Circular No. 11/2013/TT-NHNN dated May 15, 2013 of the State Bank of Vietnam providing the grant of housing support loans under the Government’s Resolution No. 02/NQ-CP of January 7, 2013

THE STATE BANK OF VIETNAM

Circular No. 11/2013/TT-NHNN of May 15, 2013, providing the grant of housing support loans under the Government’s Resolution No. 02/NQ-CP of January 7, 2013

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 November 29, 2005 Law on Housing;

Pursuant to the Government’s Decree No. 96/2008/ND-CP of August 26, 2008, defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam;

Pursuant to the Government’s Decree No. 71/2010/ND-CP of June 23, 2010, detailing and guiding the implementation of the Law on Housing;

Pursuant to the Government’s Resolution No. 02/NQ-CP of January 7, 2013, on solutions for removing difficulties for production and business, supporting the market and settling non-performing loans, and Resolution No. 48/NQ-CP of April 4, 2013, on the Government’s regular meeting of March 2013;

At the proposal of the director of the Credit Department;

The Governor of the State Bank of Vietnam promulgates the Circular providing the grant of housing support loans under the Government’s Resolution No. 02/NQ-CP.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation and subjects of application

1. Scope of regulation

a/ This Circular provides the grant of housing support loans from the refinancing source of the State Bank of Vietnam (below referred to as the State Bank) under the Government’s Resolution No. 02/NQ-CP of January 7, 2013, on solutions for removing difficulties for production and business, supporting the market and settling non-performing loans, and Resolution No. 48/NQ-CP of April 4, 2013, on the Government’s regular meeting of March 2013;

b/ State-owned commercial banks, join-stock commercial banks of which the State holds more than 50% of charter capital (below referred to as banks) shall reserve an amount of capital at least equal to 3% of total outstanding loans at the end of the previous year for granting loans to the subjects specified at Point a, Clause 2 of this Article. For loans not from the refinancing source of the State Bank, banks may grant according to current law at interest rates and for durations suitable to the clients’ payment ability and the banks’ financial status.

2. Subjects of application:

a/ Eligible borrowers (below referred to as clients) include:

- Subjects that purchase, rent or rent-purchase social houses and rent or purchase commercial houses with a floor area of under 70m² and a sale price of under 15,000,000 VND/m² each specified in the Ministry of Construction’s Circular No. 07/2013/TT-BXD of May 15, 2013, guiding the determination of subjects eligible for  housing support loans under the Government’s Resolution No. 02/NQ-CP of January 7, 2013, and documents revising and replacing Circular No. 07/2013/TT-BXD (if any);

- Enterprises being investors of social housing projects; enterprises being investors of commercial housing projects converted into social housing projects as announced by the Ministry of Construction in each period (below referred to as enterprises).

b/ Banks providing loans under this Circular include:

- Vietnam Bank for Agriculture and Rural Development;

- Joint-Stock Commercial Bank for Investment and Development of Vietnam;

- Vietnam Joint-Stock Commercial Bank for Industry and Trade;

- Vietnam Joint-Stock Commercial Bank for Foreign Trade;

- Mekong Housing Bank.

c/ Related organizations and individuals.

Article 2. Principles of grant of housing support loans

1. The State Bank shall refinance banks to grant housing support loans under this Circular. Disbursement of housing support loans to clients by banks from the refinancing source of the State Bank will end after the State Bank fully disburses the amount of money for refinancing, but within 36 months since the date this Circular takes effect.

2. Banks shall grant loans to clients in accordance with current law on the grant of loans by credit institutions to clients, and provisions in this Circular. Banks shall consider, conduct appraisal and decide on the grant of loans to clients, and take responsibility for their decisions.

3. Clients shall use loans for proper purposes and fully repay loan principals and interests on schedule to banks according to credit contracts.

4. Banks shall grant loans to enterprises being investors of social housing projects and commercial housing projects converted into social housing projects on the basis of the list announced by the Ministry of Construction in each period. Total loans granted by banks to enterprises do not exceed 30% of the amount for refinancing house support loans specified in Clause 1, Article 8 of this Circular.

Chapter II

BANKS’ GRANT OF HOUSING SUPPORT LOANS

Article 3. Conditions for loans

Apart from conditions for loans prescribed by the current law on the grant of loans by credit institutions to clients, provisions of the Ministry of Construction’s Circular No. 07/2013/TT-BXD of May 15, 2013, and documents revising and replacing Circular No. 07/2013/TT-BXD (if any), clients must meet the following additional conditions:

1. For clients being individuals who borrow loans for purchasing, renting or rent-purchasing social houses or renting or purchasing commercial houses each with a floor area of under 70m² and a sale price of under 15,000,000 VND/m²

a/ Having a contract on purchase, rent or rent-purchase of social house or a contract on rent or purchase of commercial house with the investor;

b/ Borrowing loans to pay amounts not yet paid for the purchase, rent or rent-purchase of social house or for rent or purchase of commercial house as prescribed in this Circular, for contracts signed with investors since January 7, 2013;

c/ Having a request for loans for purchase, rent or rent-purchase of social house or rent or purchase of commercial house and committing that the client as well as members of the client’s household have not yet borrowed support loans from banks for purchase, rent or rent-purchase of houses as prescribed in this Circular;

d/ Having sufficient minimum capital to participate in the loan plan as prescribed in Clause 3 of this Article.

