Circular No. 12/2009/TT-NHNN dated May 28, 2009 of the State Bank providing guidance on several contents related to guaranteed loan by Vietnam Development Bank under the Regulation on providing guarantee to enterprises that borrow capital from commercial banks issued in conjunction with the Decision No. 14/2004/QD-TTg and Decision No. 60/2009/QD-TTg of the Prime Minister

CIRCULAR

PROVIDING GUIDANCE ON SEVERAL CONTENTS RELATED TO GUARANTEED LOAN BY VIETNAM DEVELOPMENT BANK UNDER THE REGULATION ON PROVIDING GUARANTEE TO ENTERPRISES THAT BORROW CAPITAL FROM COMMERCIAL BANKS ISSUED IN CONJUNCTION WITH THE DECISION NO. 14/2004/QD-TTG AND DECISION NO. 60/2009/QD-TTG OF THE PRIME MINISTER

OF THE GOVERNOR OF THE STATE BANK OF VIETNAM

-         Pursuant to the Law on the State Bank issued in 1997 and the Law on the amendment, supplement of several articles of the Law on the State Bank issued in 2003;

-         Pursuant to the Law on Credit Institutions issued in 1997 and the Law on the amendment, supplement of several articles of the Law on Credit Institutions issued in 2004;

-         Pursuant to the Decree No. 96/2008/ND-CP dated 26 August 2008 of the Government providing for the function, duty, authority and organizational structure of the State Bank of Vietnam;

-         Pursuant to the Resolution No. 30/2008/NQ-CP dated 11 December 2008 of the Government on urgent solutions for preventing from economic recession, maintaining economic growth, ensuring social security;

-         Pursuant to the Decision No. 14/2009/QD-TTg dated 21 January 2009 of the Prime Minister on the issuance of the Regulation on providing guarantee to enterprises which borrow money from commercial banks;

-         Pursuant to the Decision No. 60/2009/QD-TTg dated 17 April 2009 of the Prime Minister on the amendment, supplement of several articles of the Decision No. 14/2009/QD-TTg dated 21 January 2009 of the Prime Minister on the issuance of the Regulation on providing guarantee to enterprises which borrow money from commercial banks;

          The State Bank of Vietnam hereby provides guidance on some contents related to lending by commercial banks to enterprises which are guaranteed by Vietnam Development Bank as follows:

Article 1. Subjects and scope of application

1. Commercial banks, which provide loans to enterprises guaranteed by Vietnam Development Bank under the Regulation on providing guarantee to enterprises which borrow capital from commercial banks issued in conjunction with the Decision No. 14/2009/QD-TTg dated 21/01/2009, of which several articles were amended, supplemented in the Decision No. 60/2009/QD-TTg dated 17/4/2009 of the Prime Minister (hereinafter referred to as the Regulation on guarantee), include: State-owned commercial banks, joint stock commercial banks, joint venture banks, branches of foreign banks operating in Vietnam, 100% foreign owned banks (hereinafter referred to as commercial banks).

2. Enterprises entitled to borrow capital from commercial banks shall be those which are guaranteed by Vietnam Development Bank, are subjects entitled to loan guarantee and subject to the scale of loan guarantee in accordance with provisions in Article 1 and Article 2 of the Regulation on guarantee.

3. Commercial banks shall provide loan to enterprises in accordance with the regulation on lending by credit institutions to customers issued in conjunction with the Decision No.1627/2001/QD-NHNN dated 31/12/2001, Decision No. 09/2008/QD-NHNN dated 10/4/2008 of the Governor of the State Bank and related applicable provisions, in the form of short term, medium term and long term loan in Vietnamese dong and freely convertible foreign currencies. The appraisement of borrowing conditions shall be implemented in accordance with provisions in Paragraph 7, Article 2 of the Decision No. 60/2009/QD-TTg dated 17/4/2009 of the Prime Minister (Decision No. 60).

Article 2. Lending interest rate

1. Commercial banks shall base on the current mechanism on interest rate management, source of capital, financial capacity, general situation of lending interest rate in the market from time to time, actual condition of the enterprise and their customer policy to consider, decide the appropriate lending interest rate, ensuring the preference of actual lending interest rate to enterprises, supporting enterprises to reduce costs of production, business and promote the development of production, business.

2. Loans provided by commercial banks shall be guaranteed by Vietnam Development Bank, if they are subjects entitled to interest rate support, to implement in compliance with provisions in Decisions of the Prime Minister and instructions of the Governor of the State Bank.

Article 3. Process and responsibilities of commercial banks in some specific cases

1. After 7 working days at the latest since the full receipt of the application file for loans from enterprises and the written notice of loan guarantee approval to enterprises of Vietnam Development Bank, commercial banks shall consider signing Credit Contracts with the enterprises if they fully satisfy borrowing conditions. In case of refusal to sign the Credit Contracts, commercial banks must provide written response to enterprises and Vietnam Development Bank clearly stating the reason thereof.

2. Commercial banks shall disburse loan funds to enterprises upon the receipt of the loan guarantee Contract (the original) signed by and between enterprises and Vietnam Development Bank and Guarantee Deed issued by Vietnam Development Bank with contents in line with those stated in the credit Contract signed with the enterprise. In the event where such documents have inconsistent contents, commercial bank shall be entitled to ask Vietnam Development Bank to consider, reconcile and amend accordingly before the disbursement of loan funds.

3. Commercial banks shall be responsible for inspecting, closely supervising the process of borrowing capital, use of loan funds, asset created from loan funds and repayment of loan funds by the enterprise so as to ensure that such enterprise uses the loan funds for right purpose and in a secure and efficient manner. Where an enterprise encounters temporary difficulty in production and business and submits an application to the commercial bank for adjusting the debt repayment period, debt rescheduling, then commercial banks shall, based on the actual condition, on current provisions of applicable laws, adjust the debt repayment period, reschedule the debt for such enterprise, providing that the efficiency of loan funds must be ensured and it must be in line with the guarantee period of Vietnam Development Bank for such loan.

