What sources does the Bank of Social Policy’s operating capital include? How are the income and expenses incurred by this agency regulated? This article shares in detail the legal regulations surrounding the income and expenses of the Bank for Social Policies according to current legal regulations. 

CSPL: Article 5, 10, 11 Circular 62/2016/TT-BTC

1. Operating capital of the Bank for Social Policies

1.1. Operating capital:

– Operating capital includes the following sources:

+ Equity and funds.

+ Mobilized capital.

+ Capital entrusted by domestic and foreign organizations and individuals.

+ Capital other.

1.2. Equity and funds:

– Equity and funds include:

+ charter capital is granted by the state budget upon establishment and is supplemented during operation. The Bank of Social Policies has its charter capital supplemented annually corresponding to the credit growth rate assigned by the Prime Minister.

+ Funds formed during the operation of the Bank of Social Policies include: charter capital Supplemental Reserve Fund, Professional Development Investment Fund, Financial Reserve Fund, Credit Risk Reserve Fund, Bonus Fund, Welfare Fund, Management Officer Bonus Fund management.

+ State budget capital (including central budget and local budget) for loans to alleviate hunger and reduce poverty, create jobs and implement other social policies according to regulations of the Government and the Prime Minister.

+ The difference between revenues and expenditures is left unallocated to funds (if any).

+ Non-refundable funding from organizations domestic and foreign organizations and individuals.

+ Other capital as prescribed by law (if any).

1.3. Mobilized capital:

1.3.1. Form of capital mobilization:

– Mobilizing interest-bearing deposits within the approved annual plan; Voluntary deposits without interest from domestic and foreign organizations and individuals; Savings of the poor and other policy beneficiaries;

– ODA capital assigned by the Government;

– Issuing bonds, certificates of deposit and other valuable papers according to the provisions of law;

– Receive deposits from credit institutions according to regulations of the State Bank of Vietnam;

– Borrow capital from the State Bank of Vietnam Nam;

– Borrowing capital from domestic and foreign financial and credit institutions.

1.3.2. Principles of capital mobilization

– Every year, the General Director of the Bank for Social Policies, based on the credit plan, plans the mobilized capital sources and submits them to the Board of Directors of the Bank for Social Policies for approval;

– Mobilizing capital sources at market interest rates to lend to poor households and policy beneficiaries must ensure the principle of only mobilizing when the capital sources have been fully used without paying interest or mobilized at low interest rates. The interest rate for mobilizing capital of the Bank for Social Policies is implemented according to the following principles:

+ In case the Bank for Social Policies issues bonds guaranteed by the Government to mobilize capital, the issuance interest rate shall comply with the interest rate framework prescribed by the Ministry of Finance.

+ In case the Bank for Social Policies mobilizes capital in the form of issuing certificates of deposit and other valuable papers (excluding issue bonds guaranteed by the Government); receive deposits from domestic organizations and individuals; mobilize savings of the poor; Borrowing capital from domestic financial institutions and credit institutions, the capital mobilization interest rate must not exceed the highest mobilization interest rate of the same term and at the same time of four banks including: Vietnam Bank for Agriculture and Rural Development, Vietnam Investment and Development Joint Stock Commercial Bank, Vietnam Foreign Trade Joint Stock Commercial Bank and Vietnam Industry and Trade Joint Stock Commercial Bank in the same area.

+ In the case of the Social Policy Bank Association receives deposits from credit institutions according to the regulations of the State Bank of Vietnam, the capital mobilization interest rate does not exceed the interest rate according to the regulations of the State Bank of Vietnam.

+ In case the Bank for Social Policies borrows capital from the State Bank of Vietnam in Vietnamese dong or in foreign currency, the loan interest rate shall comply with the regulations of the State Bank of Vietnam.

+ In case the Social Policy Bank borrows capital from credit institutions and financial institutions abroad, it must comply with the provisions of the Law on Credit Institutions and current legal documents. Capital mobilization interest rates must be sent to the Ministry of Finance for review and comments before implementation.

2. Income of the Bank of Social Policies

Income of the Bank of Social Policies includes:

– Income from professional activities:

+ Interest collected on loans to poor households and policy beneficiaries.

+ Interest collected on deposits of the Bank of Social Policies at the State Bank of Vietnam, State Treasury and commercial banks.

+ Collect fees for entrusted re-lending according to trust contracts.

+ Collect compensation for interest rate differences and management fees granted by the state budget.

+ Collect payment services and treasury funds.

+ Collect income from professional activities and services other.

– Income from other activities:

+ Revenue from liquidation and sale of assets of the Bank for Social Policies.

+ Revenue from Debts that have been processed from the Risk Reserve Fund, which have been handled according to regulations.

+ Revenue from exchange rate differences (if yes).

+ Other incomes as prescribed by law.

3. Expenses of the Bank for Social Policies

Expenses of the Bank for Social Policies are expenses incurred during its operations, including:

3.1. Expenses for professional activities:

– Capital mobilization expenses.

– Payment service and treasury expenses include payment service expenses; postal and communication network fees; Expenses for transporting, loading and unloading money, expenses for tallying, classifying and packaging money, expenses for protecting money and other expenses related to payment and treasury activities.

– Payment of service fees for organizations entrusting loans to the poor and other policy beneficiaries. The level of payment for entrustment service fees agreed upon by the Bank for Social Policies and the organization implementing entrusted lending does not exceed 0.125%/month calculated on the outstanding loan balance with interest earned.

– Payment of entrustment fees for Unions and commissions for Loan Savings Groups. The maximum total payment rate is 0.125%/month calculated on the interest-bearing debt balance, the specific distribution rate is decided by the Bank for Social Policies.

