How is the conversion of the Central People’s Credit Fund into a cooperative bank?

Central People’s Credit Fund and Cooperative Banks

Clause 6, Article 4 of the Law on Credit Institutions 2010 regulates people’s credit funds as follows:

“6. People’s Credit Fund is a credit institution voluntarily established by legal entities, individuals and households in the form of cooperatives to carry out a number of banking activities in accordance with the provisions of this Law and the Law on Cooperatives with the main goal of supporting each other to develop production, business and life.”

From there, it can be understood that the Central People’s Credit Fund is a credit fund jointly established by grassroots people’s credit funds with the purpose of supporting and improving the operational efficiency of the entire people’s credit fund system.

Clause 7, Article 4 of the Law on Credit Institutions 2010 regulates cooperative banks:

“7. Cooperative banks are banks of all people’s credit funds established by people’s credit funds and a number of capital-contributing legal entities according to the provisions of this Law with the main goal of system linkage, financial support, and capital regulation in the system of people’s credit funds.”

It can be seen that cooperative banks are established by people’s credit funds. Therefore, the conversion from the Central People’s Credit Fund to a cooperative bank is reasonable.

Appraisal of dossiers requesting conversion of the Central People’s Credit Fund into a cooperative bank

Article 12 of Circular 31/2012/TT-NHNN regulates the order and appraisal of dossiers requesting approval for conversion and issuance of a cooperative bank license as follows:

– The Central People’s Credit Fund must conduct a Congress to convert the Central People’s Credit Fund into a cooperative bank according to Article 13 of this Circular, and prepare documents to request the State Bank to approve the conversion according to Article 14 of this Circular.

– Within a maximum of 60 working days after the State Bank approves the conversion of the Central People’s Credit Fund into a cooperative bank, the Central People’s Credit Fund must organize the first Members’ Congress to carry out the following tasks:

a) Approving the Charter of the cooperative bank.

b) Officially elect the positions of Chairman and members of the Board of Directors, Head and members of the Cooperative Bank’s Control Board for the first term according to the nomination list specified in Clause 1, Article 22 of this Circular.

c) Approve the business plan for the first 3 years.

– Within a maximum period of 15 working days from the date of holding the first Members’ Congress, the Central People’s Credit Fund must prepare an application for a cooperative bank license according to the provisions of Article 16 of this Circular.

– The Banking Inspection and Supervision Agency is responsible for receiving, appraising documents and submitting them to the Governor of the State Bank for approval of the conversion and issuance of a cooperative bank license.

Congress on converting the Central People’s Credit Fund into a cooperative bank

Pursuant to Article 13 of Circular 31/2012/TT-NHNN on the Congress converting the Central People’s Credit Fund into a cooperative bank:

(1) The Congress on converting the Central People’s Credit Fund into a cooperative bank (hereinafter referred to as the Conversion Congress) is convened by the Board of Directors of the Central People’s Credit Fund. The organization of the Conversion Congress in the form of a Congress of all members or a Congress of delegates of members of the Central People’s Credit Fund, and the method of electing member delegates to attend the Conversion Congress are decided by the Board of Directors of the Central People’s Credit Fund.

(2) The Conversion Congress has the following tasks:

a) Approving the Project to convert the Central People’s Credit Fund into a cooperative bank. The project to convert the Central People’s Credit Fund into a cooperative bank must have at least the following contents:

– The necessity of converting the Central People’s Credit Fund into a cooperative bank;

– Name of the cooperative bank, head office location, duration of operation, charter capital;

– Operational content is consistent with the provisions of the Law on Credit Institutions and this Circular;

– Organizational structure, governance and administration;

– List of expected personnel, detailing professional qualifications and work experience in the banking sector:

+ Chairman and members of the Board of Directors;

+ Head and members of the Supervisory Board;

+ General Director.

b) Approve the draft Charter of the cooperative bank;

c) Approve the list of cooperative bank members.

According to the above regulations, the Board of Directors of the Central People’s Credit Fund decides on the form of organizing the congress to suit the actual situation, helping the proceedings to take place smoothly.

Dossiers and procedures for approving the conversion of the Central People’s Credit Fund into a cooperative bank

(1) Documents for converting the Central People’s Credit Fund into a cooperative bank: Clause 1, Article 14, Circular 31/2012/TT-NHNN

After the Conversion Congress, the Central People’s Credit Fund prepares 01 (one) set of documents to request the State Bank to approve the conversion of the Central People’s Credit Fund into a cooperative bank, sent directly or by post to the State Bank (Bank Supervision and Inspection Agency), including:

– Document of the Chairman of the Board of Directors of the Central People’s Credit Fund requesting the State Bank to approve the conversion of the Central People’s Credit Fund into a cooperative bank;

– Minutes of the conversion Congress meeting;

– Resolution of the Conversion Congress, which at least contains the following contents:

+ Approved the Project to convert the Central People’s Credit Fund into a cooperative bank;

+ Approve the draft Charter of the cooperative bank;

+ Approve the list of cooperative bank members.

– Project to convert the Central People’s Credit Fund into a cooperative bank;

– Cooperative bank charter;

– List of cooperative bank members.

(2) Order and procedures for converting the Central People’s Credit Fund into a cooperative bank: Clause 2, Article 14, Circular 31/2012/TT-NHNN

Within 10 working days from the date of receiving complete and valid documents, the State Bank has a decision to approve the conversion of the Central People’s Credit Fund into a cooperative bank.

Thus, the conversion of the Central People’s Credit Fund into a cooperative bank is carried out according to the legal order and procedures mentioned above.