Văn bản hợp nhất 50/VBHN-BTC

CIRCULAR[1]

PROVIDING GUIDELINES FOR FINANCIAL POLICIES FOR CREDIT INSTITUTIONS AND FOREIGN BANK BRANCHES

The Circular No. 16/2018/TT-BTC dated February 07, 2018 of the Ministry of Finance providing guidelines for financial policies for credit institutions and foreign bank branches, which comes into force from March 26, 2018, is amended by:

The Circular No. 84/2020/TT-BTC dated October 01, 2020 of the Ministry of Finance providing amendments to regulations on periodic reporting under the authority of the Minister of Finance in the fields of finance and banking, coming into force from November 15, 2020.

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

Pursuant to the Law on Credit Institutions dated June 16, 2010 and the Law on amendments to the Law on Credit Institutions dated November 20, 2017;

Pursuant to the Law on management and use of state capital invested in manufacturing and business operations of enterprises dated November 26, 2014;

Pursuant to the Law on Electronic Transactions dated November 29, 2005;

Pursuant to the Law on Information Technology dated June 29, 2006;

Pursuant to the Government’s Decree No. 93/2017/ND-CP dated August 07, 2017 on the financial regime applicable to credit institutions, branches of foreign banks and financial supervision, assessment of effectiveness of state capital investment in wholly state-owned credit institutions and partially state-owned credit institutions;

Pursuant to the Government’s Decree No. 64/2007/ND-CP dated April 10, 2007 on application of information technology to operation of regulatory bodies;

Pursuant to the Government’s Decree No. 87/2017/ND-CP dated July 26, 2017 defining functions, tasks, powers and organizational structure of the Ministry of Finance;

At the request of the Director of the Department of Banking and Financial Institutions;

The Minister of Finance promulgates a Circular providing guidelines for financial policies for credit institutions and foreign bank branches.[2]

Chapter I

GENERAL PROVISIONS

Article 1. Scope

This Circular provides guidelines for financial policies for credit institutions and foreign bank branches as prescribed in the Government’s Decree No. 93/2017/ND-CP dated August 07, 2017 on financial policies for credit institutions and foreign bank branches, and financial supervision, assessment of effectiveness of state capital investment in wholly state-owned credit institutions and partially state-owned credit institutions (hereinafter referred to as "Decree No. 93/2017/ND-CP”).

Article 2. Regulated entities

1. This Circular applies to:

a) Credit institutions and foreign bank branches (FBB) that are duly established, organized and operating under the Law on Credit Institutions dated June 16, 2010 and the Law on amendments to the Law on Credit Institutions No. 17/2017/QH14 dated November 20, 2017 and its amending and/or superseding documents (if any) (hereinafter referred to as "the Law on Credit Institutions”).

b) Relevant authorities and entities.

2. This Circular does not apply to credit institutions that are microfinance institutions, policy banks, cooperative banks or people's credit funds.

Chapter II

SPECIFIC PROVISIONS

Article 3. Management and use of capital and assets

1. Every credit institution or foreign bank branch shall assume responsibility to manage and use its capital and assets in accordance with regulations in Chapter II of the Decree No. 93/2017/ND-CP , relevant laws and specific guidelines herein.

2. With regard to property with lien for debt settlement in accordance with regulations in Clause 3 Article 132 of the Law on credit institutions:

a) With regard to real estate temporarily held by a credit institution for sale or transfer for debt recovery within a period of 03 years, the credit institution shall not record such assets as an increase in assets and depreciate assets as prescribed.

b) With regard to real estate purchased by a credit institution to serve its business, the credit institution shall record such real estate acquired as an increase in assets and depreciate assets as regulated by law, and maintain the limits on investment in and purchase of fixed assets prescribed in Clause 3 and Clause 4 Article 6 of the Decree No. 93/2017/ND-CP .

