Circular No. 14/2018/TT-NHNN dated May 29, 2018 of the State Bank of Vietnam on guiding the implementation of measures for management of monetary policies to support credit institutions in the provision of loans to agriculture and rural development

CIRCULAR

Guiding the implementation of measures for administering monetary policy to support credit institutions extending loans for agriculture and rural development^[1]

Pursuant to the June 16, 2010, Law on the State Bank of Vietnam;

Pursuant to the June 16, 2010, Law on Credit Institutions;

Pursuant to the November 20, 2017 Law Amending and Supplementing a Number of Articles of the Law on Credit Institutions;

Pursuant to the Government’s Decree No. 16/2017/ND-CP of February 17, 2017 defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam;

Pursuant to the Government’s Decree No. 55/2015/ND-CP of June 9, 2015, on credit policies for agriculture and rural development;

At the proposal of the Director of the Monetary Policy Department;

The Governor of the State Bank of Vietnam promulgates the Circular guiding the implementation of measures for administering monetary policy to support credit institutions extending loans for agriculture and rural development.

Article 1.Scope of regulation

This Circular promulgates the Circular guiding the implementation of measures for administering monetary policy to support credit institutions and foreign bank branches extending loans for agriculture and rural development under the Government’s Decree No. 55/2015/ND-CP of June 9, 2015, on credit policies for agriculture and rural development.

Article 2.Subjects of application

Commercial banks, cooperative banks, non-bank credit institutions (excluding financial leasing companies and factoring companies), microfinance organizations and Vietnam-based foreign bank branches (below referred to as credit institutions).

Article 3.Measures to support credit institutions extending loans to agriculture and rural development

1. To refinance credit institutions extending loans for agriculture and rural development under regulations on the refinancing of credit institutions.

2. To support through the reserve requirement tool as follows:

a/ Applying a supportive reserve requirement ratio for Vietnam dong deposits lower than the reserve requirement ratio set by the State Bank of Vietnam (below referred to as the State Bank) for each type of credit institution in each period according to the following criteria:

i/ For a credit institution with the ratio of outstanding loans for agriculture and rural areas reaching 70% or higher of the total average outstanding loans (below referred to as the average credit ratio for agriculture and rural areas): The supportive reserve requirement ratio will be the one proposed by the credit institution but must not be lower than one-twentieth (1/20) of the reserve requirement ratio applicable to each type of deposit set by the State Bank for each type of credit institutions;

ii/ For a credit institution with the average credit ratio for agriculture and rural areas ranging between 40% and under 70%, the supportive reserve requirement ratio will be the one proposed by the credit institution ratio but must not be lower than one-fifth (1/5) of the reserve requirement ratio applicable to each type of deposit set by the State Bank for each type of credit institutions;

b/ The supportive reserve requirement ratio specified at Point a of this Clause shall be applied for six-month periods, specifically as follows:

i/ From February to the end of July of the current year (below referred to as phase 1): the average credit ratio for agriculture and rural areas serving as the basis for determining a credit institution meeting the criteria for application of supportive reserve requirement ratio shall be calculated as follows:

Of which:

- C is the average credit ratio for agriculture and rural areas serving as the basis for the application of supportive reserve requirement ratio from February to the end of July of the current year;

- A1, A2 are its outstanding loans for agriculture and rural areas by the end of September 30 and the end of December 31 of the preceding year;

- B1, B2 are its total outstanding loans by the end of September 30 and the end of December 31 of the preceding year;

ii/ From August of the current year to the end of January of the subsequent year (below referred to as phase 2): the average credit ratio for agriculture and rural areas serving as the basis for determining a credit institution meeting the criteria for application of supportive reserve requirement ratio shall be calculated as follows:

Of which:

- F is the average credit ratio for agriculture and rural areas serving as the basis for the application of supportive reserve requirement ratio from August of the current year to the end of January of the subsequent year;

- D1, D2 are its outstanding loans for agriculture and rural areas by the end of March 31 and the end of June 30 of the current year;

- E1, E2 are its total outstanding loans by the end of March 31 and the end of June 30 of the current year;

c/ For credit institutions with the average credit ratio for agriculture and rural areas reaching 40% or higher but do not wish to apply a supportive reserve requirement ratio specified at Point a of this Clause, this Circular’s provisions on reserve requirements shall not apply.

