DECISION No. 180/2002/QD-TTg OF DECEMBER 19, 2002 PROMULGATING THE REGULATION ON FINANCIAL MANAGEMENT APPLICABLE TO THE SOCIAL POLICY BANK
THE PRIME MINISTER
Pursuant to the December 25, 2001 Law on Organization of the Government;
Pursuant to the Government�s Decree No.78/2002/ND-CP of October 4, 2002 on credits for poor people and other social policy beneficiaries;
Pursuant to the Prime Minister�s Decision No.131/2002/QD-TTg of October 4, 2002 on the establishment of the Social Policy Bank;
At the proposals of the Finance Minister and the Minister-Director of the Government Office,
Article 1.- To issue together with this Decision the Regulation on financial management applicable to the Social Policy Bank.
Article 2.- The Finance Ministry shall have to guide and inspect the implementation of the Regulation issued together with this Decision.
Article 3.- This Decision takes effect as from January 1, 2003.
The ministers, the heads of the ministerial-level agencies, the heads of the agencies attached to the Government, the presidents of the People�s Committees of the provinces and centrally-run cities, the chairman of the Managing Board and the general director of the Social Policy Bank shall have to implement this Decision.
PHAN VAN KHAI
REGULATION ON FINANCIAL MANAGEMENT APPLICABLE TO THE SOCIAL POLICY BANK
(Issued together with the Prime Minister�s Decision No. 180/2002/QD-TTg of December 19, 2002)
Article 1.- This Regulation applies to the Social Policy Bank regarding its financial management activities.
Article 2.- The Social Policy Bank is a State-run credit institution operating for non-profit purposes; is a legal person, has charter capital, its own balance sheet and seal, and is entitled to open accounts at the State Bank, the State treasuries and other credit institutions in Vietnam.
The Social Policy Bank is a unit applying centralized cost-accounting in its entire system; has financial autonomy and takes self-responsibility for its operations before law; effects capital preservation and development, and offsets expenses and credit risks according to the provisions of this Regulation. The Social Policy Bank does not have to participate in deposit insurance, has the compulsory reserve rate of 0% (zero percent), and is exempt from assorted taxes and other State budget remittances.
Article 3.- The Social Policy Bank receives and manages capital sources of the Government and People�s Committees of all levels; performs the task of mobilizing capital from organizations and individuals inside and outside the country in order to provide loans for poor people and other social policy beneficiaries.
Article 4.- The chairman of the Managing Board and the general director of the Social Policy Bank shall be held responsible before law and before the State management agencies for the Social Policy Bank�s observance of the financial regime provided for in this Regulation.
Article 5.- The Finance Ministry shall perform the function of State management over the finance of, and have to guide and inspect the implementation of the financial regime by, the Social Policy Bank.
CAPITAL, FUNDS AND ASSETS
Article 6.- Working capital of the Social Policy Bank
1. Capital and funds:
a/ The charter capital of VND 5,000,000,000,000 (five thousand billion dong), allocated from the State budget upon its establishment;
b/ The reserve fund for charter capital supplementation, the development investment fund, the financial reserve fund, the credit risk reserve fund, the severance allowance reserve fund, the reward fund and the welfare fund;
c/ The State budget capital (including the central budget and local budgets), for providing loans for hunger elimination and poverty alleviation, job creation and implementation of other social policies.
d/ The revenue-expenditure difference (if any), which is retained and not yet distributed to the funds;
e/ The non-refundable aid of organizations and individuals inside and outside the country;
f/ Other capital (if any).
When the scope of operation of the Social Policy Bank is expanded under the Government�s direction, the chairman of the Bank�s Managing Board shall report such to the Finance Minister so that the latter can submit the charter capital supplementation to the Prime Minister for decision.
2. Capital mobilized in the following forms:
a/ Interest-bearing deposits, which shall be mobilized under the approved annual plans; interest-free voluntary deposits of organizations and individuals inside and outside the country; savings of poor people;
b/ ODA capital assigned by the Government;
c/ Bonds, deposit certificates and other valuable papers issued under law provisions;
d/ Capital borrowed from postal savings and Vietnam social insurance;
e/ Capital borrowed from the State Bank;
f/ Capital borrowed from domestic and foreign financial and credit institutions.