3. During its operation, every credit institution or FBB must comply with the prescribed limits on investment in and purchase of fixed assets in direct service to its business in the following principle: the residual value of fixed assets shall not exceed 50% of the sum of its charter capital and additional reserve fund of charter capital as recorded on the accounting book of the credit institution, or 50% of allocated capital and the additional reserve fund of capital as record on the accounting book of the FBB.

Article 4. Revenues

Revenues of a credit institution or FBB shall include the revenues specified in Article 16 of the Decree No. 93/2017/ND-CP. Certain revenues of the credit institution or FBB are specified according to the following guidelines:

1. Revenues earned from other services: Revenue earned from assets preservation service, safe deposit box rental, monetary brokerage; and revenue earned from other services.

2. Revenues earned from other services as per the law, including revenue earned from asset rental minus proceeds from lease of property with lien for debt settlement as prescribed in Clause 3 Article 132 of the Law on credit institutions for the purpose of debt recovery.

3. Other revenues, including:

a) Revenue earned from liabilities whose creditors cease to exist or are not identifiable as per the law which is accounted for as an increase in income;

b) Revenue from breach of contract fines and compensations paid by clients, which is recorded as income;

c) Revenue earned from insurance proceeds, which is recorded as income after deducting insurance premiums;

d) Other revenues as prescribed by law.

Article 5. Revenue recognition principle

The revenue recognition principle associated with revenues of credit institutions and FBBs is provided for in Article 16 of the Decree No. 93/2017/ND-CP. To be specific:

1. The revenue determined for the purpose of calculation of corporate income tax shall be done in accordance with the Law on corporate income tax and its guiding documents.

2. With regard to interest income and similar income:

a) Interest income from credit extension:  Every credit institution or FBB shall evaluate the debt recoverability and classify debts as prescribed in the Law on banking as the basis for accounting for interests receivable as follows:

- The credit institution or FBB shall record the interests receivable in the period as income associated with the debts classified as standard debts for which loss reserves are not required as prescribed by SBV.

- The interest receivable of debts remaining classified in the standard debt category as a result of implementation of the State policies and the interest receivable in the period of remaining debts shall not be recorded as income. In such cases, the credit institution or FBB shall monitor them in off-balance sheet so as to expedite the debt collection. They shall be recorded as income, when collected.

b) Deposit interest revenue is the amount of interest receivable during the period.

3. The credit institution or FBB shall recognize revenue from exchange rate differences as a result of revaluation of foreign currency and gold according with accounting standards and relevant laws.

4. Revenue from trading of securities (other than shares):

a) Regarding marketable securities: The credit institution or FBB shall record revenue from marketable securities as its income in accordance with regulations on corporate accounting.

b) Regarding investment securities, other than securities requiring debt classification and loss reserves as loans:  The credit institution or FBB shall record estimated interest revenue.

5.  Interest revenue from contributed capital:  Dividends/profits distributed from capital contribution are the interest to be divided according to the distribution resolution or decision.

6. Revenue from other activities: Revenue from other activities is total proceeds from provision of goods and services in the period, for which clients accept to make payments regardless of whether they are realized or not.

7. With regard to accounts receivable which have been recorded as income but are considered unrecoverable or not collected on due dates, the credit institution or FBB shall record them as a decrease in revenue in the same period or as expenses in another period, and monitor them in off-balance sheet to expedite the collection. They shall be recorded as income, when collected.

