Circular No. 40/2026/TT-NHNN: Minimum capital adequacy ratio of 8% for people's credit funds

Pursuant to Clause 1, Article 8 of Circular No. 40/2026/TT-NHNN, people's credit funds must maintain a minimum capital adequacy ratio of 8%.

Pursuant to Clause 2, Article 8 of Circular No. 40/2026/TT-NHNN, the minimum capital adequacy ratio shall be determined by dividing own capital by total risk-weighted assets and multiplying the result by 100. Own capital shall be determined in accordance with Clause 3, Article 8; total risk-weighted assets shall be determined in accordance with Clause 4, Article 8 of this Circular.

Specifically, pursuant to Clause 3, Article 8 of Circular No. 40/2026/TT-NHNN, own capital shall comprise total Tier 1 capital and Tier 2 capital minus deductions from own capital at the time of determining own capital, specifically:

- Tier 1 capital shall include:

• Charter capital;

• Capital for basic construction investment and purchases of fixed assets;

• Reserve fund for supplementing charter capital;

• Development investment fund;

• Financial reserve fund;

• Non-refundable capital granted by organizations and individuals to the people's credit fund;

• Undistributed accumulated profits.

- The following items must be deducted from Tier 1 capital:

• Accumulated losses (if any);

• Capital contributed to the cooperative bank.

- Tier 2 capital shall be calculated up to a maximum of 100% of the value of Tier 1 capital, including general provision, up to a maximum of 1.25% of total risk-weighted assets.

- Deductions from own capital shall comprise 100% of the deficit resulting from asset revaluation in accordance with the law.

The specific determination of own capital to calculate the minimum capital adequacy ratio shall be carried out in accordance with Appendix I promulgated together with Circular No. 40/2026/TT-NHNN.

Pursuant to Clause 4, Article 8 of Circular No. 40/2026/TT-NHNN, assets shall be classified into groups with risk weights of 0%, 20%, 50%, and 100% to determine total risk-weighted assets.

Accordingly, from November 1, 2026, people's credit funds must maintain a minimum capital adequacy ratio of 8%, calculated on the basis of own capital and total risk-weighted assets in accordance with the method prescribed in Article 8 of Circular No. 40/2026/TT-NHNN.