Principles of Financial Management of the Development Bank
According to Article 4 of Decree 46/2021/ND-CP, the principles of financial management are prescribed as follows:
The Development Bank is a policy bank operating under the model of a one-member limited liability company with 100% of its charter capital held by the State. It has legal person status, charter capital, a balance sheet, its own seal, and is allowed to open accounts at the State Bank of Vietnam, the State Treasury, domestic and foreign commercial banks as per legal regulations. The Development Bank centralizes accounting for the entire system; it has financial autonomy and is responsible for its operations before the law; it moves toward self-compensating for costs and risks in its operations. The Development Bank performs financial management under this Decree, and for issues not regulated in this Decree, it complies with the legal provisions applicable to one-member limited liability companies with 100% capital held by the State.
The Development Bank operates not for profit to implement the State’s credit policies and other tasks as stipulated by the Government of Vietnam and the Prime Minister of Vietnam. It is compensated for interest rates and management fees by the state budget as per legal regulations and this Decree. The bank is exempt from paying taxes and other contributions to the state budget; it is guaranteed by the Government of Vietnam for payment capability; it is subject to a mandatory reserve ratio of 0% (zero percent) and is not required to participate in deposit insurance.
The Development Bank is allowed to borrow refinancing capital from the State Bank of Vietnam as per legal regulations; it can participate in the interbank market, the open market, organize internal payments, provide payment services, and other banking services to customers, and engage in foreign exchange activities. It can participate in domestic and international payment systems as prescribed by law.
For other lending activities: the state budget does not compensate for interest rates and management fees; income, expenses, and operational results arising from these activities are integrated with the overall operational results of the Development Bank as per this Decree.
Respectfully!
