DECREES:

Chapter I

GENERAL PROVISIONS

Article 1.- Scope of regulation

This Decree stipulates the financial regime for credit institutions which have been set up, organized and operating under the Law on Credit Institutions.

Article 2.- Financial management principles

1. Credit institutions are financially autonomous, take self-responsibility for their business activities and perform their obligations and commitments according to the provisions of law.

2. Credit institutions shall have to conduct the financial publicity.

Article 3.- The chairmen of the Managing Boards, the general directors (directors) of credit institutions shall take responsibility before law and State management agencies for the observance of financial, accounting and auditing regimes by credit institutions.

Article 4.- The Ministry of Finance shall exercise the function of State financial management over credit institutions, guide and inspect the implementation of the financial regime by credit institutions as prescribed by law.

Chapter II

MANAGEMENT AND USE OF CAPITAL AND PROPERTY

Article 5.- A credit institution�s operational capital shall come from the following sources:

1. The statutory capital;

2. The capital for construction investment and property procurement, which is allocated by the State (if any);

3. The differences brought about by the revaluation of properties and exchange rate differences;

4. The reserve fund to supplement the statutory capital, the professional development investment fund, the financial reserve fund, the job severance allowance reserve fund, the reward fund and the welfare fund;

5. The retained profits which have not yet been distributed to the funds;

6. The loan capital in form of individuals� and economic organizations� deposits, issuance of valuable papers, borrowings from domestic and foreign credit institutions and borrowings from the State Bank;

7. Other capital sources prescribed by law.

Article 6.- In the course of operation, credit institutions shall have to ensure that their actual statutory capital is not lower than the legal capital level prescribed by the Government for each type of credit institution. In case of a change in their statutory capital, credit institutions shall have to make public the new statutory capital amount.

1. Credit institutions may use their operational capital in service of business activities according to the provisions of the Law on Credit Institutions, ensuring the principle of safety and development of capital. When using capital and funds for construction investment and procurement of fixed assets, credit institutions may use no more than 50% of their own capital and must observe all the State�s regulations on investment and construction management.

2. Credit institutions may change their capital and property structures in service of development of their business activities.

3. The mobilization of capital and properties among member units of a credit institution shall be effected by the general director (director) on the basis of the plan approved by the Managing Board.

1. Credit institutions may use their statutory capital and reserve funds to contribute capital to and buy stocks of enterprises and other credit institutions according to the provisions of law.

2. The Managing Boards of credit institutions shall decide the plans on capital contribution, stock purchase or joint venture with domestic economic organizations, provided that such capital amount shall not exceed the maximum level defined by the State Bank.

3. In case of capital contribution to, stock purchase from or joint venture with foreign investors, the chairmen of the Managing Boards of credit institutions shall report such to the State Bank Governor for approval.

Article 9.- Credit institutions shall have to comply with the regulations on ensuring safety for operational capital as follows:

1. To strictly comply with the regime of capital and property management and use according to the provisions of the Law on Credit Institutions and this Decree.

2. To fully maintain the safety ratios in operations of credit institutions as prescribed by law.

3. To buy insurance for properties according to law provisions.

4. To join the Deposit Insurance or Deposit Preservation in order to protect the legitimate interests of money depositors, contributing to the maintenance of credit institutions� stability.

5. To account into their business expenses the following reserves:

a/ The reserve for risks in operations of credit institutions. The deduction level and use of the contingency reserve to handle risks in banking activities shall be stipulated by the State Bank Governor after consulting the Minister of Finance;

b/ The reserve for reduction of prices of unsaleable goods;

c/ The reserve for decrease in the stocks� value.

Article 10.- Inventory and re-evaluation of properties

1. Credit institutions shall have to inventory and re-evaluate their properties in the following cases:

a/ To inventory and re-evaluate properties periodically and at the end of a fiscal year. To accurately determine the properties in excess or deficit, the debt situation, the overdue debts, the unrecoverable debts; and to determine causes and responsibility therefor;

b/ To inventory and re-evaluate properties by decisions of the competent State agencies;

c/ To effect the equitization or diversification of the ownership forms;

d/ To use their properties to enter joint ventures, contribute stock capital or recover properties after the joint ventures terminate their operations.

2. The inventory and re-evaluation of properties must strictly comply with the law provisions. All differences as the value increase or decrease due to the property re-evaluation shall be accounted as the increase or decrease of capital of credit institutions.

Article 11.- Credit institutions shall conduct the fixed asset depreciation like enterprises. Credit institutions may use the fixed asset depreciation value for re-investment for the replacement and renovation of fixed assets and for other business purposes as prescribed by law.

