Activities of Cooperative Banks for Members of People's Credit Funds in Vietnam

Activities of Cooperative Banks for Members of People's Credit Funds in Vietnam (Internet image)

On June 28, 2024, the Governor of the State Bank of Vietnam issued Circular 27/2024/TT-NHNN regarding cooperative banks, the deductions, management, and use of the Safety Fund for the system of people's credit funds.

Activities of Cooperative Banks for Members of People's Credit Funds

(1) Receiving deposit funds, providing capital balancing loans for member people's credit funds according to the Capital Balancing Regulation. The formulation and content of the Capital Balancing Regulation must ensure the following principles:

- Member people's credit funds deposit demand money, term money at the cooperative bank to balance capital. In the case of early withdrawals, the people's credit fund must notify the cooperative bank in advance;

- Member people's credit funds are provided with capital balancing loans by the cooperative bank when there is a need for capital to expand credit;

- The interest rate mechanism for deposit ensures support and the interest rate for capital balancing loans must be clear, transparent, not aimed at profit, and establish a link between the cooperative bank and the member people's credit funds;

- Specific provisions on loan limits, subjects, procedures, records, documents related to receiving deposit funds, and capital balancing loans;

- The Capital Balancing Regulation is formulated by the cooperative bank, consulted by all member people's credit funds, and must be approved by the cooperative bank's General Meeting of Members. After the promulgation of the Capital Balancing Regulation, the cooperative bank organizes training and dissemination to member people's credit funds. Amendments and supplements to the Capital Balancing Regulation must also be approved by the cooperative bank's General Meeting of Members.

Within 07 working days from the date the Capital Balancing Regulation is issued or amended, the cooperative bank is responsible for sending the Regulation and its amendments to the State Bank (Bank Inspection and Supervision Agency) for inspection and supervision.

(2) Opening payment accounts, providing payment means for member people's credit funds. Providing domestic payment services through accounts for member people's credit funds, including checks, payment orders, remittance orders, collection orders, and money transfer services.

(3) Providing loans to member people's credit funds to address temporary liquidity difficulties. Providing special loans to member people's credit funds according to the Governor of the State Bank's regulations on special loans to credit institutions under special control.

(4) Developing, supporting the development, and applying new products and services in the activities of member people's credit funds to meet the needs of the members of people's credit funds and serve the development of community benefits in the area.

(5) Inspecting and supervising people's credit funds upon the request of the State Bank regarding the content, scope, and duration of inspection and supervision as per the following regulations:

- The cooperative bank is responsible for formulating an Inspection and Supervision Regulation for member people's credit funds as stipulated in this clause and sending it to the State Bank (Bank Inspection and Supervision Agency) for consultation before the Regulation is issued or amended. Within 07 working days from the date the Regulation is issued or amended, the cooperative bank must send it to the State Bank (Bank Inspection and Supervision Agency) to carry out inspection and supervision.

- The Inspection and Supervision Regulation for member people's credit funds must be approved by the Board of Directors and ensure the following minimum contents:

(i) Subjects for inspection and supervision;

(ii) Scope, content, purpose, principles of inspection, and supervision;

(iii) Procedures for inspection and supervision;

(iv) Duration of inspection and supervision;

(v) Rights and responsibilities of the involved parties.

(6) Performing internal audits on member people's credit funds as per the following regulations:

- Internal audit subjects:

The cooperative bank conducts internal audits on member people's credit funds with total assets below VND 50 billion, excluding early intervened people's credit funds and specially controlled people's credit funds;

- Scope, content of internal audit implementation:

(i) Implementing audits of certain items in financial reports such as losses, profits, actual value of charter capital, reserve funds;

(ii) Lending and deposit receipt procedures;

- Annually, the cooperative bank formulates an Internal Audit Implementation Plan and reports it to the State Bank along with the annual business plan for the State Bank's approval before implementation;

- The cooperative bank is responsible for formulating an Internal Audit Regulation for member people's credit funds as stipulated in this clause and sending it to the State Bank (Bank Inspection and Supervision Agency) within 07 working days from the date the Regulation is issued or amended for inspection and supervision;

- The Internal Audit Regulation for member people's credit funds must be approved by the Board of Directors and ensure support for the activities of member people's credit funds. The Internal Audit Regulation for people's credit funds must include the following minimum contents:

(i) Subjects for internal audit;

(ii) Content, purpose, principles, and scope of internal audit;

(iii) Procedures for internal audit, ensuring the confidentiality requirements for the activities of member people's credit funds;

(iv) Composition of the internal audit team;

(v) Duration of internal audit;

(vi) Rights and responsibilities of the involved parties.

(7) Dispatching personnel to hold the positions of Chairman of the Board of Directors, Director, and Deputy Director of early intervened people's credit funds, or specially controlled people's credit funds upon the request of the provincial or city branch of the State Bank where the people's credit fund is located.

The proposed personnel must meet the prescribed standards and conditions for the appointed positions according to regulations on standards and conditions for the Chairman of the Board of Directors, Director, and Deputy Director of people's credit funds, excluding the condition of being a member of the people's credit fund.

(8) Issuing and publicizing blank savings book templates and providing blank savings books to people's credit funds for receiving customer savings deposits according to the following requirements and contents:

- Blank savings books must have anti-counterfeiting elements and serial numbers to ensure statistical and management needs;

- Coordinating and ensuring the safety of printing, managing, and providing blank savings books to people's credit funds;

- Issuing regulations on providing blank savings books to people's credit funds for uniform implementation. The regulations on providing blank savings books must include, at a minimum, the following contents:

(i) Sale price ensuring cost recovery for printing, transporting blank savings books, not for profit, and being public and transparent;

(ii) Processes for registering needs, providing blank savings books to people's credit funds, ensuring prompt and complete provision of blank savings books as registered by people's credit funds and serving the supervision needs of provincial or city branches of the State Bank;

(iii) Provisions on importing, exporting, storing, inventorying, and managing blank savings books according to legal regulations;

d) Before the 10th of every month or upon request, reporting to the provincial or city branch of the State Bank on the provision status of blank savings books to people's credit funds in the province or city area for the previous month as stipulated in Appendix No. 02 issued with Circular 27/2024/TT-NHNN.

(9) Other business activities as stipulated in Article 21 of Circular 27/2024/TT-NHNN.

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