Five criteria to evaluate VDB’s performance

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The government have promulgated Decree 46/2001/ND-CP on the financial management and performance evaluation of the Vietnam Development Bank (VDB) according to that this last’s performance is evaluated on 5 criteria as following:

– Investment state credit.
– NPL
– Financial operation performance
– Compliance with laws related to investment, management and use of State funds at VDB for operations activities at the year in consideration.
-Compliance with report requirements.
Those criteria are defined and calculated on the basis of audited separate financial reports and of periodic reports as prescribed by laws. They are revised and in exclusion of important impacting factors, namely:
– Objective factors as excluded by regulations related to performance evaluation at State owned companies
– Bad debts arising from customers restructured by competent authorities, bad debts from loans decided by the government or by the PM.
– Changes in State’s policies impacting VDB’s performance.
-Delayed capital injection from State budget impacting VDB’s financial balance
VDB performance’s assessment and classification on the basis of audited separate financial report are made in line with regulations to state owned companies and with this Decree.
VDB is entitled to interest difference compensation and management fee.
In concern of financial management, VDB is a policy bank, operating on the form of one-member Ltd company having 100% charter capital owned by the government.
VDB operates for non profit purpose and to implement State credit policies and other tasks assigned by the government and the PM; State Budget is to compensate interest rate difference and to pay management fee in compliance with laws and with this Decree. VDB is exempted from tax; do not have to make other contributions to state budget. The government guarantee for VDB’s solvency; VDB has compulsory reserve ratio of 0% and do not have to participate in deposit insurance.
VDB is refinanced by SBV in compliance with laws, has right to participate in the interbank payment system, in the open market operations, to have its own internal payment system, to provide payment service and other banking services to its own customers, to operate in forex market, to enjoy the domestic and international payment system in compliance with laws.
Credit activities, state budget does not provide interest rate compensation and management fee; revenue, expenses and outcomes from those activities will be consolidated with VDB’s overall performance as prescribed by this Decree.
According this Decree, VDB is responsible to implement regulations related to capital safety including: manage and use capital, asset, distribution of financial revenue, follow strictly financial report and book account requirement in line with this decree and with related laws; to buy insurance for its assets in accordance with laws; to settle losses…
This Decree comes in force since June the first, 2021 and is applied for the financial year of 2021./.

Source: Vietnam Development Bank

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