Article 4. Coordination between commercial banks and Vietnam Development Bank in the performance of guarantee obligation

1. After one working day since the maturity of the loan, if the customer fails to pay his debt in compliance with the agreement in the credit contract, the commercial bank shall send a dispatch to Vietnam Development Bank to ask for the performance of guarantee obligation as committed in the Guarantee Deed.

2. In the event where Vietnam Development Bank refuses to perform its guarantee obligation as provided for in the Guarantee Deed, after one working day since the receipt of the written refusal of guarantee obligation performance from Vietnam Development Bank, the commercial bank must submit a written request to Vietnam Development Bank for performing procedures of handing over mortgaged assets for guarantee security (in accordance with provisions in Paragraph 5, Article 2 of the Decision No. 60) so that the commercial bank shall carry out the disposal, debt collection in accordance with current provisions of laws on secured transaction.

Article 5. Reporting

1. On a monthly basis, Vietnam Development Bank shall synthesize the situation of guarantee to enterprises borrowing capital from commercial banks in line with the Decision No.14/2009/QD-TTg dated 21 January 2009 of the Prime Minister (Decision No.14) and send to the State Bank (Credit Department) in conformity with Form 01 enclosed herewith.

2. On a monthly basis, commercial banks shall synthesize the situation of lending to enterprises with guarantee of Vietnam Development Bank in accordance with the Decision No.14 and send to the State Bank (Credit Department) in conformity with Form 02 enclosed herewith.

Article 6. Inspecting, supervising the implementation

The State Bank shall be responsible for performing the inspection, supervision over credit activity to enterprises by commercial banks in order to ensure that the lending activity to enterprises guaranteed by Vietnam Development Bank is performed efficiently and in compliance with applicable provisions.

Article 7. Organization of implementation

1. Responsibilities of commercial bank:

- To closely coordinate with Vietnam Development Bank in organizing the implementation of provisions of the Prime Minister in lending to enterprises which are guaranteed by Vietnam Development Bank and of this Circular.

- To specifically deploy the lending with guarantee of Vietnam Development Bank. To build and implement specific operational measures in order to meet the requirements in lending with guarantee in line with provisions of the Decision No.14 and Decision No.60, ensuring the closeness, asset security, compliance with applicable laws.

- Any difficulty, query that may arise during the implementation should be summarized and reported by commercial banks to competent agencies for consideration and settlement.

2. Responsibilities of units of the State Bank:

- Banking Inspectorate shall perform the inspection, supervision and dealing with violation acts committed by commercial banks and borrowers in compliance with provisions of applicable laws on lending to enterprises which are guaranteed by Vietnam Development Bank in order to ensure the capital borrowing of enterprises to be performed safely and efficiently in accordance with applicable provisions.

- State Bank branches in provinces, cities under the central Government’s management shall examine, supervise and inspect within the scope of authority to commercial banks in the local area in lending to enterprises guaranteed by Vietnam Development Bank, propose to the Governor of the State Bank and Chairperson of People’s Committee of provinces, cities under the central Government’s management for the settlement of arising issues.

- The Credit Department shall be responsible for collecting, reporting and providing advice to the Governor of the SBV for the settlement of any difficulty, query (within the scope of authority) during the implementation of the Decision No.14, Decision No.60 and this Circular.

Article 8. Implementing provisions

1. This Circular shall be effective since 11 July 2009.

2. Units of the State Bank, Chairperson of the Board of Directors and General Manager (Manager) of commercial banks, Vietnam Development Bank, borrowing enterprises shall be responsible for the implementation of this Circular.

Report on the performance of providing guarantee to enterprises borrowing capital from commercial banks under the Decision No.14/2009/QD-TTg dated 21/01/2009

Month…. Year….

Unit: VND million, USD thousand

Instructions of synthesis and sending report:

- Subject of reporting: On a monthly basis, Vietnam Development Bank shall synthesize data of the entire system and send report to the SBV (Credit Department).

- Recipient of report: Credit Department – State Bank (email: [email protected]; Tel: 04.38250608; Fax: 04.38256626).

- Other types of freely convertible foreign currencies shall be converted into USD at the exchange rate of the VDB announced by the SBV at the reporting time.

- Economic types: are classified in accordance with provisions in the Decision No.477/2004/QD-NHNN dated 28/4/2004 of SBV’s Governor.

- Deadline of sending report: On the 10^th day of the month following the reporting month at the latest.

- Please state clearly full name and phone number of the drawer.

- Any query that may arise during the implementation should be timely reported in writing or via telephone at the following number: 04.38250608; Fax: 04.38256626.

report on the lending to enterprises with guarantee of Vietnam Development Bank under the Decision No.14/QD-TTg dated 21/01/2009

Month…. Year….

Unit: VND million, USD thousand

Instructions of synthesis and sending report:

- Subject of reporting: On a monthly basis, Head Office of commercial banks shall synthesize data of the entire system by location and send report to the SBV (Credit Department).

- Recipient of report: Credit Department – State Bank (email: [email protected]; Tel: 04.38250608; Fax: 04.38256626).

- Other types of freely convertible foreign currencies shall be converted into USD at the exchange rate of Commercial Bank announced by the SBV at the reporting time.

- Deadline of sending report: On the 10^th day of the month following the reporting month at the latest.

- Please state clearly full name and phone number of the drawer.

- Any query that may arise during the implementation should be timely reported in writing or via telephone at the following number: 04.38250608; Fax: 04.38256626.