The State Bank of Vietnam (SBV) has issued Circular No. 40/2026/TT-NHNN regulating limits and prudential ratios in the operations of People’s Credit Funds (PCFs). The Circular takes effect on 1 November 2026, replacing Circular No. 32/2015/TT-NHNN and Circular No. 13/2024/TT-NHNN (which amended and supplemented several articles of Circular 32). Circular 40 consists of 4 chapters, 16 articles, and 3 appendices, stipulating requirements on: minimum capital adequacy ratio; solvency ratio, ratio of short-term funds used for medium- and long-term loans; lending restrictions and limits; total deposits-to-equity ratio; etc.
These metrics are directly linked to capital mobilization, credit extension, liquidity management, and PCF financial capacity. Beyond specific ratios, the Circular also establishes requirements for IT systems, internal regulations, and tracking, warning, and remediation mechanisms when safety limits and ratios are not met.
New Regulations on Capital Adequacy Ratio
Under Article 8, PCFs must maintain a minimum capital adequacy ratio (CAR) of 8%. The specific method for determining the minimum CAR is detailed within the Circular.
The Circular also classifies assets into risk-weighted categories of 0%, 20%, 50%, and 100%. For example, the 0% risk weight group includes cash, deposits with the SBV, deposits with Co-opBank, and certain secured loans as prescribed by regulations. Outstanding loans fully secured by residential housing, land use rights, or residential property attached to land use rights of the borrower belong to the 50% risk weight group. 100% Risk Weight Group consists of the historical cost of fixed assets and other assets that do not fall into the 0%, 20%, or 50% groups. Appendix II of the Circular provides detailed guidance on the classification and determination of total risk-weighted assets.
A provision PCFs need to monitor frequently is the real value of charter capital. According to Article 6, this value is calculated by adding charter capital and undistributed accumulated profits, and subtracting unresolved accumulated losses as reflected in the accounting records. PCFs are required to regularly monitor and assess the real value of their charter capital.
If the real value of charter capital drops lower than the legal capital level, the PCF must construct and implement a resolution plan. Within a maximum time limit of 30 days from the date the real value of charter capital decreases below the legal capital level, it must have a written report accompanied by the resolution plan and a commitment to execute the plan sent directly or via postal services to the regional SBV branch.
The Circular also stipulates measures that regional SBV branches may consider applying depending on the level of capital reduction. In cases where the real value of charter capital decreases below 80% of the legal capital level, measures under consideration include restricting profit distribution; restricting the expansion of operational scope, scale, and territory; restricting, suspending, or temporarily suspending certain operational activities; requiring the PCF to increase charter capital; deciding on credit growth limits in necessary cases; or applying certain stricter safety ratios. The Circular also stipulates the consideration of applying early intervention, special control, and restructuring in accordance with the provisions of law.
Minimum Solvency Ratio of 100%
Regarding liquidity, Article 9 stipulates the solvency ratio. Notably, PCFs must maintain a solvency ratio for the next working day and for the next 7 working days at a minimum of 100%. The determination of Assets capable of immediate payment and Liability required to be paid is implemented according to Appendix III of the Circular.
Appendix III specifically stipulates the determination rate for each line item. Within the Asset group, cash on hand, deposits at the SBV, and certain deposits at the cooperative bank are determined at a rate of 100%; outstanding matured balances of loans are applied rates of 80% or 75% depending on the case; and matured outstanding debts of other receivables are applied at a rate of 70%. On the Liability side, customer term deposits coming due for payment are determined at 100%, while customer demand deposits are determined at a rate of 15%.
The Circular further determines that a PCF is at risk of losing solvency when it has a deficit of Assets capable of immediate payment at a level from 20% or more at the time of calculating the solvency ratio compared to the minimum Assets capable of immediate payment required to comply with the solvency ratio for 30 consecutive days. A PCF is determined to have lost solvency when it fails to perform its debt obligation payments within a period of 1 month from the payment due date.
When losing solvency, being at risk of losing solvency, or self-evaluating as incapable of solvency, the PCF must promptly report to the regional SBV branch and notify the cooperative bank branch regarding the actual status, causes, applied measures, planned measures to overcome the issue, and proposals as well as recommendations to the regional SBV branch if any.
Maximum Short-Term Funds Used for Medium and Long-Term Loans of 30%
Article 10 stipulates that PCFs must maintain a maximum ratio of short-term capital used to extend medium- and long-term loans of 30%.
The Circular specifically stipulates the formula for calculating the ratio as well as the method to determine total outstanding medium- and long-term loans, medium- and long-term capital, and short-term capital. In which, total outstanding medium- and long-term loans are outstanding balances with a remaining maturity exceeding one year, excluding outstanding loans under entrustment from the Government, organizations, and individuals.
Medium and long-term capital include certain components such as charter capital, charter capital supplementary reserve fund, development investment fund, and financial reserve fund remaining after deducting accumulated losses; accumulated undistributed profits; along with deposits, savings deposits, and loans with a remaining maturity exceeding one year as prescribed. Short-term capital includes demand deposits and items with a remaining maturity of up to one year as prescribed in Article 10.
Another indicator directly related to capital mobilization activities of PCFs is the ratio of total deposit receipts relative to equity.
Article 11 stipulates that PCFs must maintain a ratio of total deposit receipts relative to equity not exceeding 20 times. Total deposit receipts are determined on the accounting balance sheet at the time of calculating the ratio, including demand deposits, term deposits, and savings deposits of members, organizations, and individuals in Vietnamese Dong. Equity is also determined on the accounting balance sheet at the time of calculating the ratio.
Regarding credit extension activities, Article 12 requires PCFs to base on their own capital at the end of the nearest working day to determine lending restrictions for organizations and individuals according to Article 135, and lending limits for a single customer, as well as a single customer and related persons, according to Article 136 of the Law on Credit Institutions.
The Board of Directors approves loans extended to loan appraisers and approval officers at the PCF with a value of VND 100 million or more, or a lower level as stated in the internal regulations of the PCF.
For loans falling under restricted lending cases according to the regulations cited in the Circular, the PCF must report to the regional SBV branch and publicly disclose before the Member General Meeting regarding loans arising up to the time of collecting data for the Member General Meeting.
The Banking Times
