Circular No. 01/2006/TT-NHNN dated February 20, 2006 of the State Bank guiding several contents concerning the capital contribution for the establishment of a credit guarantee fund for small and medium sized enterprises

CIRCULAR

GUIDING SEVERAL CONTENTS CONCERNING THE CAPITAL CONTRIBUTION FOR THE ESTABLISHMENT OF A CREDIT GUARANTEE FUND FOR SMALL AND MEDIUM SIZED ENTERPRISES

With a view to implementing the Decision No.193/2001/QD-TTg dated 21/12/2001, the Decision No.115/2004/QD-TTg dated 25/6/2004 of the Prime Minister on the issuance of the regulation on the establishment, organization and operation of a Credit Guarantee Fund for small and medium sized enterprises and the Directive No. 40/2005/CT-TTg dated 16/12/2005 of the Prime Minister on continuing the enhancement of assistance and development of small and medium sized enterprises, the Governor of the State Bank provides guidance on several contents relating to the capital contribution for the establishment of a Credit Guarantee Fund for small and medium sized enterprises (hereinafter referred to as the Credit Guarantee Fund) of credit institutions as follows:

1. State Bank branches in provinces, cities under the Central Government’s management:

a. To coordinate with the local departments, branches, advise Chairperson of People’s Committee in provinces, cities in the establishment of a Credit Guarantee Fund.

b. To delegate representatives to participate in the Preparatory Committee for the establishment of a Credit Guarantee Fund and the Management Council of the Credit Guarantee Fund upon the proposal of the People’s Committee in provinces, cities.

c. To report the Governor of the State Bank on the establishment and operation of the local Credit Guarantee Fund.

2. Credit Institutions:

Credit Institutions shall, based on the real capacity of their charter capital, reserve fund and demand for the establishment of a credit guarantee fund of each locality, decide on the capital contribution to the Credit Guarantee Fund which is established by the People’s Committee in provinces, cities under the Central Government’s management.

a. Level of capital contribution by a credit institution to a Credit Guarantee Fund shall not be in excess of 11% of the charter capital of that Credit Guarantee Fund.

b. The total level of capital contribution to a Credit Guarantee Fund and other commercial investments shall not be in excess of 40% of the charter capital and reserve fund of a credit institution.

c. To delegate representatives to participate in the Preparatory Committee for the establishment of a Credit Guarantee Fund upon the proposal of the People’s Committee in provinces, cities.

d. To participate in the Management Committee of the Credit Guarantee Fund to represent the credit institution’s contributed funds upon the decision of the Chairperson of the People’s Committee in provinces, cities.

e. To coordinate with the Credit Guarantee Fund to set up a process, procedure on the guarantee. To coordinate with the Credit Guarantee Fund in the inspection, supervision over the use of borrowed funds and debt repayment of the customer and ensuring the borrowed funds security.

This Circular shall be effective after 15 days since its publication in the Official Gazette. Provisions in the Circular No.06/2003/TT-NHNN dated 10/04/2003 of the Governor of the State Bank on guiding several contents concerning the capital contribution for the establishment of a Credit Guarantee Fund for small and medium sized enterprises of credit institutions in accordance with the Decision No.193/2001/QD-TTg dated 20/12/2001 of the Prime Minister and the Resolution No.02/2003/NQ-CP dated 17/01/2003 of the Government shall cease their effectiveness.

During the deployment, implementation of this Circular, any difficulty, query that may arise should be reported in writing to the State Bank of Vietnam (Credit Department) for  solution.