Circular No. 20/2010/TT-NHNN dated September 29, 2010 of the State Bank of Vietnam on guiding the implementation of measures for managing monetary policy instrument to support credit institutions lending for agricultural and rural development

THE STATE BANK OF VIETNAM

Circular No. 20/2010/TT-NHNN of September 29, 2010, guiding the implementation of measures for administering monetary policy instruments to support credit institutions providing loans for agricultural and rural development

Pursuant to the 1997 Law on the State Bank of Vietnam and the 2003 Law Amending and Supplementing a Number of Articles of the Law on the State Bank of Vietnam; the 1997 Law on Credit Institutions and the 2004 Law Amending and Supplementing a Number of Articles of the Law on Credit Institutions;

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. 41/2010/ND-CP of April 12, 2010, on credit policy for agricultural and rural development;

The State Bank guides the implementation of measures for administering monetary policy instruments to support credit institutions providing loans for agricultural and rural development as follows:

Article 1. The State Bank shall provide capital support for the provision of loans for agricultural and rural development by credit institutions (excluding grassroots people’s credit funds) through the application of monetary policy instruments as follows:

1. To apply compulsory reserve ratios for VND deposits lower than the ordinary compulsory reserve ratios (compulsory reserve ratios applicable to state-owned commercial banks, excluding the Vietnam Bank for Agriculture and Rural Development, joint-stock commercial banks, joint-venture banks, foreign bank branches, wholly foreign-owned banks and finance companies) from the compulsory reserve maintaining period of October 2010. Specifically as follows:

a/ For credit institutions which have a proportion of total outstanding loans for agricultural and rural development to the average of total outstanding loans at quarter-ends in the preceding fiscal year of 70% and higher: The compulsory reserve ratio applicable to VND deposits of each term is 1/20 (one twentieth) of the ordinary compulsory reserve ratio applicable to such term.

b/ For credit institutions which have a proportion of total outstanding loans for agricultural and rural development to the average of total outstanding loans at quarter-ends in the preceding fiscal year of between 40% and 70%: The compulsory reserve ratio for VND deposits of each term is 1/5 (one fifth) of the ordinary compulsory reserve ratio applicable to such term.

2. To set aside an amount from the sum of annually allocated money to refinance credit institutions providing loans for agricultural and rural development in conformity with the objectives and measures of the monetary policy. Compared to other sectors, the State Bank shall prioritize refinancing loans for the agricultural and rural sector in terms of loan term and capital sources for loan provision.

3. To perform other supportive measures under decisions of the State Bank Governor.

Article 2. Responsibilities of credit institutions and units under the State Bank

1. Responsibilities of credit institutions:

a/ To comply with laws and guidance of the State Bank of Vietnam on the credit policy for agricultural and rural development.

b/ To timely and promptly report on the provision of loans for the agricultural and rural sector according to regulations of the State Bank. To take responsibility for the accuracy and lawfulness of reported data on credit for agricultural and rural development which shall be used as grounds for the implementation of Article 1 of this Circular.

c/ To properly use support capital for the purpose of providing loans for agricultural and rural development.

2. Responsibilities of units under the State Bank:

a/ The Credit Department shall submit a list of credit institutions governed by Clause 1, Article 1 of this Circular to the Governor of the State Bank for approval and notify it to the Transaction Bureau and concerned units under the State Bank, provincial-level State Bank’s branches and credit institutions for implementation.

b/ Other units of the State Bank shall, according to their assigned functions and tasks, perform tasks of management of the monetary policy specified in Article 1 of this Circular.

Article 3. Organization of implementation

1. This Circular takes effect on the date of its signing.

2. Previous regulations contrary to this Circular are no longer effective.

3. The director of the Office, the director of the Monetary Policy Department and heads of units under the State Bank, directors of provincial-level State Bank branches; chairpersons of Boards of Directors and Directors General (Directors) of credit institutions shall implement this Circular.-

For the State Bank Governor
Deputy Governor
NGUYEN DONG TIEN