The Vietnamese government has taken significant steps to regulate the financial sector through the introduction of Decree No. 162/2024/ND-CP, which was issued on December 20, 2024. This decree specifies the conditions required for issuing licenses to people's credit unions and microfinance institutions, marking a pivotal development for financial institutions operating at the community level.
The new regulations focus on establishing clear parameters governing the operational and structural integrity of credit unions and microfinance entities. According to the decree, to be eligible for a license, people's credit unions must meet several criteria. Firstly, they are required to have a minimum charter capital equivalent to the legally mandated capital as stipulated by the government at the time of applying for the license. This aims to fortify the financial health of such institutions, ensuring they can operate sustainably.
Next, the decree mandates the existence of at least thirty members who meet the conditions outlined under Article 11. These members must possess the necessary financial capacity to contribute capital toward establishing the credit union, which is integral to its foundational stability. This provision encourages community engagement and investment, fostering local ownership and support.
Leadership is another focal point of the decree. The decree specifies stringent requirements for managers, operators, and members of the supervisory board, ensuring they fulfill standards as set out under Article 41 of the Law on Credit Institutions. This requirement emphasizes the need for qualified management to uphold governance and accountability within these organizations.
The structure of the board of directors and the supervisory board must align with the regulations established by the Law on Credit Institutions, which provides clarity on how these organizations should be governed effectively. The decree also mandates the adoption of bylaws consistent with the legal framework governing credit institutions and other relevant regulations. This ensures all credit unions operate under established guidelines, promoting transparency and regulatory compliance.
Critical to this regulation is the requirement for credit unions to have feasible business plans for the first three years of operation. This strategic planning is intended to provide credit unions with direction and sustainability as they begin their operations.
For individual members seeking to establish or become part of these credit unions, additional criteria have been specified. Individuals must be Vietnamese citizens aged eighteen and above, must possess full civil capacity, and are required to have permanent or temporary residence within the area of the credit union's operations. This ensures active community participation, as members would need to be directly involved and invested within the locality.
Should members be registered temporarily, they must demonstrate engagement through business or work activities within the credit union’s area of operation, backed by appropriate documentation to validate such activities. This condition supports the local integration of credit unions.
Individuals under legal prosecution or serving imprisonment, as well as those barred from holding certain positions or engaging in specific occupations due to past convictions, are precluded from membership. This is aimed at upholding the integrity and respectability of the credit unions.
Family units also play a role. Households must reside permanently within the credit union's operating domain and must possess shared assets to facilitate productive or service-oriented activities. A family member must be appointed as the representative, which reinforces adequate governance and accountability from household contributors.
Legal entities, excluding social welfare or charitable funds, can also participate, provided they maintain regular operational status and have their headquarters situated within the locality. The legal representative must either be authorized directly or appointed by the entity’s legal representative to take part.
Microfinance institutions are also covered under the new regulations. Similar to credit unions, they need to have the minimum charter capital as stipulated by the government when applying for the license. The decree insists on having qualified management teams, meeting the standards set by the State Bank of Vietnam.
Like credit unions, microfinance institutions are required to develop feasible business plans for their first three years, ensuring they have structured growth strategies meant to secure their financial viability and commitment to community development.
Overall, Decree No. 162/2024/ND-CP lays the groundwork for the healthy development of community-centric financial institutions, thereby enhancing access to financial services for individuals and households within the Vietnamese economy. By fortifying the operational frameworks of people's credit unions and microfinance institutions, the government aims to build resilient financial systems capable of supporting local growth and development. This initiative not only reflects the government’s commitment to community finance but also aligns with broader goals aimed at boosting financial inclusion across the country.