3. Other supportive measures as decided by the State Bank Governor.

Article 4.Notification of to-be-applied supportive reserve requirement ratio specified at Point a, Clause 2, Article 3 of this Circular

1. If meeting the criteria for the application of supportive reserve requirement ratio specified at Point a, Clause 2, Article 3 of this Circular, a credit institution determining the average credit ratio for agriculture and rural areas prescribed at Point b, Clause 2, Article 3 of this Circular shall send a written request for the application of supportive reserve requirement ratio to the State Bank (the Credit Department), clearly stating the supportive reserve requirement ratio, specifically as follows:

a/ Phase 1: Before January 15, sending a written request for the application of supportive reserve requirement ratio for phase 1, made according to Appendix 1 to this Circular.

b/ Phase 1: Before July 15, sending a written request for the application of supportive reserve requirement ratio for phase 2, made according to Appendix 2 to this Circular.

2. The State Bank shall consider and notify the credit institution of the applied reserve requirement ratio or its refusal clearly stating the reason. The deadline for notification is prescribed as follows:

a/ Phase 1: Before February 1;

b/ Phase 2: Before August 1.

Article 5.Rights and responsibilities of credit institutions

1. If having demand for loans for agriculture and rural development, the credit institution shall propose refinancing loans to the State Bank for consideration under current regulations.

2. In case of meeting the criteria for and having demand for the application of supportive reserve requirement ratio as specified in this Circular, the credit institution shall send its written request to the State Bank (the Credit Department) as defined in Clause 1, Article 4 of this Circular.

3. To fully and promptly report on data on credit for agriculture and rural areas under the State Bank’s regulations. To bear responsibility for the accuracy, legality and validity of the reported data on the total outstanding loans and the credit ratio for agriculture and rural areas to serve the application of measures to support the extension of loans for agriculture and rural development and the observance of other relevant laws.

4. To comply with laws and the State Bank’s guidance on credit policies for agriculture and rural development.

Article 6.Responsibilities of the State Bank’s affiliates

1. Based on the credit institution’s written request for application of supportive reserve requirement ratio, the Credit Department shall consider the request and submit it to the State Bank Governor for approval and notify the to-be-applied supportive reserve requirement ratio or its refusal under Clause 2, Article 4 of this Circular to the credit institution and transaction offices and the State Bank’s branch in the province or centrally run city where the head office of the credit institution (or foreign bank branch) is located for implementation.

2. The Banking Supervision Agency shall inspect and supervise credit institutions in their observance of this Circular and handle their violations under its competence or report their violations to competent authorities for handling.

3. The State Bank’s related units shall refinance and implement other measures to support credit institutions extending loans for agriculture and rural development under regulations and decisions of the State Bank Governor.

4. The State Bank’s branches in provinces and centrally run cities where the head offices of credit institutions (or foreign bank branches) are located shall monitor and coordinate with the State Bank’s related units in implementing this Circular.

Article 7.Effect

1. This Circular takes effect on July 13, 2018.

2. The following documents cease to be effective on the effective date of this Circular:

a/ The State Bank’s Circular No. 20/2010/TT-NHNN of September 29, 2010, guiding the implementation of measures for administering monetary policy to support credit institutions extending loans for agriculture and rural development;

b/ The State Bank’s Official Letter No. 854/NHNN of January 25, 2011, guiding the implementation of Circular No. 20/2010/TT-NHNN;

c/ The State Bank Governor’s Decision No. 582/2003/QD-NHNN of June 9, 2003, on adjustment of reserve requirements for credit institutions.

3. Credit institutions applying the reserve requirement ratio under the State Bank’s Circular No. 20/2010/TT-NHNN of September 29, 2010, will continue to apply such ratio through the end of July 2018.

Article 8.Organization of implementation

The Director of the Office, the Director of the Monetary Policy Department, heads of the units of the State Bank, directors of provincial-level State Bank branches, chairpersons of Boards of Directors, Members’ Councils and directors general (directors) of credit institutions shall implement this Circular.-

For the State Bank Governor
Deputy Governor
NGUYEN THI HONG