Regulating the cost management for microfinance institutions

Under this Circular, for the brokerage expenses for asset rental (including assets foreclosed, assets used as payment for debt): Broker spending level to rent out assets of the microfinance institutions must not exceed 5% of all proceeds from the asset leasing brought by the brokerage during the year. For the expenses for brokerage of selling assets mortgaged, pledged: spending level for brokerage commission to sell assets mortgaged, pledged of the microfinance institutions must not exceed 1% of the actual value obtained from the sale of assets through brokerage.

Those entitled to brokerage commissions are the organizations and individuals (domestic and foreign) to provide brokerage services to the microfinance institutions. Brokerage commissions are not be applied to the subjects as agents of the microfinance institutions, the customers designated, the titles of management, employees of the microfinance institutions. The expense for brokerage commissions of the microfinance institutions must be linked to economic efficiency brought by the brokerage. The microfinance institutions are based on guidelines of brokerage commission costs of the Finance Ministry.

Besides, the Circular also regulated that, during the operation, business, the microfinance institutions must remain limited investment in the construction, procurement of fixed assets in direct service to the business by the principle of: residual value of fixed assets shall not exceed 50% of the charter capital and additional reserve fund for charter capital of the microfinance institutions. For real estate’s held temporarily by the microfinance institutions to sell, transfer to withdraw funds, the microfinance institutions shall not account increase of assets, shall not depreciate.

This Circular takes effect from February 25, 2013.