Article 12.- When suffering from property losses, credit institutions shall have to determine their causes and responsibility therefor and handle such losses as follows:

1. If losses are caused by collectives and individuals, such collectives and individuals shall have to pay compensation therefor as prescribed by law.

2. If the property has been insured, the losses shall be handled according to the insurance contracts.

3. The reserve which has been set up with deductions from expenditures shall be used to cover losses as prescribed by law.

4. The loss value, if not fully offset by compensations of individuals, collectives, insurance organizations and reserve set up with deductions from expenditures, shall be made up for by the financial reserve fund of the credit institution. Where the financial reserve fund is not enough to make up for the loss, the deficit shall be accounted into the irregular expenditure in the period.

1. Credit institutions may lease, pledge and mortgage properties under their management on the principle of efficiency, safety and development of capital according to the provisions of the Civil Code as well as other provisions of law.

2. When leasing, pledging or mortgaging properties being technologies related to professional operations of the whole system, credit institutions must get written consent from the State Bank.

1. Credit institutions may sell their properties to recover capital for use for more efficient business purposes. The sale of properties being technologies related to professional operations of the whole system must be approved in writing by the State bank.

2. When selling their properties, credit institutions shall have to re-evaluate such properties and organize auctions in cases where laws require auctions.

3. The differences between the proceeds from the sale of properties and the remaining value of the sold properties as well as the sale expenses shall be accounted into the business results of credit institutions.

1. Credit institutions may liquidate properties of poor or degraded quality and damaged properties which cannot be restored; technically obsolete properties no longer needed for use or inefficiently used, which cannot be sold in their status quo. The liquidation of properties being technologies related to professional operations of the whole system must be approved in writing by the State Bank.

2. When liquidating their properties, credit institutions shall have to set up liquidation councils; in case of the sale of liquidated properties, auctions must be held according to the provisions of law.

3. The differences between the proceeds gained from the property liquidation and the remaining value of liquidated properties as well as the property liquidation costs shall be accounted into the credit institutions� business results.

Chapter III

REVENUES, EXPENDITURES AND BUSINESS RESULTS

Article 16.- The revenues from business activities of credit institutions mean the sum of money to be collected in the period, including:

1. Revenues from professional activities:

a/ Revenue from loan interests;

b/ Revenue from deposit interests;

c/ Revenue from financial leasing operation;

d/ Other revenues from credit activities;

e/ Revenue from payment service;

f/ Revenue from the collection of guaranty charges;

g/ Revenue from the collection of treasury service charges;

h/ Revenue from the collection of deduction service charges;

i/ Revenue from other services related to the banking activities.

2. Revenues from other activities:

a/ Revenue from interests of capital contribution and stock purchase;

b/ Revenue from participation in the monetary market;

c/ Revenue from gold, silver and foreign currency trading;

d/ Revenue from consignment and agency activities;

e/ Revenue from insurance service;

f/ Revenue from consultancy service;

g/ Revenue from debt sale and purchase between credit institutions;

h/ Revenue from property leasing;

i/ Revenue from other services.

3. The revenue from reimbursement of reserves set up with deductions from expenditures according to the current regulations; revenue from capital sources which have been dealt with by the contingency reserve; and revenue from exchange rate differences as prescribed.

4. Other revenues.

Article 17.- Expenditures of credit institutions are the reasonable payable expenses arising in the period, including:

1. Expenses for business activities of credit institutions:

a/ Expenses for the payment of deposit interests; expenses for the payment of loan interests; and banking service expenses.

b/ Expenses for the depreciation of fixed assets used for business and service activities. The depreciation levels shall comply with the general provisions set for enterprises.

c/ Salaries, wages and expenses of salary and wage nature, which credit institutions have to pay to laborers; allowances for part-time personnel as prescribed. The levels of salary and wage expenses shall be based on the law provisions and labor contracts signed between the credit institutions and laborers, ensuring the following principles:

- For the State credit institutions, the salary and wage regime prescribed for State enterprises shall apply.

- For other credit institutions, the wage levels paid to laborers shall be decided by the Managing Boards, based on the agreements in the labor contracts signed between the credit institutions and laborers according to the provisions of the Labor Code, which must not exceed the maximum wage level set for the determination of the taxable profit by the local People�s Committees.

d/ The social insurance, medical insurance and trade union funding, which credit institutions have to pay according to the provisions of law;

e/ Expenses for the procurement of services from outside such as transportation, electricity, water, telephone, materials, printing papers, stationery, labor tools, repair of fixed assets, fire prevention and combat, consultancy, auditing, property insurance, payment of commissions, brokerage agency, consignment and other services.

f/ Other expenses:

- Excise, land use tax or land rents, land and house taxes, other taxes, charges and fees.

