What are the regulations on operating capital of the Vietnam Development Bank?

What are the regulations on operating capital of the Vietnam Development Bank? (Internet image)

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

1. What are the regulations on operating capital of the Vietnam Development Bank?

The operating capital of the Vietnam Development Bank is regulated according to Article 6 of Decree 46/2021/ND-CP as follows:

* Equity:

- Charter capital is allocated by the state budget and supplemented from the charter capital supplement reserve fund, development investment fund, or other sources according to the provisions of the law.

The change in charter capital is decided by the Prime Minister based on the proposal of the Development Bank and the opinion of the Ministry of Finance, ensuring compliance with the requirements, tasks, and capital adequacy ratio of the Development Bank in each period;

- Capital construction investment is provided by the state budget;

- Funds: Charter capital supplement reserve fund, development investment fund, financial reserve fund;

- Differences due to the revaluation of assets; exchange rate differences;

- Undistributed operating results;

- Non-refundable funding from domestic and foreign organizations;

- Other capital owned by the Development Bank.

* Capital mobilized according to the provisions of law, including:

- Issuing bonds guaranteed by the Government;

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

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

- Loan from the State Bank of Vietnam;

- Mobilization of other organizations at home and abroad;

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

- Mobilizing other capital sources according to the provisions of law.

* Other capital includes:

- The state budget provides interest rate compensation to implement post-investment support contracts arising before May 15, 2017;

- The Government's foreign loans are authorized to be re-lent by the Ministry of Finance;

- Capital entrusted by the Ministry of Finance, local authorities, local financial funds, and domestic and foreign organizations (trusting parties) to comply with the written request of the trusting party;

- Other legal sources of capital as prescribed by law.

2. Regulations on equity capital of the Vietnam Development Bank 

According to Article 7 of Decree 46/2021/ND-CP, the equity capital of the Vietnam Development Bank is determined and calculated from data in the individual financial statements, including:

- Authorized capital.

- Funds:

+ Reserve fund to supplement charter capital;

+ Development investment fund;

+ Financial reserve fund.

- Positive difference due to the revaluation of assets (including fixed assets and long-term investment capital contributions).

- Accumulated positive undistributed revenue and expenditure difference.

- Amounts that must be deducted when determining equity capital include:

+ Capital contributed to subsidiaries and affiliated companies according to the provisions of law;

+ Accumulated negative revenue and expenditure difference;

+ Negative difference due to asset revaluation.

3. Regulations on the use of capital and assets of Vietnam Development Bank

Regulations on the use of capital and assets of the Vietnam Development Bank according to Article 8 of Decree 46/2021/ND-CP are as follows:

- The Development Bank can use its operating capital to:

+ Implement credit policy according to the provisions of the law;

+ Implement other forms of credit granting as prescribed in the Charter of Organization and Operation of the Development Bank and decisions of competent authorities according to the provisions of law;

+ Provide post-investment support according to the provisions of law for contracts arising before Decree 32/2017/ND-CP takes effect;

+ Carry out credit guarantee obligations for small and medium-sized enterprises to borrow capital from commercial banks according to the provisions of the law;

+ Entrust credit institutions to carry out a number of activities of the Development Bank according to the provisions of law;

+ Lend under authorization/trust, capital allocation under trust; Guarantee under authorization/trust;

+ Entrust and receive entrustment to provide financial and banking services to customers according to the provisions of law;

+ Buy, sell, discount, and rediscount valuable papers according to the provisions of law;

+ Contribute capital, establish subsidiaries, or participate in the establishment of domestic affiliated companies according to the provisions of the law and the Charter of Organization and Operation of the Development Bank;

+ Invest in basic construction and purchasing assets to serve the Development Bank's operations according to regulations;

+ Use idle capital to deposit at credit institutions and foreign bank branches. The Development Bank selects credit institutions and foreign bank branches to deposit money to ensure safety and not lose capital;

+ Perform a number of other tasks assigned by the Government and Prime Minister.

- Adjusting capital and asset structure:

The Development Bank is allowed to proactively adjust the capital structure and assets within the system to serve its operations according to the provisions of the Development Bank's Charter of Organization and Operation.

- Mobilizing capital and assets:

The mobilization of capital and assets between units under and under the Development Bank is carried out in accordance with the provisions of the Charter on organization and operation of the Development Bank.

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