Circular No. 01/2016/TT-NHNN dated February 04, 2016 on guiding policies on provision of loans to develop supporting industries

CIRCULAR

Guiding policies on provision of loans to develop supporting industries[1]

Pursuant to June 16, 2010 Law No. 46/2010/QH12 on the State Bank of Vietnam;

Pursuant to June 16, 2010 Law No. 47/2010/QH12 on Credit Institutions;

Pursuant to the Government’s Decree No. 156/2013/ND-CP of November 11, 2013, defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam;

Pursuant to the Government’s Decree No. 111/2015/ND-CP of November 3, 2015, on development of supporting industries;

At the proposal of the Director of the Credit Department;

The State Bank Governor promulgates the Circular guiding policies on provision of loans to develop supporting industries specified in the Government’s Decree No. 111/2015/ND-CP of November 3, 2015, on development of supporting industries.

Article 1.Scope of regulation

1. This Circular guides provision of loans to develop supporting industries under the Government’s Decree No. 111/2015/ND-CP of November 3, 2015, on development of supporting industries (below referred to as Decree No. 111/2015/ND-CP).

2. This Circular does not govern the borrowing of state investment credit to implement projects to manufacture supporting industry products on the list of supporting industry products prioritized for development specified in Decree No. 111/2015/ND-CP.

Article 2.Subjects of application

1. Credit institutions and foreign bank branches providing loans to projects to manufacture supporting industry products on the list of supporting industry products prioritized for development specified in Article 11 of Decree No. 111/2015/ND-CP (below collectively referred to as projects to manufacture supporting industry products prioritized for development).

2. Customers (organizations or individuals) borrowing capital to invest in projects to manufacture supporting industry products prioritized for development.

3. Organizations or individuals engaged in provision of loans to develop supporting industries under Decree No. 111/2015/ND-CP.

Article 3.Policies on provision of loans to projects to manufacture supporting industry products prioritized for development

1. When lending a short-term loan to a project to manufacture supporting industry product prioritized for development, a credit institution or foreign bank branch shall apply a Vietnam-dong short-term lending interest rate not exceeding the maximum Vietnam-dong short-term lending interest rate to be applied by credit institutions and foreign bank branches to borrowers to meet capital demand of a number of economic sectors and industries as announced by the State Bank Governor in each period.

2.  In addition to the preferential lending policy specified in Clause 1 of this Article, when borrowing capital from a credit institution with guarantee of an organization providing credit guarantee for small- and medium-sized enterprises under regulations to invest in a project to manufacture supporting industry products prioritized for development, a small- or medium-sized enterprise may borrow up to 70% of its project’s investment capital if it meets the conditions specified at Point a, Clause 2, Article 12 of Decree No. 111/2015/ND-CP.

Article 4.Lending principles

1. Projects to manufacture supporting industry products prioritized for development eligible for the lending policies specified in Clauses 1 and 2, Article 3 of this Circular are those which have been granted a certificate of  incentives as specified in Article 11 of Decree No. 111/2015/ND-CP.

2. Credit institutions and foreign bank branches shall consider, appraise and decide to provide loans to projects to manufacture supporting industry products prioritized for development specified in Clauses 1 and 2, Article 3 of this Circular according to current regulations and take responsibility for their lending decisions.

Article 5.Organizations providing credit guarantee for small- and medium-sized enterprises

Organizations providing credit guarantee for small- and medium-sized enterprises specified in Clause 2, Article 3 of this Circular include:

1. Credit guarantee funds for small- and medium-sized enterprises established and operating under the Prime Minister’s Decision No. 58/2013/QD-TTg of October 15, 2013, promulgating the Regulation on setting up, organization and operation of credit guarantee funds for small- and medium-sized enterprises.

2. The Vietnam Development Bank, which shall provide guarantee under the Prime Minister’s Decision No. 03/2011/QD-TTg of January 10, 2011, promulgating the Regulation on guarantee for small- and medium-sized enterprises to borrow capital from commercial banks.

3. Other organizations which are licensed to provide guarantee for small- and medium-sized enterprises to borrow capital from credit institutions in accordance with law.

Article 6.Debt classification, deduction of reserves for, and handling of risk

The classification and extension of debts, conversion of overdue debts, deduction and use of reserves for handling risks by credit institutions and foreign bank branches with regard to loans provided to projects to manufacture supporting industry products prioritized for development must comply with the State Bank of Vietnam’s current regulations.

Article 7.Responsibilities of borrowers

1. To fully and truthfully provide information and documents relating to capital borrowing and take responsibility for the accuracy of information and documents provided to credit institutions and foreign bank branches.

2. To use loans for proper purposes and repay both the principal and interest in time according to signed credit contracts; to fulfill all commitments as stated in credit contracts and prescribed in relevant regulations.

Article 8.Responsibilities of credit institutions and foreign bank branches

1. Credit institutions and foreign bank branches shall provide loans to develop supporting industries according to this Circular, lending regulations, prudential limits and ratios in operation of credit institutions, and other relevant laws.

2. Quarterly (not later than the 10^thday of the first month of the quarter following the reporting quarter), credit institutions and foreign bank branches having loan balances owed by customers in the supporting industry sector shall send reports on results of provision of loans to develop supporting industries, made according to forms No. 1 and 2 enclosed with this Circular to the State Bank of Vietnam (the Credit Department and the Banking Supervisory Agency) and take responsible for the adequacy, truthfulness and accuracy of reported information and data.

Article 9.Responsibilities of the State Bank of Vietnam’s units

1. The Credit Department shall:

a/ Act as a focal point in supervising and summarizing loan provision operation of credit institutions and foreign bank branches according to this Circular;

b/ Assume the prime responsibility for, and coordinate with related units in, addressing issues arising in the course of implementation of this Circular.

2. The Monetary Policy Department shall assist the State Bank Governor in determining the maximum Vietnam-dong short-term lending interest rate in each period as specified in Clause 1, Article 3 of this Circular.

3. The Banking Supervisory Agency shall:

a/ Inspect, examine and supervise the provision of loans by credit institutions and foreign bank branches to borrowers within its competence;

b/ Coordinate with the Credit Department and related units in addressing issues arising in the course of implementation.

4. State Bank branches of provinces and centrally run cities shall:

a/ Monitor the provision of loans by credit institutions and foreign bank branches to carry out policies on development of supporting industries in their localities;

b/ Coordinate with local departments and sectors in addressing issues arising in the process of provision of loans to carry out policies on development of supporting industries in their localities. Promptly report cases falling beyond their competence to provincial-level People’s Committees and the State Bank of Vietnam (the Credit Department) for consideration and settlement.

Article 10.Effect

1. This Circular takes effect on February 22, 2016.

2. Loan contracts signed before the effective date of this Circular shall continue to be applied through the end of their validity period. The modification or supplementation of loan contracts must comply with this Circular.

Article 11.Organization of implementation

The chief of the Office, the director of Credit Department and heads of units of the State Bank of Vietnam, directors of State Bank branches of provinces and centrally run cities, and chairpersons of the Boards of Directors or Members’ Councils and directors general (directors) of credit institutions and foreign bank branches shall implement this Circular.-

For the Governor of the State Bank of Vietnam
Deputy Governor
NGUYEN DONG TIEN