Article 6. Expenses

Expenses of a credit institution or FBB shall include those specified in Article 17 of the Decree No. 93/2017/ND-CP. Certain expenses of the credit institution or FBB are specified according to the following guidelines:

1. Brokerage commissions:

a) The credit institution or FBB shall pay commissions on brokerage services as prescribed by law.

b) Brokerage commissions are paid to third parties (that are brokers) and not paid to agents of the credit institution or FBB, its managerial officers, employees and related parties as prescribed in the Law on credit institutions and its amending and superseding documents (if any).

c) Brokerage commissions shall be paid under written agreements or certifications made by and between the credit institution or FBB and relevant brokers. Such written agreement or certification shall include the broker’s name, payment contents, amounts and methods, period for performance and completion of brokerage service, and responsibilities of the parties.

d) With regard to commissions paid to brokers for leasing of assets (including foreclosed properties and those given as payments of debts), the commission paid to a broker for every asset leased by the credit institution or FBB shall not exceed 5% of total proceeds from the leasing of assets through that broker during the year. 

dd) With regard to commissions paid to brokers for sale of mortgaged and pledged assets, the commission paid to a broker for each sale of mortgaged or pledged assets of the credit institution or FBB shall not exceed 1% of actual proceeds from the sale of such mortgaged or pledged assets through that broker.

e) The Board of Directors or Board of Members or General Director (Director) of the credit institution or FBB shall promulgate regulations on payment of brokerage commission for consistent and transparent application.

2. Expenses on officials and employees as prescribed in Point h Clause 2 Article 17 of the Decree No. 93/2017/ND-CP. Certain expenses on officials and employees are specified according to the following guidelines:

a) Expenses on personal protective equipment provided for employees who need personal protective equipment while working.

b) Expenses on shift meals: wholly state-owned credit institution and credit institutions over 50% of charter capital of which is held by the State shall pay shift meals in accordance with regulations applicable to state-owned enterprises.

c) Medical expenses include expenses for periodic health examinations for employees, purchase of occupational medicines and other medical expenses incurred by the enterprise as prescribed by applicable laws.

d) Other expenses include payments for annual leave, additional payments made to female employees as prescribed in the Labor Code and other expenses as prescribed by law.

3. Management and administration expenses as prescribed in Point i Clause 2 Article 17 of the Decree No. 93/2017/ND-CP , including:

a) Expenses for scientific and technological research, including:

- Contributions paid to the science and technology development fund as prescribed by law. This fund shall be used in accordance with applicable laws;

- Payments for making up deficits in case the balance of the science and technology development fund is not sufficient to cover science and technology research expenses in the year.

b) Expenses on rewards for initiatives in improving and increasing labor productivity, rewards for practice of costs saving paid according to the principle in conformity with the actual effectiveness; the credit institution or FBB must establish and announce regulations on rewards for initiatives, and establish a Council in charge of appraising initiatives.

4. Expenses on assets:

a) Expenses on depreciation of fixed assets used to serve business operations shall comply with regulations on management, use and depreciation of fixed assets of enterprises.

In case of fixed assets purchased with deferred payment:  the credit institution or FBB shall record the difference between the total amount payable and cash down price of fixed asset as expenses according to the payment schedule, unless such difference is included in the input value of fixed assets (capitalization) in accordance with accounting standards.

b) Expenses on leased fixed assets: Expenses on leased fixed assets shall be determined according lease agreements. In case of lump-sum payment for leased assets for many years, the rental shall be apportioned and recorded as business expenses by the number of years of use of leased assets.

c) Expenses on asset and building management and operation services paid under the signed service contracts.

5. Other expenses as prescribed in Point n Clause 2 Article 17 of the Decree No. 93/2017/ND-CP , including:

a) Membership fees paid to trade associations of which the credit institution or FBB is a member.

b) Expenses on recovery of debts written off and collection of bad debts are debt recovery costs, including payments made to debt recovery service providers, that are licensed to provide debt recovery services as prescribed by law, and debt trading costs.

c) Other expenses, including:

- Expenses on debts recorded as income and creditors of which are lost at first but are identified thereafter;

- Expenses on fines/compensations due to breach of economic contracts under liability of the credit institution or FBB;

- Expenses on fines for administrative violations, excluding those to be paid by individuals as prescribed by law;

- Expenses on court fees/judgment enforcement charges;

- Other expenses as prescribed by law.

