Circular No. 45/2018/TT-NHNN dated December 28, 2018 of the State Bank of Vietnam on providing credit institutions with instructions for grant of loans guaranteed by credit guarantee funds under regulations of Government’s Decree No.34/2018/ND-CP dated March 8, 2018 on establishment, organization and operation of credit guarantee funds for small and medium-sized enterprises

THE STATE BANK OF VIETNAM

CircularNo. 45/2018/TT-NHNN dated December 28, 2018 of the State Bank of Vietnamon providing credit institutions with instructions for grant of loans guaranteed by credit guarantee funds under regulations of Government’s Decree No.34/2018/ND-CP dated March 8, 2018 on establishment, organization and operation of credit guarantee funds for small and medium-sized enterprises

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

Pursuant to the Law on Credit Institutions dated June 16, 2010 and the Law on Amending and Supplementing certain Articles of the Law on Credit Institutions dated November 20, 2017;

Pursuant to the Law on Support for Small- and Medium-sized Enterprises dated June 12, 2017;

Pursuant to the Government’s Decree No. 34/2018/ND-CP dated March 8, 2018 on establishment, organization and operation of credit guarantee funds for small and medium-sized enterprises;

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

Upon the request of the Director of the Department of Economic Sector Credit;

The Governor of the State Bank of Vietnam hereby promulgates the Circular providing credit institutions with instructions for grant of loans guaranteed by credit guarantee funds under regulations of Government’s Decree No.34/2018/ND-CP dated March 8, 2018 on establishment, organization and operation of credit guarantee funds for small and medium-sized enterprises.

Article 1. Scopeof regulation

This Circular instructs credit institutions to cooperate with credit guarantee funds and determine interest rates on loans guaranteed by credit guarantee funds under regulations of the Government’s Decree No.34/2018/ND-CP dated March 8, 2018 on establishment, organization and operation of credit guarantee funds for small and medium-sized enterprises (hereinafter referred to as Decree No. 34/2018/ND-CP).

Article 2. Subjects of application

1. Credit guarantee funds established, structured and operated as per the Decree No. 34/2018/ND-CP (hereinafter referred to as credit guarantee fund).

2. Credit institutions established and operated as per the Law on Credit Institutions (hereinafter referred to as lender).

3. Small- and medium-sized enterprises whose loans are guaranteed by credit guarantee funds under the provisions of the Decree No. 34/2018/ND-CP (hereinafter referred to as borrower).

4. Other organizations and individuals concerned.

Article 3. Cooperation in granting loans guaranteed by credit guarantee funds

1. In case where a credit guarantee fund receives collateral to provide a guarantee, the lender, the credit guarantee fund, the collateral giver and other parties involved (if any) shall enter into a written agreement to ensure that the lender has the right to receive and handle collateral to secure the guarantee obligations on which the credit guarantee fund defaults under the provisions of the Decree No. 34/2018/ND-CP, this Circular and other relevant laws.

2. Before granting a loan guaranteed by the credit guarantee fund, the lender and the credit guarantee fund shall implement the following regulations:

a) After consulting the lender’s internal rules and the mechanism for management of operations of the credit guarantee fund as provided in Article 14 in the Decree No. 34/2018/ND-CP, they must enter into a framework or one-by-one agreement on cooperation in granting loans guaranteed by the credit guarantee fund (hereinafter referred to as cooperation agreement) in order to agree on guarantee, lending activities and use such agreement as a basis for exercising rights and obligations of both parties that may arise;

b) In case where both parties wish to amend and supplement the signed cooperation agreement, such amendment and supplementation must be carried out in writing and must serve as an integral part of the cooperation agreement.

Article 4. Contents of the cooperation agreement between the lender and the credit guarantee fund

The cooperation agreement between the lender and the credit guarantee fund referred to in clause 2 of Article 3 herein shall include, but not limited to, the followings:

1. Sequence of cooperation between parties in receipt and evaluation of application documentation (independent evaluation, evaluation cooperation and establishment of the evaluation group, etc.), grant and disbursement of loans guaranteed by credit guarantee funds (including lending time, amount and form, etc.).

2. Subject matters of the guarantee certificate shall be subject to Article 24 of the Decree No. 34/2018/ND-CP and shall include specific agreements on the measures to recover debts, the deadline for the lender s implementation of the guarantee in case of the borrower’s failure to repay debts or insufficient repayment of debts to the lender, and the methods for evidencing completed implementation of these measures prior to informing the credit guarantee fund to request discharge of its guarantee obligations.

3. Contents related to rights and obligations of the guarantor and the lender under the provisions of Article 26 and 27 of the Decree No. 34/2018/ND-CP.

4. Cooperation and procedures for inspection and oversight of the process of using borrowed funds and assets acquired from borrowed funds shall serve the purpose of ensuring that these borrowed funds and assets are used according to commitments made in credit agreements and shall serve as a basis for the credit guarantee fund s implementation of any guarantee obligation that may arise.

5. It shall be necessary to cooperate in assessing the rescheduling of repayment of the borrower’s debts, suspension of fund disbursement, recovery of debts prior to maturity in case of the borrower’s violation against terms and conditions of credit agreements, credit guarantee agreements or other violations of laws.