3. Capital entrusted by organizations and individuals inside and outside the country;
4. Other capital.
Article 7.- Use of capital by the Social Policy Bank
1. The working capital of the Social Policy Bank shall be used to provide loans for poor people and other social policy beneficiaries under law provisions. When using its capital and/or funds to build and/or procure fixed assets, the Social Policy Bank may use no more than 15% of its actual charter capital and must abide by all the State regulations on investment and construction management. The construction and procurement of fixed assets and other assets by the Social Policy Bank shall comply with the State-prescribed norms for non-business and administrative agencies as well as the plans approved by the Managing Board.
2. The transfer of capital and/or assets among units attached to the Social Policy Bank shall be effected by the general director on the basis of the plans approved by the Managing Board of the Social Policy Bank.
Article 8.- Annually, the Social Policy Bank shall have to balance its capital sources and capital demands so as to provide loans for poor people and other social policy beneficiaries under the Government-approved plans. The mobilization of capital sources at the market interest rates for loan provision must adhere to the principle that the mobilization shall be conducted only when the interest-free or low interest-bearing capital sources have already been used to the utmost.
Annually, the Social Policy Bank shall be allocated capital by the State to offset the interest-rate difference and management charges.
The annual allocation level for interest-rate difference offsetting shall be determined on the basis of the difference between the interest rate for harmonization of capital sources and the prescribed lending interest rate, and the management charge amount, which the Bank is entitled to.
The management charges in the first 3 years after the Social Policy Bank�s establishment are determined not to exceed 0.6%/month of the average loan credit balance (including the Social Policy Bank�s direct management charge and the entrustment charge). The management charges to be enjoyed by the Social Policy Bank in the subsequent years shall be submitted by the Finance Minister to the Prime Minister for consideration and decision.
Article 9.- The Social Policy Bank shall have to observe the following provisions on assurance of safety of its working capital:
1. Managing and using capital for the right purposes, right subjects and in an efficient manner.
2. Buying insurance for its assets and observing other prescribed insurance regimes.
3. Being allowed to account into its operation expenses the following reserves:
a/ The credit risk reserve;
b/ The exchange-rate risk reserve.
The Finance Ministry shall guide in detail the deduction for setting up and use of the above-mentioned risk reserves.
Article 10.- The Social Policy Bank shall depreciate its fixed assets according to law provisions applicable to enterprises. The Social Policy Bank may use fixed-asset depreciation capital for reinvestment, replacement or renovation of its fixed assets.
Article 11.- Inventory, evaluation, liquidation and sale of assets
1. Periodically, upon the fiscal year�s end, the Social Policy Bank must inventory its assets, accurately determining the total amount of assets, surplus and deficit, the situation of credit balance of loans provided for social policy beneficiaries, overdue debts and irrecoverable debts, and determining the reasons and responsibility therefor for handling. The asset inventory must strictly comply with the stipulations for State enterprises.
2. The Social Policy Bank may reevaluate its assets and account the difference arising therefrom as capital increase or decrease under decisions of competent State agencies. The accounting of State capital increase or decrease must be approved by the Finance Ministry.
3. The Social Policy Bank may liquidate and/or sell assets of poor or degraded quality as well as damaged or technically- obsolete assets, which are no longer needed or used inefficiently. When liquidating and/or selling its assets, the Social Policy Bank must set up a sale and/or liquidation council. For assets, which, as required by law, must be auctioned when they are sold or liquidated, the Social Policy Bank must organize auctions according to the provisions of law.
The difference between the proceeds from asset liquidation and/or sale and the residual value of the liquidated and/or sold assets as well as the liquidation and/or sale expenses shall be accounted into the operation results of the Social Policy Bank.
Article 12.- Risk handling
1. The credit risk reserve fund
The Social Policy Bank is entitled to make deductions for setting up the credit risk reserve fund and account these into its expenses to offset losses and damage incurred sporadically due to objective causes. The deduction level shall be 0.02% of the annual average loan credit balance. In case the credit risk reserve fund is not used up in a year, it shall be transferred to the subsequent year to cover credit risks in the subsequent years. In case the credit risk reserve fund is not enough to cover risks of a year, the chairman of the Managing Board shall report such to the Finance Minister for consideration and decision.
