Requirements for licensing of a people's credit fund in Vietnam

Requirements for licensing of a 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?

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 the Law on Credit Institutions 2010 and the Law on Cooperatives 2012 for the main purpose of mutual assistance in production and business development and life.

(Clause 6, Article 4 of the Law on Credit Institutions 2010)

2. Requirements for licensing of a 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 Circular04/2015/TT-NHNNr.

- 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.

3. Rights and responsibilities of the people’s credit fund in Vietnam

3.1. Rights of the people’s credit fund in Vietnam

- Receive guidance and training in banking and information technology practices by the Vietnam Cooperative Bank.

- Receive assistance in banking activities by the Vietnam Cooperative Bank in accordance with the provisions of law.

- Receive assistance in carrying out internal audits upon request by the Vietnam Cooperative Bank.

- Receive funding from the State, organizations and individuals domestically and abroad.

- Request lenders to provide documents on production, business and service activities related to the loans.

- Decide on income distribution and handle losses in accordance with law provisions and the Charter of the people’s credit fund.

- Reject requests of organizations or individuals which are contrary to the provisions of law.

- Lodge complaints and file lawsuits against organizations or individuals that violate legitimate rights and interests of the people's credit fund.

- Perform other rights in accordance with the provisions of law.

(Article 40 of Circular 04/2015/TT-NHNN, amended in Circular 06/2017/TT-NHNN)

3.2. Obligations of people's credit funds in Vietnam

People's credit funds are responsible for performing the following obligations:

- Conduct business activities in accordance with granted licenses. Comply with the laws on money, credit and banking services.

- Comply with the laws on accounting, statistics and auditing.

- Bear financial obligations within the scope of charter capital and other sources of capital of the people's credit fund in accordance with the provisions of law.

- Pay taxes and perform other financial obligations in accordance with the provisions of law.

- Contribute capital to establish membership interest and annual capital at the Vietnam Cooperative Bank.

- Deposit idle capital into the deposit account used for trade-off purposes at the Vietnam Cooperative Bank in accordance with the provisions of law.

- Participate in the Fund for assuring the safety of the people's credit fund system in accordance with the regulations of the State bank.

- Provide reports to the Vietnam Cooperative Bank for the purpose of capital trade-off, monitoring the system security and managing the Fund for assuring the safety of the people's credit fund system in accordance with the provisions of the Regulation on capital trade-off, Regulation on the management and use of funds for ensuring system security of the people's credit fund promulgated by the Vietnam Cooperative Bank in accordance with the provisions of law.

- Adopt preferential policies, physical and spiritual welfare for members in order to create cohesion and enhance the link among members.

- Participate in deposit insurance in accordance with the provisions of law and publicize at the headquarter on the deposit insurance participation.

- Submit to the inspection and supervision of the cooperative bank in the implementation of the provisions of law when the State Bank requests.

- Perform other financial obligations in accordance with the provisions of law.

(Article 41 of Circular 04/2015/TT-NHNN, amended in Circular 06/2017/TT-NHNN)

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