Article 7. Expense recognition principle

1. Expenses of a credit institution or FBB are those actually incurred in association with its business; conform to the matching principle between revenue and expenses; are provided with adequate lawful invoices and documents as prescribed by law. The credit institution or FBB shall not record expenses covered by other sources of funding as its expenses. Expenses shall be determined and recorded in accordance with Vietnam’s accounting standards and other relevant laws.

2. When calculating corporate income tax, expenses shall be determined in accordance with the Law on corporate income tax and its guiding documents.

3. A wholly state-owned credit institution or a credit institution over 50% of charter capital of which is held by the State shall only record expenses which are deductible as prescribed in the Law on corporate income tax as its business expenses. The wholly state-owned credit institution or a credit institution over 50% of charter capital of which is held by the State may use its after-tax profits to make up the costs for risk provisions in excess of the statutory amount which is deductible upon calculation of the corporate income tax due to difference in risk provision between the Law on corporate income tax and SBV’s regulations (if any), and pay membership fees to overseas trade associations of which it is a member, and fines for administrative violations (excluding the fines payable by individuals as prescribed by law).

Article 8. Reporting contents, forms, periods, submission deadlines and recipients

1. Credit institutions and FBBs shall comply with regulations on reports in Articles 25 and 26 of the Decree No. 93/2017/ND-CP and guidelines herein.

2. Report on annual financial plan: Wholly state-owned credit institutions and credit institutions over 50% of charter capital of which is held by the State shall send reports on annual financial plan according to Article 25 of the Decree No. 93/2017/ND-CP .

3. Financial statements, including:

a)  Interim and annual balance sheets;

b) Interim and annual income statements;

c) Interim and annual cash flow statements;

d) Interim and annual notes to financial statements;

dd) Other reports, including:

- Monthly balance sheets;

- Annual report on some financial safety indicators;

- Annual report on income of managers and employees.

Credit institutions and FBBs shall prepare and submit financial statements in accordance with regulations on financial statements of credit institutions. The report on financial safety indicators and report on income of managers and employees shall be made according to Appendix 1 and Appendix 2 enclosed herewith.

4. Deadlines for submission of reports:

a) The annual report on some financial safety indicators shall be submitted by the deadline prescribed in Article 25 of the Decree No. 93/2017/ND-CP .

b) The monthly report shall submitted by the 10^th day of the following month.

c) Interim financial statements shall be submitted by the 30^th of the first month of the following quarter.

d) Unaudited annual financial statements shall be submitted within 180 days or 90 days from the end of the fiscal year by foreign credit institutions and other credit institutions respectively.

dd) Audited annual financial statements, enclosed with written opinions given by an independent audit organization (auditor’s report) shall be submitted immediately after completing audit process.

e) If the deadline for submission of financial statements falls on a public holiday or weekend, it will be automatically extended to the succeeding working day.

5. Report recipients:

Credit institutions and FBBs shall send financial statements to SBV for supervising their compliance of financial policies, and also to the Ministry of Finance.

Article 9. Reporting forms

Credit institutions and FBBs shall send reports to the Ministry of Finance in the following forms:

1. Physical form:

Credit institutions and FBBs shall send physical copies of the documents prescribed in Points a, b, c, d Clause 3 Article 8 hereof of audited annual financial statements.

2. Electronic form:

a) The reports prescribed in Article 8 hereof shall be submitted electronically.

b) Credit institutions and FBBs shall connect with the portal of the Ministry of Finance for submitting electronic financial statements to the Ministry of Finance according to its regulations.

c) If a credit institution or FBB is incapable of connecting with the portal of the Ministry of Finance, reporting files shall be submitted through information carriers or physical reports shall be submitted to the Ministry of Finance (via the Department of Banking and Financial Institutions) for updating reporting data.

d) If the data transmission system fails, reports shall be sent via information carriers or in physical form to the Ministry of Finance (via the Department of Banking and Financial Institutions) at the following address: 28 Tran Hung Dao, Hoan Kiem, Hanoi (the Ministry of Finance’s headquarters).