- Expenses for advertisement, marketing, trade promotion, guest reception, ceremonies, transactions, external relations, conferences and other expenses. For newly set up credit institutions, these expenses must not exceed 7% of the yearly total expenditures in the first two (2) years and 5% in the subsequent years.

- Expenses for labor protection.

- Expenses for job severance allowances for laborers according to the provisions of law.

- Expenses paid to female laborers according to prescribed regimes.

- Working-shift meal expenses for officials and employees of the credit institutions with the level not exceeding the minimum wage level set by the State for State employees.

- Expenses for professional and trade associations and societies which credit institutions participate in.

- Deductions for the establishment of reserves as prescribed and expenses for participation in insurance organizations or on the payment of insurance premiums according to the provisions of Article 9 of this Decree.

- Expenses for the reward of innovations and thrifty use of materials as prescribed.

- Expenses for scientific research and techno-logical renovation studies; expenses for innovations, laborer training, raising of laborers� professional and managerial skills; expenses in support of education (if any); medical expenses for laborers of credit institutions according to the law provisions.

- Expenses for the institutions� security.

- Expenses for warehouse and fund operation.

- Expenses for environmental protection. If the yearly expenditures are large and to be effected in many years, it shall be distributed to the subsequent years.

- Expenses for the payment of fines on breaches of economic contracts.

2. Other expenses for operations of credit institutions, including:

a/ Expenses for foreign currency, gold and silver trading.

b/ Expenses for the sale and purchase of stocks and bonds.

c/ Expenses for property leasing and renting.

d/ Expenses for the sale and liquidation of properties (including the remaining value of properties and the sale and liquidation costs).

e/ Expenses for joint venture operations, business cooperation and stock capital contribution.

f/ Expenses for debt sale and purchase between credit institutions.

g/ Expenses for the recovery of the already forgiven debts, expenses for fine collection.

h/ The remaining property loss value after having been offset by the sources stipulated at Point 4, Article 12 of this Decree.

i/ Other permitted expenses.

Article 18.- Credit institutions shall not be allowed to account into their business expenditures the following:

1. Fines paid by collectives and/or individuals for law violations while they are on duty.

2. Expenses not related to business activities of credit institutions such as expenses for capital construction, expenses in support of laborers meeting with difficulties, expenses in support of other organizations and/or individuals.

3. Expenses for overseas working trips, which exceed the prescribed level.

4. Expenses covered by other funding sources: non-business expenses, expenses for rewards, welfare, regular and irregular allowances for people meeting with difficulties and expenses covered by other funding sources.

5. Other unreasonable expenses.

1. All economic operations must be reflected in Vietnam dong in accounting books and final account settlement reports.

2. Where economic operations arise in foreign currency(ies), such currency(ies) must be converted into Vietnam dong according to the stipulations of the Finance Ministry.

Article 20.- Credit institutions shall conduct the account settlement of their revenues and expenditures in strict compliance with the prescribed regime, take responsibility before law for the accuracy of such revenues and expenditures and have to comply with the regulations on accounting vouchers and invoices.

Chapter IV

PROFITS AND DEDUCTIONS FOR ESTABLISHMENT OF FUNDS

Article 21.- A credit institution�s profits obtained in a year mean its business results, including the operational profit and profit from other activities. The credit institution�s profits are the difference between the total revenues to be collected and the total reasonable payable expenses.

Article 22.- Distribution of State credit institutions� profits:

A State credit institution�s profits left after the payment of enterprise income tax prescribed by law shall be distributed as follows:

1. To deduct 5% for the establishment of the reserve fund for supplement to the statutory capital. The maximum level of this fund must not exceed the actual statutory capital level of the credit institution.

2. To offset the preceding years� losses which must not deducted from the pre-enterprise income tax profit.

3. To pay fees for the use of the State budget capital.

4. To pay fines on the law violations under the credit institution�s responsibility.

5. The profit left after subtracting the above-said expenses shall be distributed as follows:

a/ 10% -for the establishment of the financial reserve fund, the balance of which must not exceed 25% of the credit institution�s statutory capital.

b/ 50%- for the professional development investment fund.

c/ 5%- for the job losing allowance fund, the balance of which must not exceed six (6) months� actual salary amount.

d/ To make deductions for the establishment of the reward and welfare funds. The maximum deduction levels for both funds shall be based on the profit ratios (calculated on the State capital) and equivalent to the following:

- 3 months� actual salary amount, if the profit ratio of the current year is not lower than that of the preceding year.