The chairman of the Managing Board of the Social Policy Bank shall have to stipulate and effect the use of the reserve funds for handling risks in operation of the Social Policy Bank.
2. Risks incurred due to objective causes in a wide area shall be handled according to the Prime Minister�s decision.
FINANCIAL REVENUES AND EXPENDITURES
Article 13.- Incomes of the Social Policy Bank are the real revenues arising in a period, including:
1. Revenues from professional operations:
a/ The revenue from interests on loans provided for poor people and social policy beneficiaries;
b/ The deposit interest revenue;
c/ The revenue from entrustment service of providing loans for social policy beneficiaries;
d/ The revenue from payment and treasury services;
e/ The revenue from State budget allocations for offsetting interest-rate differences and management charges;
f/ The revenue from other professional operations and services.
2. Other revenues:
a/ The revenue from liquidation and/or sale of assets (after subtracting the liquidation and/or sale expenses);
b/ Other revenues generated in operation.
Article 14.- Expenditures of the Social Policy Bank are the real expenses arising in the course of its operation, including:
1. Expenses for professional operations of the Social Policy Bank:
a/ The expense for payment of interests on the mobilized capital; the expense for payment and treasury services;
b/ The expense for payment of service charges to organizations entrusted to provide loans for poor people and other social policy beneficiaries. The entrustment service charge rates shall be agreed upon between the Social Policy Bank and the entrusted lending organizations but must not exceed 0.22%/month, calculated on the credit balance of loans on which interests are collected.
c/ The expense for payment of commissions to capital-lending teams, which must not exceed 0.1%/month, calculated on the credit balance of loans on which interests are collected;
d/ The expense for payment of allowances to the Managing Board and its representations at all levels, as well as the Board of Consultants; the expense for payment of remunerations to commune/ward officials according to regulations of the Finance Ministry.
e/ The expense for deduction and setting up of the credit risk and exchange-rate reserve funds according to the provisions in Clause 3, Article 9 of this Regulation;
f/ Other expenses arising in the course of professional operation.
2. The management expenses:
a/ The expense for fixed-asset depreciation; the deduction level shall comply with the general provisions for enterprises;
b/ The expense for payment of wages and remunerations to officials and employees;
c/ The expense for social and health insurance and contribution of trade union fees as prescribed;
d/ The expense for mid-shift meals for officials and employees of the Social Policy Bank; the per-capita expense level shall not exceed the minimum wage level prescribed by the State for State employees;
e/ The expense for official uniforms under regulations applicable to State enterprises;
f/ The expense for labor protection for subjects who should be equipped with protective devices in their work as prescribed;
g/ The expense for payment of severance allowances to laborers; the expense for female laborers under the prescribed regime;
h/ The expense for working trip allowances under the prescribed regime;
i/ The expense for services purchased from outside such as transportation, electricity, water, telephone, materials, printing papers, stationery, labor tools, repair and maintenance of fixed assets, fire prevention and fighting supplies, consultancy, auditing, purchase of property insurance, hiring of assets, healthcare, office sanitation, petrol, professional training and fostering, and scientific research;
j/ The expenses for transactions, external relations, conferences, guest reception, festivities and other expenses. These expenses must not exceed 7% of the total yearly expenditure of the Bank in the first three years after its establishment, and 5% in the subsequent years.
k/ The other management expenses (including expenses for liquidation and sale of fixed assets).
Article 15.- The Social Policy Bank shall account its revenues and expenditures under the prescribed regime, take responsibility before law for the accuracy of its revenues and expenditures, and observe the regulations on accounting vouchers and invoices.
Article 16.- The Social Policy Bank must not account into its expenditures the following:
1. The risks and losses already offset by the Government or compensated by the insurance agencies or damage-causing party.
2. The expenses for payment of fines for law violations.
3. The expenses not related to operations of the Social Policy Bank such as expenses as support for organizations and individuals, expenses for difficulty allowances for laborers.
4. The expenses in excess of the norms prescribed by the financial regime.
5. The expenses covered by other funding sources: non-business expenses, reward and welfare expenses, and expenses covered by other funding sources.
