Vietnam: How shall a microfinance institution manage and use its capital and assets?

Every microfinance institution shall assume responsibility to manage and use its capital and assets in accordance with regulations in Chapter II of Decree No. 93/2017/NĐ-CP of Vietnam’s Government, relevant laws and guidelines of Circular No. 18/2018/TT-BTC of the Ministry of Finance of Vietnam, specifically as follows:

- Every microfinance institution must do bookkeeping in accordance with applicable accounting policies; fully, accurately and timely reflect the use or changes in its capital and assets in the course of business; clearly assign responsibilities to and announce sanctions of handling of each department or individual for each case of damage or loss of assets or capital.

- During the operation, every microfinance institution must maintain the limit on investment in construction and procurement 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 charter capital and the additional reserve fund of charter capital as recorded on its accounting book.

- Microfinance institutions shall assume responsibility to manage or use assets leased, pledged, mortgaged or kept on behalf of clients as agreed upon with their clients in accordance with applicable laws.

- With regard to real estates temporarily held by the handling of loans in accordance with regulations in Clause 3 Article 132 of the Law on credit institutions:

+ With regard to real estate temporarily held by a microfinance institution for sales or transfer for debt recovery within a period of 03 years, it shall not record such real estate as an increase in assets and depreciate assets as regulated.

+ With regard to real estate purchased by a microfinance institution to serve its business, it 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 purchase of fixed assets regulated in Clause 3 Article 6 of Decree No. 93/2017/NĐ-CP of Vietnam’s Government.

View relevant provisions 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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