The conditions for granting licenses to people's credit funds and microfinance institutions

On 20/12/2024, the Government issued Decree No. 162/2024/ND-CP stipulating the conditions for granting licenses to people's credit funds and microfinance institutions and the conditions for owners of credit institutions that are single-member limited liability companies, founding shareholders and founding members.

This Decree stipulates the conditions for owners of credit institutions that are single-member limited liability companies, founding shareholders and founding members as prescribed in Point b, Clause 1, Article 29 of the Law on Credit Institutions and the conditions for granting licenses to people's credit funds and microfinance institutions.

The Article 10 of Decree No. 162/2024/ND-CP stipulates the conditions for granting a License to a people's credit fund:

To have a minimum charter capital equal to the legal capital level prescribed by the Government at the time of applying for a License.

To have at least 30 members meeting the conditions prescribed in Article 11 of this Decree, have sufficient financial capacity to participate in contributing capital to establish a people's credit fund.

Managers, operators, and members of the Board of Supervisors meet all the standards and conditions prescribed in Clause 6, Article 41 of the Law on Credit Institutions.

The organizational structure of the Board of Directors and the Board of Supervisors must comply with the provisions of the Law on Credit Institutions.

To have a Charter in accordance with the provisions of the Law on Credit Institutions and other relevant legal provisions.

To have an establishment plan and a feasible business plan for the first 3 years of operation.

The Article 11 of Decree No. 162/2024/ND-CP stipulates the conditions for founding members of people's credit funds.

For individuals: Vietnamese citizens aged 18 years or older, with full civil act capacity, registered for permanent residence or temporary residence in the area of ​​operation of the people's credit fund. In case of temporary residence registration, the individual must have production or business activities or be a worker working in the area of ​​operation of the people's credit fund and must have documents proving this issue. Not being a person who is being prosecuted for criminal liability, serving a prison sentence; currently serving an administrative measure at a compulsory drug rehabilitation facility or compulsory education facility; currently being banned by the Court from holding a position, practicing a profession or doing certain work; a person who has been convicted of a serious crime or more and has not had his/her criminal record expunged.

Not subject to the prohibitions prescribed by the Law on Cadres and Civil Servants and other relevant legal provisions.

For households: A household with members permanently residing in the area of ​​operation of the people's credit fund; members of the household have common assets to serve the production and business services of the household.

Members of the household must appoint a member of the household as a representative to exercise the rights and obligations of a member of the people's credit fund. The representative of the household must be authorized in writing by the members of the household in accordance with the provisions of law and must ensure the conditions prescribed for individuals.

For legal entities: A legal entity (except for Social Funds and Charity Funds) that is operating normally and has its head office located in the area of ​​operation of the people's credit fund.

The representative of a legal entity participating in the membership of a people's credit fund is the legal representative of the legal entity or an individual authorized by the legal representative of the legal entity for participation.

The Article 12 of Decree No. 162/2024/ND-CP also clearly stipulates the conditions for granting a License to a microfinance institution:

- To have a minimum charter capital equal to the legal capital level prescribed by the Government at the time of applying for a License.

- To have an owner or founding member as prescribed in Article 13 of this Decree.

- To have a manager, operator, or member of the Board of Supervisors who meets the standards and conditions prescribed by the State Bank.

- To have a Charter in accordance with the provisions of the Law on Credit Institutions and relevant legal provisions.

- To have an establishment plan and a feasible business plan for the first 3 years of operation.

This Decree takes effect from December 20, 2024.

Decree No. 39/2014/ND-CP dated May 7, 2014 of the Government on the operation of finance companies and financial leasing companies ceases to be effective from the effective date of this Decree.