each member that is not registered residence in the area of operation of the people's credit fund.

3. Handling plans and measures (including transfer and termination of membership) and commitments to ensure that after a maximum of 12 months from the effective date of this Circular, there are no members registered permanent residence outside the area of operation of the people's credit fund.

Article 49. Transitional provisions applied to the maximum amount of contributed capital

By the time when this Circular comes into force, the people's credit fund that has members contributed more capital than the amount prescribed in Clause 2 Article 28 hereof must formulate a handling plan in which at least the following contents must be provided:

1. The list of members whose total contributed capital exceeds the prescribed limit, the amount of capital contributed and the percentage of capital contributed by each member.

2. Handling measures, plans and commitments to ensure that, after a maximum of 12 months from the effective date of this Circular, the regulations will be complied.

Article 50. Transitional provisions applied to receipt of deposits from members

By the time when this Circular comes into force, the people's credit fund that has the amount of deposits received from members lower than those stipulated in Clause 2, Article 36 hereof must formulate a handling plan in which at least the following contents must be provided:

1. Total balance of deposits of the people's credit fund at the time of reporting, in which clearly state the total balance of deposits from members of the people's credit fund; ratio of the deposit balance from members of the people's credit fund to the total deposit balance of the people's credit fund.

2. Handling schedules, plans and commitments to ensure that, after a maximum of 12 months from the effective date of this Circular, the regulations will be complied.

Article 51. Post-transitional treatment

The branch of State bank and the Bank Supervision and Inspection Department shall, by taking into consideration the forms and nature of violations, apply necessary treatment measures, including legitimate restructuring or revocation of their licenses to the following cases:

1. People's credit funds fail to send handling plans after the maximum time limit prescribed in Clause 2, Article 46; fail to send reports on the fulfillment of each condition for inter-communal operation specified in Clause 1, Article 47 hereof; or fail to re-send the revised handling plan at the request of the branch of State Bank or the Banking Inspection and Supervision Department after the maximum time limit prescribed in Clause 2, Article 46 hereof.

2. After a maximum transitional period as prescribed in Clause 3, 4 Article 47, 48, 49 and 50 hereof or after maximum duration as requested by the branch of State bank or the Banking Inspection and Supervision Department, the people’s credit fund is not able to take handling measures.

Chapter V

IMPLEMENTATION CLAUSE

Article 52. Responsibilities of related units

1. Banking Inspection and supervision agencies:

a) Act as a central role in receiving reports of the branch of State bank as specified in Point b and d Clause 2 this Article and the provisions of law;

b) Inspect, supervise and handle violations of people's credit funds at the provinces or cities where the Banking Inspection and Supervision Department is located in the implementation of this Circular and other relevant laws

c) Direct, guide, supervise and inspect the people's credit funds headquartered where the Banking Inspection and Supervision Department is located in the implementation of the transitional provisions and post-transitional treatment specified in Article 46, 47 and 51 hereof;

d) Take charge and cooperate with departments and sections under the State Bank in requesting the State Bank Governor to consider matters related to the establishment, organization and operation of people's credit funds.

2. Branches of State bank at the provinces

a) Manage, inspect, supervise and handle violations of people's credit funds at the provinces or cities without the Banking Inspection and Supervision Department in the implementation of this Circular and other relevant laws

b) Evaluate, grant license and approve the list of candidates/nominees for President and members of the Board of directors, Head and members of the Control board and Director of the people’s credit fund; confirm the registration of the Charter of the people’s credit fund in accordance with the provisions of this Circular; report to the Governor of the State bank (through the Banking Inspection and Supervision Department) the result of the issuance of license for the people’s credit fund within a maximum of 15 days after the issuance date of the license;

c) Collect suggestions of:

(i) The provincial People’s Committee on the establishment of the people’s credit fund at the province; list of candidates/nominees for President and members of the Board of directors, Head and members of the Control board and Director of the people’s credit fund;

