Application for licensing of People's credit fund in Vietnam

Application for licensing of People's credit fund in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. What is the People's Credit Fund?

According to Clause 6, Article 4 of the Law on Credit Institutions 2010, People's credit fund means a credit institution established voluntarily by legal entities, individuals and households as a cooperative to conduct some banking operations under this Law and the Law on Cooperatives for the main purpose of mutual assistance in production and business development and life.

2. Composition of the application for licensing of People's credit fund in Vietnam

Specifically, in Article 11 of Circular 04/2015/TT-NHNN (amended in Circular 01/2023/TT-NHNN), the application file for a license for establishment and operation of a people's credit fund is as follows:

- A written request for licensing signed by head of the preparatory committee using the form prescribed in Annex 01 of Circular 04/2015/TT-NHNN.

Written request for licensing signed by head of the preparatory committee

- Draft Charter of the people’s credit fund passed by the founding conference.

- People’s credit fund establishment proposal passed by the founding conference, which contains:

+ Necessity for establishment of the people’s credit fund;

+ Name of the people’s credit fund, area of operation, location where the headquarter is planned to be located, operation duration, initial charter capital and activities in accordance with the regulations specified in the Law on Credit Institutions 2010 and Circular 04/2015/TT-NHNN;

+ Organizational structure;

+ Regulations on risk management, including the types of risks that may occur during operation, methods and measures to prevent and control these types of risks;

+ Lending policies and procedures applicable to members, persons whose deposits are placed into the people's credit fund and poor households in the locality that are not members of the people's credit fund;

+ Information Technology: expected IT system for operation management, ability to apply IT system in banking activities and investment in IT system;

+ Expected internal control and internal audit system that comply with regulations of the State bank;

+ Expected business plan in the initial 03 year in accordance with the contents and scope of operation, which analyzes and demonstrates the effectiveness and ability to implement the plan in each year.

- List of candidates/nominees for President and members of the Board of directors, Head and members of the Control board and Director of the people’s credit fund.

- Documents proving the qualifications of candidates/nominees for President and members of the Board of directors, Head and members of the Control board and Director of the people’s credit fund, including:

+ Resumes in accordance with forms in Annex 04 of Circular 04/2015/TT-NHNN;

Resumes

+ Copies of professional diplomas or certificates;

+ Police records issued by the provincial Department of Justice;

+ Other documents proving the satisfaction of the regulatory eligibility and qualifications requirements as prescribed in the Law on credit institutions and Article 20, 23 and 24 hereof.

- List of capital contributors of the people’s credit fund. The list must be signed by all capital contributors at least containing:

+ Full name (if the member is a natural person or representative of a household); name, address of the headquarter (if the member is a juridical person);

+ Citizen ID card number or ID card number or Passport number for individual members; the number of the citizen's identity card or the number of the people's identity card or the passport number of the representative of the household, for members being a household;

Enterprise code or number of establishment decision or number of other papers of equivalent value and number of citizen identity card or identity card number or passport number of the representative of the contributed capital for members who are legal entities

+ The amount of contributed capital, capital contribution rate of each member.

- A copy of the Certificate of Business Registration or the Establishment Decision or another document of equivalent value (for members being a legal entity)

-  Authorization document of the household for the representative of the capital contributor being household.

- Financial statements from the year preceding the year of application for licensing and financial statements and the latest financial statement that not exceeding 90 days up to the time of signing the application for licensing (if the member is a juridical person)

- Reports on financial resources for capital contribution for the establishment of the people’s credit fund if the member is a juridical person in accordance with Annex 06 of Circular 04/2015/TT-NHNN.

Reports on financial resources for capital contribution for the establishment of the people’s credit fund

- Application for membership using the forms prescribed in Annex 02A, 02B and 03 of Circular 04/2015/TT-NHNN.

Annex 02A

Annex 02B

Annex 03

- The written record of the founding conference.

- Charter of the people’s credit fund passed by the people’s credit fund founding general meeting and signed by the President of the Board of directors.

- Written record of the people’s credit fund founding general meeting.

- Resolution of the founding general meeting on ratification of the Charter, election of President and members of the Board of directors, Head and members of the Control board (or full-time controller) appointed for the first tenure in accordance with the planned list approved by the branch of State bank;

The resolution on ratification of contents within competence of the founding general meeting must be passed on the principle of majority vote by the participating members.

- Decision by the Board of directors of the people’s credit fund on appointment of General Director of the people’s credit fund in accordance with the planned list approved by the branch of State bank.

- Documentary evidence of ownership or right to enjoyment of locations where the people’s credit fund is headquartered.

3. Requirements for licensing of People's credit fund in Vietnam

According to Article 10 of Circular 04/2015/TT-NHNN, in order to obtain the license, a people’s credit fund must:

- Has a minimum charter capital which is equal to the statutory capital prescribed by the Government on the date of submission of application.

- Has at least 30 members that satisfy the requirements in Article 31 hereof and have sufficient financial resources in order to contribute capital to establish the people’s credit fund.

- Has managers and members of the Control board who meet the standards prescribed in Article 20, 23 and 24 of Circular 04/2015/TT-NHNN.

- Has a Board of Directors and a Control Board that complies with the provisions of the Law on Credit Institutions 2010 and Circular 04/2015/TT-NHNN.

- Has a Charter conformable to regulations specified in the Law on Credit Institutions 2010, the Law on Cooperatives 2012 and other relevant legislative regulations.

- Has an establishment proposals and business plans as deemed feasible within 03 initial years of its operation.

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