Submit to the National Assembly to support 5,000 billion VND budget to increase capital for Cooperative Bank

Cooperative Bank is one of the most "undercapitalized" banks in the system today.

Established in 2013 on the basis of conversion from the Central People's Credit Fund (CPF), by the end of December 2024, the total outstanding credit balance of the CPF system was about VND 139,000 billion, accounting for 13.6% of outstanding credit balance in the agriculture, forestry and fishery sector. However, up to now, the financial capacity of the Cooperative Bank has not kept up with the growth rate as well as the support needs of member CPFs.

As of December 31, 2024, the charter capital of the Cooperative Bank was only VND 3,029 billion (state support capital accounted for 99.34%), approximately equal to the legal capital (the legal capital is VND 3,000 billion), the lowest in the banking system, less than 1/15 of the charter capital of state-owned commercial banks, only 38.5% of the charter capital and 1.5% of the total assets of the QTDND system.

Cooperative banks play a very important role in providing financial support, regulating capital, ensuring the safe and stable operation of the People's Credit Fund system; at the same time, they are also an important and effective tool for the Government to implement credit policies for the agricultural sector, promoting the development of the collective economy.

As the focal unit of the system (1,200 QTDND), the Cooperative Bank not only ensures safety ratios for itself but also ensures safety for the entire QTDND system.

However, the current minimum capital adequacy ratio (CAR) of Cooperative Banks is still low compared to the average of the banking industry, much lower than the capital demand required to carry out the goals, responsibilities and tasks assigned by the State. Up to now, Cooperative Banks have not been able to implement CAR according to the provisions of Circular No. 41/2016/TT-NHNN20 but are implementing according to the provisions of Circular No. 22/2019/TT-NHNN21 (minimum CAR is 9%). By March 31, 2025, the CAR of Cooperative Banks is 10.3%, down 1.8% compared to the end of 2024.

To ensure the CAR target of 13.5% by 2026, the equity capital as of December 31, 2026 is VND 9,419 billion (corresponding to the expected scale of risky assets of VND 69,768 billion). The equity capital of the Cooperative Bank as of December 31, 2026 (in case the charter capital is not increased) is VND 4,416 billion 26. Accordingly, the Cooperative Bank determines the equity capital shortage to be VND 5,000 billion. The Cooperative Bank proposes to receive capital support from the State budget to increase the charter capital to compensate for the above equity capital shortage.

Pursuant to the provisions of the State Budget Law 2015, the Law on Credit Institutions 2024 and the Law on Cooperatives 2023, the Cooperative Bank is eligible for State capital support to increase its charter capital, the capital source is from the annual development investment expenditure of the State. However, the above Laws do not have provisions on the authority to decide, the order and procedures for State capital support for the Cooperative Bank.

Therefore, the Government believes that the proposal of the Cooperative Bank, the State Bank and relevant ministries and branches on the State to support capital from the State budget (the source of investment and development expenditure for the State budget) to increase the charter capital of the Cooperative Bank to ensure the safe operation of this bank is appropriate.

Therefore, the Government respectfully requests the National Assembly to consider and decide on supporting VND 5,000 billion of state capital (from the central budget development investment expenditure) to increase charter capital to improve the financial capacity of the Cooperative Bank and include it in the General Resolution of the National Assembly session. At the same time, assign the Government to direct the support of state capital to increase charter capital for the Cooperative Bank according to regulations as well as be responsible to the National Assembly for the accuracy of the data and the scale of state capital support for the Cooperative Bank.

Source: https://baodautu.vn/trinh-quoc-hoi-ho-tro-5000-ty-dong-ngan-sach-tang-von-cho-ngan-hang-hop-tac-xa-d269143.html