(ii) The Vietnam cooperative bank on the list of candidates/nominees for President and members of the Board of directors, Head and members of the Control board and Director of the people’s credit fund (if necessary);

(iii) The Banking Inspection and Supervision Department as prescribed in Point c (iii) Clause 1 Article 12 hereof.

d) Direct, guide, supervise and inspect the people's credit funds in the implementation of the transitional provisions and post-transitional treatment specified in Article 46, 47 and 51 hereof. Quarterly send a written report on the implementation progress of transitional provisions of the people’s credit fund to the State bank (Banking Inspection and Supervision Department) no later than the 15th of the first month of the quarter.

2. Vietnam Cooperative Bank:

a) Provide consistent guidelines in the people's credit fund system on the design and printing of membership cards as specified in Clause 5, Article 28 hereof;

b) Send a written reply on the list of candidates/nominees for President and members of the Board of directors, Head and members of the Control board and Director of the people’s credit fund upon the request of the branch of State bank or the people’s credit fund.

Article 53. Effect

1. This Circular takes effect from June 01, 2015.

2. Provisions on the license granting, organization and operation of the people’s credit fund below shall become invalid:

a) The State Bank’s Circular No. 08/2005/TT-NHNN dated December 30, 2005 guiding a number of articles of Decree No. 48/2001/ND-CP dated August 13, 2001 on organization and operation of people's credit funds, the Government’s Decree No. 69/2005/ND-CP dated May 26, 2005 on amendments and supplements of a number of articles of Decree No. 48/2001/ND-CP dated August 13, 2001 on organization and operation of people’s credit funds;

b) The State Bank’s Circular No. 06/2007/TT-NHNN dated November 06, 2007 on amendments and supplements of a number of articles of Circular No. 08/2005/TT-NHNN dated December 30, 2005 guiding a number of articles of Decree No. 48/2001/ND-CP dated August 13, 2001 on organization and operation of people's credit funds, the Government’s Decree No. 69/2005/ND-CP dated May 26, 2005 on amendments and supplements of a number of articles of Decree No. 48/2001/ND-CP dated August 13, 2001 on organization and operation of people’s credit funds;

c) Articles 4, 5, 6, 7, 8, 9, 10 and 11 in the Decision No. 24/2006/QD-NHNN dated June 06, 2006 of the State Bank issuing the regulation on grant and revocation of establishment license and operation of people's credit funds; opening and termination of the operation of transaction departments, branches, representative offices and transaction bureaus, transaction offices of people's credit funds; full division, partial division, consolidation and merger of people's credit funds; liquidation of people's credit funds under the supervision of the State Bank.

d) Clause 4, Article 1 of the State Bank Governor's Decision No. 26/2008/QD-NHNN dated September 9, 2008 amending and supplementing a number of articles in the regulation on grant and revocation of establishment license and operation of people's credit funds; opening and termination of the operation of transaction departments, branches, representative offices and transaction bureaus, transaction offices of people's credit funds; full division, partial division, consolidation and merger of people's credit funds; liquidation of people's credit funds under the supervision of the State Bank issued together with the Governor of the State bank's Decision No. 24/2006/QD-NHNN dated June 06, 2006.

dd) Decision No. 31/2006/QD-NHNN dated July 18, 2006 of the State Bank promulgating the regulation on criteria of members of the Board of Directors, members of the Control Board and the regulatory bodies of people's credit funds.

e) Decision No. 45/2006/QD-NHNN dated September 11, 2006 of the State Bank on the organization and operation of the Board of Directors, the Control Board and the executive system of people's credit funds.

Article 54. Implemental organization

Chief of Office, Chief of the Bank Inspection and Supervision Department, Heads of affiliates of the State Bank, Directors of State Bank branches, President of the Board of directors, General Director of the cooperative bank, President of the Board of directors and Director of the people’s credit fund shall be responsible for implementing this Circular./.