6. Cases in which the credit guarantee fund may refuse to discharge part or all of guarantee obligations, and the time limits for the credit guarantee fund s issue of notification of refusal to secure guarantee obligations to the obligee under the provisions of clause 3 of Article 31 and Article 32 in the Decree No. 34/2018/ND-CP.

7. An agreement on transfer of the right to receive and handle collateral shall include the followings:

a) Transferring the right to receive and handle collateral put up to obtain the guarantee in case the credit guarantee fund defaults on guarantee obligations in accordance with point d of clause 2 of Article 26 and point b of Article 27 in the Decree No. 34/2018/ND-CP;

b) Handling collateral put up to obtain the guarantee in case the credit guarantee fund defaults on part of guarantee obligations under the provisions of the Decree No. 34/2018/ND-CP and other relevant laws;

c) Handling collateral in case it is put up as security for both a loan and a guarantee before the credit guarantee fund’s implementation of its guarantee obligations under the provisions of clause 3 of Article 33 in the Decree No. 34/2018/ND-CP.

8. Other contents agreed upon between contracting parties in conformity with legislative regulations in force.

Article 5. Principles of lending guaranteed by credit guarantee funds

1. In order to obtain loans guaranteed by credit guarantee funds, investment projects and business plans of borrowers must be assessed by credit guarantee funds and guaranteed by their decisions to give guarantee for obligations to repay either loan principal or interest, or both of them, as provided in clause 2 of Article 17 in the Decree No. 34/2018/ND-CP.

2. The lender must consider, assess and decide on grant of loans in Vietnamese dong to the borrower’s investment projects and business plans under the credit guarantee fund’s guarantee for obligations to repay either principal or interest, or both of them, as provided by laws on credit institutions’ lending of funds to borrowers, and shall be solely responsible for its lending decision.

3. Classification and rescheduling of repayment of debts, charge-off of debts, setting aside and use of provisions for dealing with risks to the lender s loans guaranteed by the credit guarantee fund shall be subject to regulations of the State Bank of Vietnam (hereinafter referred to as State Bank)

Article 6. Interest rates on loans guaranteed by credit guarantee funds

The lender and borrower shall agree on the interest rates on short-term, medium-term and long-term loans guaranteed by credit guarantee funds, shall ensure that the interest rate is not greater than the one on loans with the same maturity period, in the same sector or industry determined by the lender, and conforms to regulations of the State Bank as well as other relevant law provisions.

Article 7. Lender’s responsibilities

1. Closely cooperate with the credit guarantee fund in carrying out lending transactions with borrowers under agreements between involved parties, provisions of this Circular and other relevant law provisions.

2. On a monthly basis (not later than the 10^thday of the subsequent month), the lender must send a review report on grant of loans guaranteed by the credit guarantee fund to small- and medium-sized enterprises, which is classified into economic sectors, to the State Bank branches in cities or provinces, where offices of credit guarantee funds are located, according to the Appendix No. 01 hereto.

3. In the course of implementation of this Circular, if there is any difficulty and query, report to the State Bank branches in cities and provinces where offices of credit guarantee funds are located.

Article 8. Responsibilities of State Bank’s affiliates

1. Department of Economic Sector Credit:

a) Act as a presiding entity in charge of monitoring and synthesizing grant of the lender‘s loans guaranteed by the credit guarantee fund to small- and medium-sized enterprises;

b) Preside over and cooperate with related units in resolving any difficulty that may arise in the course of implementation of this Circular.

2. Bank Supervision and Inspection Agency, and inspectors and supervisors of State Bank branches in cities and provinces shall carry out the inspection and supervision of implementation of this Circular and handle violations within their jurisdiction.

3. State Bank branches in cities and provinces where offices of credit guarantee funds are located shall assume the following responsibilities:

a) On a monthly basis (not later than the 15^thday of the subsequent month), after consolidating reports from credit institutions within their remit, send the State Bank a consolidated review report on grant of loans guaranteed by the credit guarantee fund to small- and medium-sized enterprises according to the Appendix No. 02 hereto;

b) Cooperate with Departments and Sectoral Administrations at localities under their remit in handling any difficulty that may arise during the process of granting loans guaranteed by credit guarantee funds within these localities. In case such difficulty is ultra vires, promptly report to People s Committees in centrally-affiliated cities and provinces and the State Bank (in care of Department of Economic Sector Credit).

Article 9. Entry into force

1. This Circular shall enter into force from February 12, 2019 and replace the Circular No. 05/2015/TT-NHNN dated May 4, 2015 of the State Bank providing instructions for credit institutions’ collaboration with credit guarantee funds in granting loans guaranteed by credit guarantee funds as per the Prime Minister’s Decision No. 58/2013/QD-TTg dated October 15, 2013.

2. If credit agreements guaranteed by credit guarantee funds have been signed prior to the effective date of this Circular, terms and conditions hereof shall remain valid until the validity period expires. Any amendment or supplement to the aforesaid credit agreements must be conformable to provisions hereof.

Article 10. Implementation

The Office’s Chief, Director of Department of Economic Sector Credit, Heads of the State Bank’s affiliates, Directors of State Bank branches in centrally-affiliated cities and provinces, Chairs of Management Boards, Chairs of Members Boards, General Directors (Directors) of credit institutions, credit guarantee funds and borrowing small- and medium-sized enterprises shall be responsible for implementing this Circular./.

For the Governor

Deputy Governor

Dao Minh Tu