- 2 months� actual salary amount, if the profit ratio of the current year is lower than that of the preceding year.

The Managing Board of the credit institution shall, after consulting the trade union of the credit institution, decide the deduction proportion for each fund.

e/ The profit left after deduction for the establishment of the reward and welfare funds shall be added to the professional development investment fund.

Article 23.- Distribution of profits by other credit institutions:

The other credit institutions� profits left after the payment of enterprise income tax shall be distributed as follows:

1. To set up the reserve fund for supplement to the statutory capital, offset losses of the previous years and pay fines on the law violations according to the provisions of Clauses 1, 2 and 4, Article 22 of this Decree.

2. The remaining profit shall be distributed as follows:

a/ 10%- for the financial reserve fund, the balance of which must not exceed 25% of the credit institution�s statutory capital.

b/ 5%- for the job severance allowance fund, the balance of which must not exceed 6 months� actual salary amount.

3. The distribution of profits left after the establishment of the funds stipulated Clauses 1 and 2 of this Article shall be decided by the credit institutions themselves.

Article 24.- Principles for the use of funds:

1. The reserve fund for supplement to the statutory capital shall be used to supplement the statutory capital.

2. The professional development investment fund shall be used to invest in the expansion of business activities and renovation of technologies, equipment and improvement of working conditions of a credit institution.

Basing itself on the investment demand and the fund�s capacity, the Managing Board of the credit institution shall decide the investment forms and measures on the principle of efficiency, safety and development of capital.

3. The financial reserve fund shall be used to offset the remaining losses and property damage incurred in the business process after they have been made up for by compensation from organizations and/or individuals that have caused such losses or damage, insurance organizations and the reserve funds.

4. The job losing allowance fund shall be used to support laborers who have worked in a credit institution for one (1) year or more but have temporarily lost their jobs under the law provisions; to spend on the professional and technical re-training for laborers due to the technological changes or transfer to new jobs; train reserve jobs for female laborers of the credit institution and raise the professional skills of officials and employees working therein.

5. The reward fund shall be used for:

a/ The year-end reward or periodical reward of officials and employees in the credit institution. The reward levels shall be decided by the Managing Board of the credit institution at the proposal of the general director (director) and trade union of the credit institution, based on the labor productivity and work achievements of each official and employee in the credit institution.

b/ Irregular reward of individuals and collectives in the credit institution that have technical and/or professional innovations, bringing about the business efficiency. The reward levels shall be decided by the Managing Board of the credit institution.

c/ The reward of individuals and units outside the credit institution that have economic relations with the latter and have well fulfilled the contractual terms, efficiently contributing to the credit institution�s business activities. The reward levels shall be decided by the Managing Board of the credit institution.

6. The welfare fund shall be used for:

a/ Investment in the construction or repair or addition of capital for the construction of welfare projects of the credit institution; contribution of investment capital for the construction of public facilities within the branch or jointly with other units according to the contracts.

b/ Expenses for sport, cultural and public welfare activities of the collective of officials and employees of the credit institution.

c/ Contribution to the social welfare fund.

d/ Expenses for regular and irregular allowances for the credit institution�s officials and employees meeting with difficulties.

e/ Expenses for other welfare activities.

The general director (director) of the credit institution shall coordinate with the executive committee of the trade union of the credit institution to manage and use this fund.

Chapter V

ACCOUNTING, STATISTICAL AND AUDITING REGIME

1. Credit institutions shall implement the accounting and statistical regime according to the provisions of law, fully record all the initial vouchers, update their accounting books and reflect fully, promptly, honestly, accurately and objectively their financial activities.

2. A fiscal year of credit institutions shall commence from January 1st and end on December 31 of the calendar year.

1. Credit institutions shall have to make and send quarterly and annual financial reports to the State financial agencies, statistical and tax agencies as well as the State Bank, including:

a/ The balance sheet of the credit institution, enclosed with the detailed explanation on the increase, decrease, fluctuation of capital sources and use of capital.

b/ The report on business results and situation of revenue remittance to the State budget.

c/ The report on labor and wage implementation by the credit institution.

2. The time-limit for sending the above-mentioned reports shall comply with the regulations of the Finance Ministry and the General Department of Statistics.

