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.
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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