Regulations on operating capital of the Vietnam Development Bank

Regulations on operating capital of the Vietnam Development Bank (Internet image)

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

1. What is Vietnam Development Bank?

Vietnam Development Bank is a policy bank, operating under the model of a one-member limited liability company with 100% charter capital held by the State.

Specifically, the Vietnam Development Bank has legal status under Vietnamese law; having charter capital, having a seal, being allowed to open accounts at the State Bank of Vietnam, the State Treasury, domestic and foreign commercial banks, being allowed to join the payment system with banks and provide payment services in accordance with the law.

(Article 3 of the Charter issued together with Decision 1515/QD-TTg in 2015)

2. Regulations on operating capital of the Vietnam Development Bank

Specifically, in Article 6 of Decree 46/2021/ND-CP, the operating capital of the Vietnam Development Bank is as follows:

(1) Equity:

- Charter capital is allocated and supplemented by the state budget from the reserve fund for supplementing charter capital, the development investment fund, or other sources as prescribed by law.

The change in charter capital level shall be decided by the Prime Minister on the basis of the proposal of the Development Bank and the opinion of the Ministry of Finance to ensure compliance with the requirements, tasks, and capital adequacy ratio of the Development Bank in each period;

- Capital for capital construction is provided by the state budget;

- Funds: Reserve fund for supplementing charter capital, investment and development fund, financial reserve fund;

- Difference due to revaluation of assets; exchange rate differences;

- Undistributed operating results;

- Non-refundable funding from domestic and foreign organizations;

- Other capital owned by the Development Bank.

(2) Capital mobilized as prescribed by law, including:

- Issuing government-guaranteed bonds;

- Issuance of bonds, promissory notes, certificates of deposit, and valuable papers in Vietnam dong of the Development Bank;

- Borrowing from Vietnam Social Insurance; loans from domestic and foreign financial and credit institutions;

- Borrowing from the State Bank of Vietnam;

- Mobilization of other organizations at home and abroad;

- Receiving entrusted deposits from domestic and foreign organizations and individuals;

- Mobilizing other capital sources as prescribed by law.

(3) Other capitals include:

- The state budget shall provide interest rate compensation for the performance of post-investment support contracts arising before the effective date of Decree 32/2017/ND-CP;

- Foreign loans of the Government authorized by the Ministry of Finance for on-lending;

- Entrusted capital of the Ministry of Finance, local authorities, local financial funds, and domestic and foreign organizations (entrusting party) to comply with the written request of the entrusting party;

- Other lawful capital sources as prescribed by law.

3. What does the Vietnam Development Bank use its operating capital for?

According to Clause 1, Article 8 of Decree 46/2021/ND-CP, the Vietnam Development Bank is allowed to use operating capital to:

- Implementing credit policies in accordance with the law;

- Performing other forms of credit extension as prescribed in the Charter on the organization and operation of the Development Bank and the decision of the competent authority in accordance with the law;

- Granting post-investment support in accordance with the law for contracts arising before the effective date of Decree 32/2017/ND-CP;

- Performing credit guarantee obligations for small and medium-sized enterprises to borrow capital at commercial banks in accordance with law;

- Entrusting credit institutions to perform a number of activities of the Development Bank in accordance with the law;

- Lending under authorization/entrustment, allocating capital under entrustment; guaranteeing under authorization/entrustment;

- Entrusting, receiving entrustment to provide financial and banking services to customers according to the provisions of law;

- Buying, selling, discounting, and rediscounting valuable papers in accordance with the law;

- Contributing capital, establishing subsidiaries, or participating in the establishment of domestic affiliated companies in accordance with the law and the Charter on the organization and operation of the Development Bank;

- Investing in capital construction and purchasing assets to serve the Development Bank's operations in accordance with Decree 46/2021/ND-CP;

- Using idle capital to deposit at credit institutions, foreign bank branches. The Development Bank selects credit institutions, foreign bank branches to deposit money safely, without losing capital;

- Performing a number of other tasks assigned by the Government and the Prime Minister.

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