3. The chairmen of the Managing Boards, the general directors (directors) of credit institutions shall have to take responsibility for the accuracy and truthfulness of these reports.

1. A credit institution shall have to organize internal audit of its financial reports.

2. Within 30 days before the end of a fiscal year, the credit institution shall have to hire an independent auditing organization lawfully operating in Vietnam to audit its financial reports. The selected auditing organization must be approved by the State Bank. The results of auditing the credit institution�s financial reports must be sent to the State financial agencies and the State Bank.

Article 28.- Within 120 days after the end of a fiscal year, credit institutions shall have to publicize their financial reports as prescribed by law.

Article 29.- Basing themselves on the documents guiding the financial regimes, the credit institutions shall elaborate their own financial regulations and submit them to the Managing Boards for approval to serve as basis for implementation. As for the State credit institutions, the financial regulations must be approved by the Finance Ministry.

Chapter VI

RESPONSIBILITIES OF THE MANAGING BOARDS, GENERAL DIRECTORS AND DIRECTORS OF CREDIT INSTITUTIONS

Article 30.- Responsibility of a credit institution�s Managing Board

1. To exercise the function of management over the credit institution; within its competence, to inspect and oversee the financial operations of the credit institution.

2. To receive capital, land, natural resources and other resources assigned by the State and shareholders to the credit institution.

3. To submit to the State Bank Governor plans on capital contribution, stock purchase and joint venture with foreign investors for consideration, decision and reporting to financial management agencies of the same level.

4. To ratify plans on capital mobilization, use, preservation and development as well as plans on the use of after-tax profits, which are submitted by the general director (director) of the credit institution, and take responsibility for its decisions.

5. To approve the annual financial reports of the credit institution and publicize the financial reports as prescribed; to approve the long-term and annual financial plans submitted by the general director (director) of the credit institution.

6. To inspect and supervise the general director (director) of the credit institution in the capital use, preservation and development and organization of business activities according to plans and projects already approved by the credit institution�s Managing Board and fulfill the obligations toward the State budget.

7. To take responsibility for the accuracy and truthfulness of the reports on business results of the credit institution, the distribution and use of the after-tax profits in strict compliance with the regulations.

8. To perform other obligations as prescribed by law.

Article 31.- Responsibility of the general director (director) of a credit institution

1. To act as the legal representative of the credit institution, run the operations of the credit institution and take responsibility before the Managing Board, the State Bank Governor, law and financial agency for the administration of operations of the credit institution.

2. To join the chairman of the Managing Board in signing for reception of capital, land, natural resources and other resources assigned by the State and shareholders.

3. To be responsible for administering the use of capital in business according to the plan on capital use, preservation and development already approved by the Managing Board; to implement the plan on profit distribution after making remittances to the State budget.

4. To take responsibility for the mobilization and use of capital sources for business activities; to nominate personnel to manage investment capital as well as capital for joint venture and business cooperation with other enterprises; to take material liability for damage caused to the credit institution by his/her subjective faults.

5. To elaborate the spending norms in conformity with the business conditions of the credit institution.

6. To take responsibility for the accuracy and truthfulness of the financial reports, statistical reports, final account settlement reports and other financial information.

7. To elaborate annual financial plans in conformity with the business plan to be submitted to the Managing Board for approval and send them to the State financial agencies according to the stipulations of the Finance Ministry.

8. To fulfill other obligations as prescribed by law.

Chapter VII

FINANCIAL PLANS, EXAMINATION AND INSPECTION

1. Credit institutions the shall have to elaborate annual financial plans under the guidance of the Finance Ministry and send them to the State financial agencies and the State Bank. A credit institution�s financial plans include:

a/ A plan on its capital sources and use of capital.

b/ A plan on its revenues, expenditures, business results and State budget remittance quotas.

c/ A plan on its labor and wages.

2. The above-mentioned plans of the credit institutions must be approved by their Managing Boards and at the same time sent to the State financial agencies and State Bank before November 15 of the year preceding the plan year.

Article 33.- The Ministry of Finance shall conduct examination and inspection of the observance of financial regime by credit institutions.

Chapter VIII

IMPLEMENTATION PROVISIONS

Article 34.- This Decree takes effect 15 days after its signing. The earlier provisions on the financial regime for credit institutions which are contrary to this Decree now cease to be effective.

Article 35.- The Finance Ministry shall assume the prime responsibility and coordinate with the State Bank in guiding the implementation of this Decree.

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 shall have to implement this Decree.

On behalf of the Government
Prime Minister
PHAN VAN KHAI