2. For clients being enterprises:

a/ Being an enterprise as prescribed at Point a, Clause 2, Article 1 of this Circular;

b/ Borrowing loans to pay expenses not yet paid arising from January 7, 2013 (excluded tax expenses), for the implementation of a social housing project or a commercial housing project converted into a social housing project as prescribed in this Circular;

c/ Having sufficient minimum capital to participate in the loan project or plan as prescribed in Clause 3 of this Article;

d/ Committing that it has not yet borrowed support loans from banks for the implementation of social housing projects or commercial housing projects converted into social housing projects as prescribed in this Circular.

3. Banks shall specify the minimum capital level for clients to participate in the loan project or plan, which must not exceed 20% of the loan plan for clients specified in Clause 1 of this Article, and not exceed 30 % of total investment level of the loan project or plan for clients specified in Clause 2 of this Article. For clients rent-purchasing social houses who have paid full 20% of the value of the houses, banks will not apply the minimum capital level.

Article 4. Lending interest rates

1. The State Bank shall annually announce the lending interest rate for housing support loans granted by banks to clients and apply it to outstanding loans in the year.

2. The interest rate applied in 2013 is 6% a year.

3. In December every year, the State Bank shall determine and announce the interest rate applied for the subsequent year, which is equal to around 50% of the average lending interest rate applied by banks on the market but must not exceed 6%/year.

4. The duration of application of the lending interest rate stated in this Article is 10 years at most for clients purchasing, renting or rent-purchasing social houses or renting or purchasing commercial houses, and 5 years for clients being enterprises, but must expire on June 1, 2023.

Article 5. Lending duration

1. The lending duration applicable to clients purchasing, renting or rent-purchasing social houses or renting or purchasing commercial houses is at least 10 years. If a client wishes to borrow a loan for less than 10 years, he/she may agree with banks on lending durations shorter than the minimum lending duration.

2. The lending duration applicable to clients being enterprises is 5 years at most.

Article 6. Loan security measures

Banks shall consider and decide on the grant of loans with or without asset security in accordance with law

Article 7. Classification of debts and handling of risks

Classification of debts, setting up of provisions and use of provisions for handling risks applicable to housing support loans prescribed in this Circular comply with regulations of the State Bank.

Chapter III

REFINANCING OF HOUSING SUPPORT LOANS

Article 8. Refinancing by the State Bank

1. The State Bank shall disburse the refinancing amount of about VND 30 trillion to banks on the basis of outstanding loans granted by banks to clients, within 36 months after this Circular takes effect. The Governor of the State Bank shall decide on the specific total refinancing amount.

2. Refinancing interest rate

a/ The refinancing interest rate applied by the State Bank to banks is 1.5%/year lower than the lending interest rates applied by banks to clients at the same time. The overdue debt interest rate is 150% of the refinancing interest rate applicable to loans paid on time;

b/ Periodically, on the first working day of every month, banks shall pay the refinancing interest of the previous month to the State Bank.

3. Refinancing duration: Except cases of withdrawing refinancing debts according to notices of the State Bank specified at Point d, Clause 5 of this Article, the time limit for refinancing housing support loans each time is 364 days and automatically extended for the remaining outstanding refinancing debt at the time of maturity for a duration equal to the first duration of refinancing. The automatic extension will last up to June 1, 2023. The remaining outstanding debts of clients at banks after June 1, 2023, will be converted into loans granted from the banks’ own capital sources.

4. Disbursement and withdrawal of refinancing debts: Monthly, based on the banks’ results of grant of housing support loans, the State Bank shall disburse the refinancing amount to or withdraw the refinancing debts from the banks, ensuring the banks’ outstanding refinancing debts at the State Bank do not exceed the outstanding loans granted by banks to clients at the point of time of disbursement or withdrawal of the refinancing debts.

5. Process and procedures for refinancing

a/ The State Bank shall sign a principle contract on refinancing housing support loans with each bank;

b/ Not later than the fifth day every month, banks shall report results of grant of housing support loans according to Appendix No. 01 to this Circular to the State Bank (the Credit Department) serving as a basis for the State Bank to disburse or withdraw the refinancing debts;

c/ Cases of disbursement of refinancing amounts:

i/ Banks make a written request for refinancing enclosed with a report on the result of grant of housing support loans;

ii/ Within 1 working day after receiving complete dossiers of the banks, the Credit Department shall assume the prime responsibility for consulting the Monetary Policy Department and the Banking Supervisory Agency about the banks’ requests for refinancing;

iii/ Within 2 working days, the units stated at Point c(ii) of this Clause shall send their written opinions to the Credit Department for summarization and submission to the Governor of the State Bank for decision and approval of the refinancing amounts to the banks;

iv/ Based on the decisions on the Governor of the State Bank and the principle contract on refinancing housing support loans between the State Bank and banks, within 1 working day after having the decisions of the Governor of the State Bank, the Operations Center of the State Bank shall disburse the refinancing amount and banks shall sign contracts on acknowledgement of the disbursed refinancing amount.

