Circular No. 18/2010/TT-NHNN dated September 16, 2010 of the State Bank of Vietnam detailing the provision of interest rate support for organizations and individuals borrowing medium- or long-term loans from the Vietnam Development Bank

CIRCULAR

DETAILING THE PROVISION OF INTEREST RATE SUPPORT FOR ORGANIZATIONS AND INDIVIDUALS BORROWING MEDIUM- OR LONG-TERM LOANS FROM THE VIETNAM DEVELOPMENT BANK

THE STATE BANK OF VIETNAM

Pursuant to the Government s Resolution No. 30/2008/NQ-CP of December 11,2008, on urgent measures to curb economic decline, maintain economic growth and assure social welfare;

Pursuant to the Prime Minister s Decision No. 443/QD-TTg of April 4, 2009, on interest rate support for organizations and individuals borrowing medium- and long-term bank loans for investment in production and business development: and the Prime Minister s directing opinions in Document No. 670/TTg-KTTH of May 5, 2009, on the implementation of Decisions No. 131/QD-TTg of January 23, 2009, and No. 443/QD-TTg of April 4, 2009;

The State Bank of Vietnam details the provision of interest rate support for organizations and individuals borrowing medium- or long-term loans from the Vietnam Development Bank as follows:

Article 1. Purposes of interest rate support

The State provides interest rate supports for organizations and individuals borrowing medium- or long-term loans in Vietnam dong from the Vietnam Development Bank for the implementation of production and business development projects or infrastructure projects or for the performance of export contracts, aiming to reduce investment costs, increase production and business capacity and product competitiveness and create jobs.

Article 2. Subjects and scope of application of regulations on interest rate support

1. The Vietnam Development Bank shall provide loans to borrowers eligible for preferential loans and other loan borrowers specified in the Government s Decree No. 106/ 2008/ND-CP of September 19. 2008, amending and supplementing a number of articles of Decree No. 151/2006/ND-CP of December 20,2006, on state investment credit and export credit and other relevant documents.

2. Borrowers eligible for interest rate support are investors and exporters that borrow loans from the Vietnam Development Bank under regulations of the Government, the Prime Minister and the Ministry of Finance.

3. Loans eligible for interest rate support are Vietnam-dong medium- and long-term loans granted under credit contracts signed before or after April 1, 2009. but actually disbursed (in lump sum or installments) from April 1 to December 31, 2009. by the Vietnam Development Bank under the Government s and the Prime Minister s regulations, including:

a/ Loans granted under regulations on state investment credit issued by the Government before the effective date of Decree No. 106/2008/ ND-CP.

b/ Loans specified in the list of loans eligible for the state investment credit prescribed in Decree No. 106/2008/ND-CP.

c/ Loans granted under the Government s or the Prime Minister s regulations; loans for overseas investment projects; the Hanoi-Haiphong expressway project: payment of compensation and resettlement expenses of Son La hydropower project; projects borrowing loans from the Trust Revolving Fund; export credit with a term exceeding 12 months and other projects.

d/ Loans disbursed for the implementation of loan-funded projects approved by competent agencies and the Vietnam Development Bank. including: payment and advanced payment of loan-funded projects expenditures; refund of own capital advanced by clients for payment of loan-funded projects expenditures; transfer of money to clients deposit accounts to pay for loan-funded projects expenditures.

Article 3. Principles on, and duration, level and method of. interest rate support

1. Interest rate support will be provided on the principle that the Vietnam Development Bank shall provide long- and medium-term loans in Vietnam dong under the current lending mechanism and provide interest rate support under the Prime Minister s regulations and the Ministry of Finance s and the State Bank of Vietnam s guidance.

2. The maximum term of loans eligible for interest rate support is 24 months, counting from the date of disbursement, for loans under credit contracts signed before or after April 1, 2009. but actually disbursed from April 1 to December 31. 2009. Interest rate support will be provided from April 1,2009. to December 31,2011. Loans eligible for interest rate support which are overdue or extended or have a term of over 24 months are not entitled to interest rate support in the overdue or extension period or the period exceeding 24 months.

3. Interest rate support level for borrowers

a/ The level of interest rate support for borrowers is 4%/year. calculated on the actual loan amount and term in the period from April I, 2009, to December 31, 2011.

b/ In case a client that wishes to borrow from the Vietnam Development Bank a Vietnam-dong medium- or long-term loan eligible for interest rate support has this loan pledged or guaranteed with valuable papers, savings books or other monetary forms (below referred to as valuable papers) or has deposited money at the Vietnam Development Bank or other credit institutions, interest rate support will be provided as follows:

- For valuable papers purchased or available (issued) before January i7 2009. the Vietnam Development Bank shall provide interest rate support for the whole outstanding loan amount; for valuable papers purchased or available (issued) from January 1, 2009. the Vietnam Development Bank shall provide interest rate support for the difference between the outstanding loan amount and the value of the borrower s mortgaged or guaranteed valuable papers.

