Press Release of issuance of Circular No.33/2015/TT-NHNN
The Governor of the State Bank of Vietnam (SBV) issued Circular No. 33/2015/TT-NHNN on December 31, 2015 on prudential ratios in operations of micro-finance institutions. The Circular will take effect from March 1, 2016, and replace Circular No.07/2009/TT-NHNN dated April 17, 2009 on prudential ratios in operations of micro-finance institutions.
The Circular No. 33/2015/TT-NHNN is applicable to micro-finance institutions with license granted by the SBV and operating in Vietnam in accordance with laws, and relevant credit institutions and individuals. The Circular is not applicable to micro-finance programs and projects of non micro – finance institutions.
The Circular includes 4 Chapters and 13 Articles as follows:
Chapter I: General provisions including 03 Articles (Articles 1 to 3) stipulates governing scope, implementers and interpretation.
Chapter II: Specific provisions including 05 Articles (Articles 4 to 8) stipulates regulations on capital adequacy ratio, equity capital, internal regulations on liquidity management, risk – weighted assets and solvency ratio.
Chapter III: Reporting, resolving violations and responsibilities of relevant entities including 03 Articles (Articles 9 to 11) stipulate reports, violation resolution and responsibilities of relevant entities.
Chapter IV: Terms of execution including 02 Articles (Articles 12 to 13) stipulates the effective date and the implementation.
Several main substances of the Circular are as follows:
Firstly, the Circular maintains the capital adequacy ratio of 10% as stipulated in Circular No. 07/2009/TT-NHNN, and supplements several regulations in accordance with operational features of micro-finance institutions in line with Law on Credit Institutions as follows:
- Supplementing conditions of debts to be calculated in to tier 2 capital of micro-finance institutions, which are similar to conditions of debts calculated in to tier 2 capital of credit institutions and foreign bank branches prescribed in Circular No.36/2014/TT-NHNN dated November 20, 2014 on limits and prudential ratios in operations of credit institutions and foreign bank branches.
- Supplementing several types of risk – weighted assets including:
+ Fully guaranted loans of the customers who have savings and borrow at micro-finance institutions; the risk coefficient of this type of loans is 50%.
+ Loan outstanding to customers with risk coefficient of 100% (excluding loans of Group “Asset” of risk coefficient of 0%, 20%, 50%)
- Eliminating small scaled credit granted to customers of micro finance institutions which have the duration of less than 01 year, belonging to group “Assets” with risk coefficient of 50%.
Secondly, the Circular maintains the regulation on solvency ratio of 20% as stipulated in Circular No. 07/2009/TT-NHNN, and revising the method of determining the solvency ratio of micro-finance institutions; specifically, the criteria to calculate solvency ratio includes only voluntary deposits, no compulsory deposits as stipulated in Circular No. 07/2009/TT-NHNN in line with the nature of the compulsory deposits. The regulation will facilitates micro-finance institutions to increase capital for lending to poor customers, low – income households, contributing to poverty reduction.
The issuance of Circular No. 33/2015/TT-NHNN aims at completing legal framework for the system of micro-finance institutions, creating standards of governing, safe and sound operations of micro-finance institutions in accordance with international standards, meeting the requirements of management and supervision of the system of micro-finance institutions in the new period, thereby gradually developing the system of micro-finance institutions safely, healthily and more effectively, contributing to socio-economic development.
Translated by LH