d/ Cases of withdrawal of refinancing debts:

i/ Within 2 working days after receiving the banks’ reports on the result of the grant of housing support loans, the State Bank (the Credit Department) shall determine and notify the Operations Center of the State Bank and banks about the refinancing principals to be paid by banks to the State Bank;

ii/ Within 1 working day after receiving the notification of the State Bank (the Credit Department), banks shall return the refinancing principals to the State Bank;

iii/ Withdrawal of the refinancing principals is effected by incrementally deducting from the debt acknowledgment contracts of banks at the State Bank according to their timing order, from the first debt acknowledgement contract;

iv/ By June 1, 2023, banks shall return all refinancing principals and interests to the State Bank.

6. Handling of failures to pay debts on schedule

In case a bank violates this Circular’s provision on payment of principal and interest, the State Bank shall convert the debt (principal and interest) into overdue debt and apply the interest rate of overdue debt, from the date such debt becomes overdue. Concurrently, the State Bank shall withdraw overdue debts in the following priority order:

a/ Deducting from deposits of banks at the State Bank;

b/ Withdrawing the principal and interest from other sources (if any) of banks;

c/ Other forms as prescribed by law.

Chapter IV

ORGANIZATION OF IMPLEMENTATION AND IMPLEMENTATION PROVISIONS

Article 9. Reponsibilities of clients

1. To comply with the law on borrowing of housing support loans and commitments in the credit contracts with banks.

2. To be responsible before law for the accuracy of information and documents provided for banks to appraise and decide on the grant of loans.

Article 10. Reponsibilities of banks

1. To promulagte documents guiding the grant of housing support loans in the system in accordance with this Circular and relevant laws.

2. To monitor, account and manage separately housing support loans.

3. Not later than the fifth day every month, to send to the State Bank (the Credit Department) reports on results of the grant of housing support loans and take responsibility for the accuracy of reported information.

4. After making appraisal and tentative decision on the grant of loans to enterprises, banks shall send to the State Bank reports on the tentative grant of loans to enterprises according to Appendix No. 02 to this Circular, and may sign contracts with enterprises only after the State Bank notifies that it still has refinancing source for these subjects.

Article 11. Reponsibilities of units of the State Bank

1. The Credit Department

a/ To assume the prime responsibility for, and coordinate with the Monetary Policy Department and the Banking Supervisory Agency in, advising the Governor of the State Bank on handling matters arising in the implementation of this Circular;

b/ Monthly, to summarize and report on the banks’ results of the grant of housing support loans to the Governor of the State Bank, and concurrently send these reports to the Monetary Policy Department and the Banking Supervisory Agency;

c/ To propose monitoring measures and advise the Governor of the State Bank on decision on the specific total amount for refinancing and the ending time of disbursement for refinancing as prescribed in this Circular;

d/ To monitor and sum up banks’ demands for loans to enterprises. Within 3 working days after receiving banks’ reports as prescribed in Clause 4, Article 10 of this Circular, to notify banks of the refinancing source for these subjects;

2. The Monetary Policy Department

a/ To coordinate with the Credit Department and related units in handling matters arising in the implementation of this Circular;

b/ To assume the prime responsibility for, and coordinate with the Credit Department and the Banking Supervisory Agency in, determining and submitting the lending interest rates for housing support loans specified in Clause 3, Article 4 of this Circular to the Governor of the State Bank.

3. The Operations Center

a/ To draft and conclude principle contracts on housing support loans between the State Bank and banks; disburse capital for refinancing, withdraw loan principals; calculate, notify and collect interests; and account and monitor refinancing amounts provided to banks for granting housing support loans;

b/ To coordinate with the Credit Department and related units in handling matters arising in the implementation of this Circular.

4. The Finance and Accounting Department

To assume the prime responsibility for handling accounting issues related to housing support loans as prescribed in this Circular.

5. The Banking Supervisory Agency

a/ To inspect and supervise the grant of loans by banks to clients under this Circular and relevant legal documents;

b/ To coordinate with the Credit Department and related units in handling matters arising in the implementation of this Circular.

6. The State Bank’s branches in provinces and centrally run cities shall monitor and coordinate in handling matters arising in the grant of housing support loans in their localities.

Article 12. Implementation provisions

1. This Circular takes effect on June 1, 2013.

2. The Chief of the Office, the director of the Credit Department and heads of units of the State Bank; directors of the State Bank’s branches in provinces and centrally run cities; chairpersons of Members’ Councils, chairpersons of Boards of Directors and directors general of state-owned commercial banks and joint-stock commercial banks in which the State holds more than 50% of charter capital; and eligible borrowers of housing support loans shall implement this Circular.-

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