- For borrowers having deposited money at the Vietnam Development Bank or other credit institutions from February 1. 2009: the Vietnam Development Bank shall provide interest rate support for the difference between the outstanding loan and the value of the borrower s deposit accounts at the time of signing the credit contract. The value of the borrower s deposit accounts at the Vietnam Development Bank and other credit institutions include the credit balance of time and demand deposits in Vietnam dong or foreign currencies, excluding the balance of allocated and entrusted capital deposit accounts; deposit accounts of own capital for participation in investment projects, frozen deposits awaiting settlement and work warranty, collaterals and blocked deposits as prescribed by law. Borrowers shall report to the Vietnam Development Bank on the value of their Vietnam dong and foreign-currency deposit accounts at other credit institutions and take responsibility for the lawfulness and accuracy of their reports.

4. The method of interest rate support means that when collecting loan interests, the Vietnam Development Bank shall subtract the amount of interest rate support from the payable interest amount of borrowers. The State Bank of Vietnam shall transfer the provided interest rate support amount under Clause 1, Article 5 of this Circular.

Article 4. Procedures for, and responsibilities of borrowers and the Vietnam Development Bank in, providing interest rate support

1. Borrowers having loans eligible for interest rate support shall:

a/ In the period from April 1 to December 3.1.2009, when borrowing loans for the first time at the Vietnam Development Bank, send a written request for interest rate support, made according to Form No. 1 provided in the Appendix to this Circular (not printed herein), to the Vietnam Development Bank.

b/ Use loans for proper purposes as stated in credit contracts. If using loans for improper purposes, they will not be provided with interest rate support and shall refund the granted amount of interest rate support to the Vietnam Development Bank and be handled under law.

c/ Provide sufficient and truthful information and documents to prove the use purposes of loans eligible for interest rate support and take responsibility before law for the accuracy of information and documents provided to the Vietnam Development Bank.

d/ Comply with regulations of the Vietnam Development Bank on the procedures for loan borrowing, interest rate support and reporting.

e/ Account loan interest amounts in strict accordance with interest amounts payable to the Vietnam Development Bank after receiving interest rate support.

f/ Request the Vietnam Development Bank to provide interest rate support under the Prime Minister s regulations and the State Bank of Vietnam s guidance.

2. The Vietnam Development Bank shall:

a/ Provide interest rate support to borrowers under the Prime Minister s regulations and the State Bank of Vietnam s guidance; refrain from refusing to provide interest rate support for eligible loans; make periodical reports to the State Bank of Vietnam and the Ministry of Finance for inspection and supervision of the interest rate support; provide information on bank accounts to the Slate Bank of Vietnam (the Transaction Bureau and the Monetary Policy Department) for transfer of interest rate support amounts.

b/ Based on the use purposes of loans eligible for interest rate support, write in credit contracts contents related to interest rate support in accordance with law; refuse requests for interest rale support which are contrary to law.

c/ The Chairperson of the Board of Directors and the Director General of the Vietnam Development Bank shall take responsibility and be handled according to law for cases of illegal provision of interest rate support.

d/ Provide to the State Bank of Vietnam (the Banking Inspection and Supervision Agency and provincial-level branches of the State Bank) its lending regulations and the Government s and Prime Minister s documents and decisions on investment projects and export credit.

e/ Conduct inspection before, during and after providing loans so as to ensure the lawful provision of interest rate support. If detecting that borrowers use loans for improper purposes, recover interest rate support amounts already provided. If it is impossible to recover these amounts, report the problem to competent state agencies for handling or initiation of lawsuits against borrowers breaches of credit contracts.

f/ Provide guidance to borrowers so as to ensure the convenient and safe provision of loans to eligible borrowers.

g/ When collecting loan interests from borrowers, subtract the interest amount eligible for interest rate support from the payable loan interest amount of borrowers in accordance with law. By December 31, 2011, if loan interests are not yet due, calculate the interest amounts to be paid by borrowers and subtract the interest amounts eligible for interest rate support from the payable interest amounts- The calculation and collection of loan interests must comply with law. The Vietnam Development Bank shall account and monitor interest amounts of loans eligible for interest rate support as follows:

- Account the whole amount of loan interests as income under the current financial regime. The amount of loan interests eligible for interest rate support transferred from the State Bank of Vietnam shall be accounted in a separate account for interest rate support during 2009-2010.

