Vietnam: Operations of people’s credit funds from July 01, 2024

Operations of people’s credit funds from July 01, 2024 (Image from the Internet)

Operations of people’s credit funds from July 01, 2024

“People's credit fund” means a credit institution voluntarily established by juridical persons, individuals and households as a cooperative with a view to conducting one or some banking operations under the Law on Credit Institutions 2024 of Vietnam for the main purpose of mutual assistance in development of production and business and life.

Article 126 of the Law on Credit Institutions 2024 specifies the operations of people’s credit funds as follows:

- Receiving deposits in Vietnam Dong.

- Granting loans in Vietnam Dong.

- Providing money transfer, collection and payment services for their members and clients, except for opening of payment accounts for clients.

- Conducting other business activities, including:

+ Receiving capital under entrustment by organizations and individuals for giving loans;

+ Acting as agents that provide payment services for cooperative banks with respect to their members and clients;

+ Borrowing loans and depositing money at cooperative banks; borrowing loans from credit institutions and foreign bank branches. People’s credit funds must not grant loans and make deposits with each other;

+ Participating in contribution of capital to cooperative banks;

+ Opening payment accounts at the State Bank, commercial banks, cooperative banks, foreign bank branches;

+ Acting as agents in a number of fields related to banking operations and asset preservation;

+ Acting as insurance agents in accordance with the law on insurance business within the scope of insurance agency activities as specified by the Governor of State Bank;

+ Giving advice on banking operations and other business activities specified in licenses to their members.

Rights and obligations of the People's Credit Fund

According to Articles 29 and 30 of Circular 29/2024/TT-NHNN, the People's Credit Fund has the following rights and obligations:

(1) Rights of the People's Credit Fund

- Receive support from cooperative banks in developing products and services and training on operations.

- Receive support from cooperative banks in banking activities as prescribed by law.

- Receive support from cooperative banks in internal audit activities according to the regulations of the State Bank on cooperative banks.

- Receive financial sponsorship from the government, domestic and foreign organizations, and individuals.

- Require borrowers to provide documents on production, business, service, and life conditions related to the loan and other information as prescribed by law.

- Refuse demands from organizations and individuals that are against the law.

- Exercise other rights as prescribed by law.

(2) Obligations of the People's Credit Fund

- Conduct business activities in accordance with the activities specified in the issued License.

- Contribute capital to cooperative banks as prescribed by law.

- Deposit money at cooperative banks to regulate capital in accordance with the regulations of the State Bank on cooperative banks.

- Participate in the Safe Fund for the system of People's Credit Funds as prescribed by law.

- Provide reports to cooperative banks for the purposes of capital regulation, inspection, supervision, internal audit, management of the Safe Fund for the system of People's Credit Funds according to the internal regulations issued by cooperative banks under the regulations of the State Bank on cooperative banks.

- Be subject to inspection, supervision, and internal audit by cooperative banks according to the regulations of the State Bank on cooperative banks.

- The People's Credit Fund must publicly disclose and keep information as specified in Clause 1, Article 49 of the Law on Credit Institutions 2024 at its headquarters and send written reports to the State Bank's branches within 07 working days from the date the People's Credit Fund receives the provided information. Annually, the People's Credit Fund must disclose information specified in points a, b, and d, Clause 1, Article 49 of the Law on Credit Institutions 2024 to its members' General Meeting.

Tran Trong Tin

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE