Vietnam: Amounts included in revenues of a microfinance institution

11:51, 15/02/2018

On February 12, 2018, the Ministry of Finance of Vietnam issued Circular No. 18/2018/TT-BTC to provide guidance on financial policies applicable to microfinance institutions.

According to Vietnam’s current regulations, microfinance institution means a type of credit institution which mainly conducts some banking operations to meet the needs of low-income individuals and households and super small-sized enterprises (Article 4 of the Law on Credit Institutions of Vietnam).

According to Article 5 of Circular No. 18/2018/TT-BTC of the Ministry of Finance of Vietnam, revenues of a microfinance institution include the amounts receivable prescribed in Article 16 of Decree No. 93/2017/NĐ-CP of Vietnam’s Government. To be specific:

Interest revenue and similar revenue	- Deposit interest; - Loan interest; - Interest from debt trading; - Other revenue from credit activities as regulated by law.
Revenue from service provision	- Revenue from payment services; - Revenue from treasury operations; - Revenue from collection, payment and transfer of money on behalf of microfinance clients; - Revenue from accepting entrusted loans; - Revenue from financial consulting services concerning microfinance operations; - Revenue from insurance agents; - Revenue from provision of other services, including: + Revenue from asset management service and leasing of safes; + Revenue from provision of products for public interests; + Revenue from other services as regulated by law.
Revenue from foreign exchange differences as regulated in accounting standards and applicable laws
Revenue from other activities	- Revenue from the loans handled by risk reserve fund (including debts which have been written off, now recovered); - Revenue from debt trading; - Revenue from transfer or liquidation of assets; - Revenue from reversal of provisions; - Revenue from other activities as prescribed by law, including: + Revenue from lease of assets, excluding revenue from the lease of real estate temporarily held by the handling of loans in accordance with regulations in Clause 3 Article 132 of the Law on credit institutions for the purpose of debt recovery; + Revenue from other activities.
Other revenues	- Revenue from debts to creditors that cease to exist or are not identifiable, which is recorded as an increase in revenue; - Revenue from breach of contract fines and compensations paid by clients, which is recorded as revenue; - Revenue from insurance proceeds, which are recorded as revenue upon the deduction of insurance expenses; - Revenue from grants received by a microfinance institution for implementing its development programs and operations; - Revenue from tax refunds (if any); - Other revenues as regulated by law.

View revenue recognition principle at Circular No. 18/2018/TT-BTC of the Ministry of Finance of Vietnam, effective from March 29, 2018.

Thu Ba

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