Chapter II
SPECIFIC PROVISIONS
Section 1. PRUDENTIAL RATIOS AND LIMITS FOR OPERATIONS OF PEOPLE’S CREDIT FUNDS
Article 5. Capital adequacy ratio (CAR)
1. People’s credit funds must maintain the minimum CAR of 8%.
2. CAR is determined by adopting the following formula:
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CAR =
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Equity
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x 100
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Total risk-weighted assets
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Where:
- The equity shall be determined according to clause 3 of this Article;
- Total risk-weighted assets are the sum of assets, determined according to the level of risks specified in clause 4 of this Article.
3. Equity equals Tier 1 capital plus (+) Tier 2 capital minus (-) the amount deducted from equity at the time of equity determination. To be specific:
a) Tier 1 capital
Tier 1 capital includes:
(i) Charter capital;
(ii) Funds for fundamental construction and purchase of fixed assets;
(iii) Additional reserve fund of charter capital;
(iv) Operational development investment fund;
(v) Grants offered by sponsors to the people’s credit fund;
(vi) Retained earnings.
The following amounts must be deducted from Tier 1 capital:
(i) Accumulated losses (if any); and
(ii) Capital amount contributed to the cooperative bank;
b) Tier 2 capital may not exceed 100% of Tier 1 capital, and includes:
(i) Financial reserve fund;
(ii) General provision which shall not exceed 1,25% of total risk-weighted assets;
c) Amount deducted from equity: 100% of decrease resulted from revaluation of assets as prescribed by law.
Determination of equity used for calculating the minimum CAR shall comply with Appendix 1 enclosed herewith.
4. Assets are classified by level of risks into the following groups:
a) Assets given a risk weight of 0% include:
(i) Cash;
(ii) Deposits at SBV;
(iii) Deposits at the cooperative bank;
(iv) Outstanding balances of the granted loans which are fully secured by cash or deposits of borrowers at the people’s credit fund;
(v) Outstanding balances of the granted loans which are fully secured by valuable papers issued by the Government or SBV;
(vi) Outstanding balances of the loans granted using trust funds in accordance with regulations of law on trusteeship in banking sector;
b) Assets given a risk weight of 20% include:
(i) Deposits to checking accounts opened at commercial banks and foreign bank branches;
(ii) Outstanding balances of the granted loans which are fully secured by valuable papers issued by state-owned financial institutions, credit institutions or foreign bank branches;
c) Assets given a risk weight of 50% include: Outstanding balances of the granted loans which are fully secured by housing, land use rights, housing on land granted land use rights of borrowers in accordance with regulations of law;
d) Assets given a risk weight of 100% include:
(i) Fixed assets of the people’s credit fund;
(ii) All assets on the balance sheet other than those specified in points a, b, c, d(i) of this clause, and amount of capital contributed to the cooperative bank.
Valuation of risk-weighted assets shall comply with Appendix 2 enclosed herewith.
Article 6. Solvency ratio
1. The solvency ratio is determined using the following formula:
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Solvency ratio =
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Liquid assets
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Total liabilities
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Where: Liquid assets and total liabilities are determined according to Appendix 3 enclosed herewith.
2. At the end of each business day, the people’s credit fund shall be required to maintain the minimum solvency ratio of 1 for the next business day and for the next 7 (seven) business days.
Article 7. Maximum ratio of short-term capital used for granting medium- and long-term loans
1. Each people’s credit fund shall maintain a ratio of short-term capital used for granting medium- and long-term loans of not exceeding 30%.
2. The ratio of short-term capital sources used for granting medium and long-term loans is determined using the following formula:
Where:
- A: Ratio of short-term capital sources used for granting medium and long-term loans.
- B: Total outstanding balance of medium- and long-term loans as prescribed in clause 3 of this Article.
- B: Total amount of medium- and long-term capital as prescribed in clause 4 of this Article.
- D: Total short-term capital as prescribed in clause 5 of this Article.
3. Total outstanding balance of medium- and long-term loans includes outstanding balances of loans with remaining term of over 01 (one) year. Total outstanding balance of medium- and long-term loans excludes outstanding balances of loans granted using trust funds of the Government, organizations (including other credit institutions and foreign bank branches) and individuals.
4. Medium- and long-term capital includes:
a) Charter capital and reserve funds that remain after deduction of costs of purchase or investment in fixed assets, and capital contributed to the cooperative bank as prescribed by law;
b) The following amounts with remaining term of over 01 (one) year, including:
(i) Term deposits and saving deposits of organizations and individuals;
(ii) Loans received from other credit institutions and financial institutions.
5. Short-term capital includes:
a) Demand deposits;
b) The following amounts with remaining term of up to 01 (one) year, including:
(i) Term deposits and saving deposits of organizations and individuals;
(ii) Loans received from other credit institutions and financial institutions.
Article 8. Limits on lending operations
1. A people’s credit fund is not allowed to grant unsecured loans or concessional loans (i.e. a loan is granted with interest rate, documentation requirements, procedures for considering and approving loan application, collateral and debt collection measures softer than those prescribed by laws and its internal regulations on lending operations and loan management) to:
a) Members of the Management Board, members of the Board of Controllers, Director, Deputy Director(s) and Chief Accountant of the people’s credit fund;
b) Audit organization, auditor(s) and inspector(s) that are carrying out an audit or inspection of the people’s credit fund;
c) An enterprise over 10% of the charter capital of which is held by one of the entities specified in point a of this clause;
d) Persons in charge of appraisal or approval of loan applications of the people’s credit fund.
2. Regarding the loans granted to the entities prescribed in Clause 1 of this Article, the people’s credit fund shall:
a) ensure that total outstanding balance of loans granted shall not exceed 5% of its equity;
b) ensure that the grant of loans is approved by the Management Board and made publicly available in the people’s credit fund;
c) submit report to the Office of the SBV Banking Supervision Agency of province or city where the people’s credit fund is headquartered or the SBV’s provincial branch (if the Office of the SBV Banking Supervision Agency is not established) whenever a loan is granted;
d) submit report to the GMM on loans granted by the ending date of data collection which is conducted to serve the GMM.
3. Total outstanding balance on loans granted to a member that is a juridical person shall not exceed the sum of contributed capital and balance on deposits of that juridical person at the people’s credit fund at all times. The term of a loan granted to a member that is a juridical person shall not be longer than the remaining term of that member's deposit at the people’s credit fund which must also be used as the loan collateral.
4. Total outstanding balance of loans granted to a client shall not exceed 15% of equity of the people’s credit fund.
5. Total outstanding balance of loans granted to a client and their related persons shall not exceed 25% of equity of the people’s credit fund, in which total amount of loans granted to the client shall not exceed the limit specified in clause 4 of this Article.
6. Limits prescribed in clauses 4 and 5 of this Article shall not apply to:
a) Loans granted using trust funds of the Government, organizations (including credit institutions and foreign bank branches) and individuals;
b) A loan granted to a client which is fully secured by that client's deposits at the people’s credit fund in both terms of the loan term and amount.
7. Equity specified in point a clause 2, clauses 4 and 5 of this Article is determined according to clause 3 Article 5 of this Circular.
Section 2. REPORTING AND HANDLING OF VIOLATIONS
Article 9. Reporting
People’s credit funds shall submit reports on their implementation of regulations on prudential ratios and limits for their operations as prescribed by the SBV.
Article 10. Handling of violations
Any people’s credit funds and relevant individuals that commit violations against provisions of this Circular shall, depending on the nature and severity of the violation, incur penalties as prescribed by laws.
Tìm kiếm
Thông tư 32/2015/TT-NHNN (Bản Word)