– Expenses for participating in the currency market.

– Other expenses for professional activities.

3.2. Payment of taxes, fees and charges according to regulations.

3.3. Costs for setting up the Credit Risk Reserve Fund.

3.4. Expenses for exchange rate differences (if any).

3.5. Expenses to compensate for losses in capital, assets and loan balances (if any).

3.6 Expenditures for officials, civil servants, public employees, and employees of the Bank for Social Policies.

– Expenditure on salaries and salary allowances for officials according to the provisions of law.

– Expenditure on social insurance, health insurance, unemployment insurance, Contribute to trade union fees according to the provisions of law.

– Mid-shift meal expenses: Maximum expense level does not exceed the base salary prescribed by the State for state civil servants/person/month.

– Transactional clothing expenses: Expenses do not exceed ½ of the maximum transaction clothing expense level for cash expenses to be included in deductible expenses when determining taxable income for businesses industry.

– Expenditure on labor protection equipment for subjects who need labor protection equipment according to the provisions of law.

– Expenditure on remuneration for members of the Board of Directors who work part-time at the central government in accordance with the provisions of law.

– Expenditure on allowances for members of the Advisory Board of Directors of the Board of Directors, concurrent members of the Board of Directors’ Control Board, members of the Board of Directors at all levels, the monthly payment for each member is 0.2 months of base salary as prescribed by the State for civil servants.

– Payment of remuneration for commune and ward officials with a maximum of 0.12 months of base salary/commune, ward/month.

– Payment of severance allowance for employees in accordance with the law law.

– Expenses for female employees according to regulations.

– Annual leave expenses according to provisions of law.

3.7 Cost of assets of the Bank for Social Policies

– Expenses for depreciation of fixed assets according to the current Regulations on management, use and depreciation of fixed assets for businesses.

– Fixed asset repair costs to restore the asset’s capacity are directly accounted for or gradually allocated to operating expenses during the year. For specific fixed assets where fixed asset repair costs arise unevenly between periods and years, if the Bank for Social Policies wants to advance fixed asset repair costs into operating expenses, it must make a plan to advance fixed asset repair costs and report to the Ministry of Finance for consideration and decision. The Social Policy Bank must settle the actual repair costs incurred with the previously deducted repair costs. If the actual repair costs are greater than the deducted amount, the difference is accounted directly or gradually allocated to expenses in the period. If the actual repair costs are less than the deducted amount, the difference is accounted for in income in the period.

– Asset rental costs are accounted for in operating expenses according to the actual amount spent in the year based on property lease contract, in case the property rent is paid once for many years, the rent is gradually allocated to operating expenses according to the number of years of using the property.

– Repair, renovation, and upgrade costs for rented or borrowed offices of the Bank of Social Policies. The maximum expenditure must not exceed 5% of the average cost of fixed assets during the year.

– Expenditure on tools and labor tools: Expenditure must not exceed 2% of the total management fee of the Social Policy Bank assigned annually.

– Expenditure on purchasing property insurance for assets that must be insured according to the provisions of law, the expenditure is based on the signed property insurance contract with the Insurance agency.

3.8. Expenditures for management and public affairs activities

These expenditures are made according to the principle:

– The Bank for Social Policies is allowed to proactively spend on general public service activities within the total assigned management fee according to the principle of savings, efficiency and with reasonable and valid documents.

– Expenditures for management and public affairs activities including:

+ Expenses for purchasing printing materials and papers include expenses for purchasing office materials, printing papers, information carriers, gasoline and other materials;

+ Expenses for officials and employees going on business trips domestically and internationally according to current regulations of the Ministry of Finance for administrative and non-business agencies; For monthly per diem expenses for officials who often have to travel on mobile work to serve local credit activities, the General Director of the Bank for Social Policies shall be assigned to consider regulations to suit the actual conditions of each locality but not to exceed 2 times the State-specified norms;

+ Expenses for training and professional training for officials and employees of the Bank for Social Policies. Expenditure levels according to State regulations for administrative and non-business agencies;

+ Expenses for scientific research and technological innovation research; initiatives and improvements to improve the operational efficiency of the Bank for Social Policies. Research topics and research cost estimates for each topic must be approved by the General Director of the Bank for Social Policies and take responsibility for the effectiveness of those projects;

+ Postage and telephone expenses are expenses on postage, communication, telegraph, telephone, communication channel rental, telex, fax paid according to the postal agency’s invoice. Payment for using fixed telephones installed in private homes and mobile phones for equipped subjects is decided by the General Director of the Bank for Social Policies based on financial capacity and work needs;

+ Expenditures to support activities of the Party and unions of the Bank for Social Policies (when the operating budget of these organizations is insufficient) according to State regulations (excluding expenditures to support industry unions, localities, social organizations and other agencies);

+ Expenses for purchasing documents, books, newspapers;

+ Expenses for electricity, water, health care, and agency sanitation;

+ Transaction costs, foreign affairs, conference costs, reception costs, ceremonies and other expenses must be associated with operational efficiency, the cost must not exceed 5% of total costs;

+ Expenses for inspection, examination and audit of the Bank for Social Policies according to the prescribed regime;

+ Expenses for fire prevention and fighting activities in the agency according to regulations;

+ Spending on environmental protection;

+ Other management costs as prescribed.

3.9. Other branches

– Expenses for selling and liquidating assets (including the remaining value of fixed assets upon liquidation or sale).

– Expenses for recovering bad debts.

– Other expenses as prescribed by law.