Article 10. Responsibilities of regulatory authorities

1. The Ministry of Finance shall provide credit institutions and FBBs with guidelines for electronic reporting.

2.[3] Responsibilities of SBV:

a) Every 06 months (by August 31) and on an annual basis (by April 30 of the following year), SBV shall notify the Ministry of Finance of financial status of credit institutions and FBBs according to Clause 2 Article 38 of the Decree No. 93/2017/ND-CP , and the following criteria (classified by type of credit institutions):

- The number of credit institutions and FBBs.

- Total charter capital, the owner's equity, current assets, total liabilities, total capital raised, bad debt ratio and adequacy ratios of  credit institutions and FBBs.

- Total gains (losses) and number of credit institutions and FBBs earning gains (or incurring losses).

- Financial status and business performance of credit institutions over 50% of charter capital of which is held by the State.

- Other relevant criteria and contents.

- Violations against financial policies committed by credit institutions and FBBs and detected during inspections.

b) Data closing duration:

- A biannual report shall include data from January 01 to June 30 inclusively of the reporting period (except data reflected at a given time).

- An annual report shall include data from January 01 to December 31 inclusively of the reporting year (except data reflected at a given time).

c) Financial statements shall be submitted in one of the following methods:

- Directly in the form of paper financial statements;

- By post in the form of paper financial statements;

- By email or through specialized reporting software system;

- Other methods as prescribed by law.

Article 11. Responsibilities of credit institutions and FBBs

Comply with financial policies prescribed in the Law on credit institutions, the Decree No. 93/2017/ND-CP ; guidelines herein and relevant legislative documents on financial management.

Chapter III

IMPLEMENTATION

Article 12. Implementation [4]

1. This Circular comes into force from March 26, 2018.

2. This Circular supersedes the Circular No. 05/2013/TT-BTC dated January 09, 2013 by the Ministry of Finance providing guidelines for financial policies for credit institutions and foreign bank branches.

3. While the Ministry of Finance does not yet promulgate guidelines for electronic reporting, credit institutions and FBBs shall send physical financial statements (except monthly balance sheets) as prescribed in Clause 3 Article 8 hereof.

4. Difficulties that arise during the implementation of this Circular should be reported to the Ministry of Finance for consideration./.

[1] This document is consolidated from the following 02 Circulars:

-  The Circular No. 16/2018/TT-BTC dated February 07, 2018 of the Ministry of Finance providing guidelines for financial policies for credit institutions and foreign bank branches, which comes into force from March 26, 2018.

-  The Circular No. 84/2020/TT-BTC dated October 01, 2020 of the Ministry of Finance providing amendments to regulations on periodic reporting under the authority of the Minister of Finance in the fields of finance and banking, coming into force from November 15, 2020 (hereinafter referred to as “Circular No. 84/2020/TT-BTC”).

This document supersedes none of 02 Circulars mentioned above.

[2] Circular No. 84/2020/TT-BTC is promulgated pursuant to:

“The Government’s Decree No. 87/2017/ND-CP dated July 26, 2017 defining functions, tasks, powers and organizational structure of the Ministry of Finance;

The Government’s Decree No. 09/2019/ND-CP  dated January 24, 2019 prescribing reporting regime for state administrative agencies;

 And at the request of the Director of the Department of Banking and Financial Institutions;”

[3] This Clause is amended according to Article 4 of the Circular No. 84/2020/TT-BTC, coming into force from November 15, 2020.

[4] Article 18 of the Circular No. 84/2020/TT-BTC stipulates as follows:  

“Article 18. Implementation

1. This Circular comes into force from November 15, 2020.

2. Difficulties that arise during the implementation of this Circular should be promptly reported to the Ministry of Finance for consideration./.”