Guidance on the use of capital and assets of the Vietnam Development Bank

Recently, the Ministry of Finance of Vietnam issued Circular 111/2007/TT-BTC guiding the implementation of the Financial Management Regulations for the Vietnam Development Bank.

Use  of  Capital  and  Assets  of  Development  Bank,  Circular  111/2007/TT-BTC

Guidance on the use of capital and assets of the Vietnam Development Bank​​ (Illustration)

Circular 111/2007/TT-BTC regulates that the Vietnam Development Bank​ is allowed to use its operating capital to:

- Implement development investment credit policies, export credit of the State under the regulations of the Government of Vietnam;

- Invest in basic construction and procure assets of the Vietnam Development Bank​, with a maximum limit of 15% of the actual charter capital;

- Allocate entrusted grants and provide entrusted loans as required by the entrusting party.

The Vietnam Development Bank​ has the right to adjust the structure of capital and assets within the system to serve the operations of the Vietnam Development Bank​. The allocation of capital and assets among units belonging to or under the Vietnam Development Bank​ is decided by the General Director of the Vietnam Development Bank​.

Additionally, annually, the Vietnam Development Bank​ must balance the investment credit and State export credit plans with the available capital sources for execution. It must plan the mobilization of capital sources; ensure that the mobilization of capital at market interest rates for lending purposes adheres to the principle of mobilizing only when the maximum use of non-interest or lower-than-market interest sources has been made and balance with the capital use demand, avoiding capital idleness.

Moreover, the Vietnam Development Bank​ must comply with regulations on capital safety, including:

- Managing and using capital for the right purposes, right subjects, effectively, ensuring capital recovery and cost compensation;

- Purchasing asset insurance and related insurance policies as per regulations;

- Temporarily idle capital can be deposited in domestic banks or the State Treasury;

- If necessary, the Vietnam Development Bank​ is permitted to repurchase securities issued by the Vietnam Development Bank​ as regulated by the Ministry of Finance;

- Setting up a Risk Provision Fund according to the regulations in part III of this Circular.

For further details, refer to Circular 111/2007/TT-BTC effective on October 10, 2007.

Ty Na

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