6. Other unreasonable expenses.
FINANCIAL REVENUE-EXPENDITURE DIFFERENCE AND DEDUCTION FOR SETTING UP OF FUNDS
Article 17.- The financial revenue-expenditure difference in a year is the result of financial operations of the Social Policy Bank, to be determined by the total incomes minus the total expenses in the year.
Article 18.- Handling of annual financial revenue-expenditure difference
1. In cases where the incomes are bigger than expenses, the difference shall be handled as follows:
a/ To make deduction for setting up the reward fund and welfare fund. The deduction level for these two funds shall be equal to 3 months� wages paid by the Social Policy Bank in the year; the proportion of each fund shall be decided by the Managing Board of the Social Policy Bank.
b/ The remaining revenue-expenditure difference amount shall further be distributed as follows:
- 50% for setting up the charter capital-supplementation reserve fund;
- 15% for setting up the financial reserve fund;
- 30% for setting up the development investment fund;
- 5% for setting up the severance allowance reserve fund; this fund�s balance must not exceed 6 month�s wages paid by the Social Policy Bank in the year.
2. In cases where the incomes are smaller than expenses:
The Social Policy Bank is entitled to transfer the deficit to the following years for not more than 3 years. If after 3 years the Social Policy Bank fails to fully transferred this deficit, the chairman of the Bank�s Managing Board shall report such to the Finance Minister for submission to Prime Minister for consideration and decision.
ACCOUNTING, STATISTICAL AND AUDITING REGIMES, AND FINANCIAL PLANS
Article 19.- The Social Policy Bank shall implement the accounting and statistical regimes as prescribed by law, fully inscribe and record the initial vouchers, update accounting books and reflect in a full, timely, honest, accurate and objective manner the professional operations. The Social Policy Bank shall effect cost-accounting according to the system of book-keeping accounts as prescribed by law.
A fiscal year of the Social Policy Bank shall start on January 1 and end on December 31 of the calendar year.
Article 20.- The Social Policy Bank shall have to draw up and send to the Finance Ministry the following financial plans:
1. The plan on capital sources and capital use, and the capital construction investment plan.
2. The revenue and expenditure plan.
3. The plan on State budget allocations for offsetting interest-rate difference and management charges.
4. The labor and wage plan.
The financial plans shall serve as basis for the Social Policy Bank to organize the yearly implementation thereof and must be approved by the Bank�s Managing Board and sent to the Finance Ministry. The time limit for drawing up and sending the Social Policy Bank�s financial plans shall comply with the provisions of the State Budget Law and current law provisions.
1. The Social Policy Bank shall have to make and send quarterly, annual and extraordinary financial reports to the Finance Ministry under the latter�s regulations.
2. The contents of financial reports include:
a/ The grade-III account balance sheet (including off-sheet accounts);
b/ The asset inventory of the Social Policy Bank;
c/ The income and expense reports;
d/ The implementation of labor and wage regimes by the Social Policy Bank;
e/ The situation of overdue debts, bad debts and irrecoverable debts;
f/ The report on the deduction for setting up and use of the credit risk reserve fund.
3. The general director of the Social Policy Bank shall be responsible for the accuracy and truthfulness of the financial reports.
4. The annual financial settlement reports shall be approved by the chairman of the Managing Board of the Social Policy Bank and sent to the Finance Ministry. The auditing and certification of the annual financial reports of the Social Policy Bank shall be effected by the State auditing bodies. The results of auditing of financial reports of the Social Policy Bank must be sent to the Finance Ministry and the State Bank.
5. Annually, on the basis of the financial settlement reports of the Social Policy Bank, the Finance Ministry shall make consideration and inspection according to functions of the State management agency.
Article 22.- The Social Policy Bank shall observe the internal auditing regime, publicize the results of its annual financial operations under the guidance of the Finance Ministry and take responsibility for the released data.
ORGANIZATION OF IMPLEMENTATION
Article 23.- The Finance Ministry shall assume the prime responsibility and coordinate with the concerned ministries and branches in guiding the implementation of this Regulation.
PHAN VAN KHAI
Phan Van Khai