- Make statements (or build a database) for monitoring in detail loans eligible for interest rate support (borrowers, loan amounts, loan terms, interest rates, and interest rate support amounts) which shall be sent to borrowers, used for internal supervision, statistics and audit and reported to the State Bank of Vietnam and serve the inspection and supervision by competent state agencies.

h/ Issue certificates of interest rate support which bear the certification of borrowers and the Vietnam Development Bank s lending unit (with their signatures and seals) for use as documents for inspection and supervision. A certificate of interest rate support will be made in 3 copies. one enclosed with accounting documents, one enclosed with the credit records and the other sent to the borrower. Certificates of interest rate support shall be made upon each collection of loan interests and subtraction of loan interest amounts eligible for interest rate support or on a monthly basis in conformity with the time limit for sending reports on interest rate support to the State Bank of Vietnam.

i/ Send written registration of plans on interest rate support and reports on interest rate support amounts to the State Bank of Vietnam as follows:

- The registrations of quarterly plans on interest rate support shall be made on a quarterly basis according to Form No. 2 provided in the Appendix to this Circular (not printed herein) and sent no later than the l0th of the first month of the subsequent quarter.

- Monthly reports on interest rate support shall be made according to Forms No. 3 and 4 provided in the Appendix to this Circular (not printed herein) and sent no later than the 10th of the month following the reporting month.

j/ Promptly and accurately monitor and make statistics on loans eligible for interest rate support in service of internal audit, reporting to the State Bank of Vietnam and inspection and supervision by competent state agencies; open accounts or apply appropriate management systems to separately account loans eligible for interest rate support.

k/ Recover and refund to the State Bank of Vietnam interest rate support amounts provided to ineligible loans.

l/ Inspect the provision of loans with interest rate support by its branches and Transaction Bureau; and report to the State Bank of Vietnam (the Monetary Policy Department and the Banking Inspection and Supervision Agency) and the Ministry of Finance on the implementation of regulations on interest rate support on a quarterly basis (on the 20th of the last month every quarter).

m/ Manage and keep dossiers of loans eligible for interest rate support according to law.

Article 5. Transfer of interest rate support amounts and inspection and supervision of the provision of loans with interest rate support

1. The State Bank of Vietnam shall transfer 90% of loan interest rate support amounts to the Vietnam Development Bank on the basis of the latter s reports on loans for which interest rate support has been provided. The Chairperson of the Board of Directors and the Director General of the Vietnam Development Bank shall take responsibility before law for the provision of interest rate support and the accuracy of their reports. The remaining interest rate support amounts shall be transferred on the basis of the finalization of interest rate support with the Vietnam Development Bank.

2. The State Bank of Vietnam shall collaborate with the Ministry of Finance in inspecting and supervising the implementation of the law on interest rate, support on a regular or irregular basis.

Article 6. Responsibilities of units under the State Bank of Vietnam

1. The Monetary Policy Department shall collaborate with units under the Stale Bank of Vietnam in settling matters related to the interest rate support mechanism; receive registrations of plans and reports on interest rate support from the Vietnam Development Bank; notify the transfer of interest rate support amounts to the Vietnam Development Bank; guide the finalization of interest rate support amounts; and make reports to the Prime Minister.

2. The Finance - Accounting Department shall settle book-keeping matters related to the interest rate support mechanism.

3. The Transaction Bureau shall account and transfer interest rate support amounts to the Vietnam Development Bank under the State Bank Governor s decisions and the Monetary Policy Department s notices.

4. The Banking Inspection and Supervision Agency shall assume the prime responsibility for. and collaborate with functional agencies of the Ministry of Finance in. inspecting and handling violations of law on interest rate support committed by the Vietnam Development Bank.

5. Provincial-level State Bank s branches shall inspect and supervise the observance of regulations on interest rate support by the Vietnam Development Bank branches, handle violations according to their competence and report and propose the State Bank Governor to settle arising matters.

Article 7. Organization of implementation

1. This Circular takes effect on the dale of its signing. Regulations on interest rale support for the Vietnam Development Bank provided in Circular No. 24/2009/TT-NHNN of December 14. 2009. detailing the provision of interest rate support for organizations and individuals borrowing medium- and long-term loans from the Vietnam Development Bank and local development investment funds for investment in production and business development, cease to be effective. For loans eligible for interest rate support under this Circular which are granted after April 1, 2009, if no interest rate support has been provided, the Vietnam Development Bank shall provide interest rate support under law and this Circular from the date of loan provision.

2. The chief of the Office, the director of the Monetary Policy Department, heads of units under the State Bank, directors of provincial-level branches of the State Bank, Chairperson of the Board of Directors and Director General of the Vietnam Development Bank and borrowers shall implement this Circular.-