VietnameseOfficial Dispatch No. 1436/NHNN-CSTT dated March 3, 2009 of the State Bank of Vietnam providing detailed guidance on several points related to mechanism of interest rate support
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Official Dispatch No. 1436/NHNN-CSTT dated March 3, 2009 of the State Bank of Vietnam providing detailed guidance on several points related to mechanism of interest rate support
| Issuing body: | State Bank of Vietnam | Effective date: | Known Please log in to a subscriber account to use this function. Don’t have an account? Register here |
| Official number: | 1436/NHNN-CSTT | Signer: | Nguyen Dong Tien |
| Type: | Official Dispatch | Expiry date: | Updating |
| Issuing date: | 03/03/2009 | Effect status: | Known Please log in to a subscriber account to use this function. Don’t have an account? Register here |
| Fields: | Finance - Banking , Policy |
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THE STATE BANK OF VIETNAM ------------- | SOCIALIST REPUBLIC OF VIETNAM Independence- Freedom - Happiness ---------------------------- |
No. 1436/NHNN-CSTT Ref: providing detailed guidance on several points related to mechanism of interest rate support | Hanoi, March 3, 2009 |
To: | - Commercial banks - State bank branches in provinces, cities under the central Government’s management |
Since the beginning of February 2009, commercial banks have timely deployed and carried out the provision of loan with interest rate support to organizations and individuals that borrow capital from banks for production, business in accordance with provisions in the Decision No. 131/QD-TTg dated 23 January 2009 of Prime Minister and the Circular No. 02/2009/TT-NHNN dated 3 February 2009 of the Governor of State Bank of Vietnam. With a view to implementing guidelines of Prime Minister stated at the Notice No. 52/TB-VPCP dated 18 February 2009 and according to opinions of several commercial banks and State Bank branches in provinces, cities under the central Government’s management, the State Bank of Vietnam hereby would like to provide detailed guidance on several points related to the organization of implementation of interest rate support mechanism as follows:
1. For commercial banks
1.1. Drawing certificate of interest rate support upon writing down loan interests used as interest rate support to borrowers:
- Certificate of interest rate support contains the contents under the signed credit contract: number of credit contract and time of signing; name and address of borrower, lending commercial bank; account number of borrower; using purpose of loan fund; period of calculation and collection of loan interests (period of time for calculating and collecting interests); loan term and term entitled to interest rate support; loan interest rate; loan outstanding entitled to interest rate support; amount of interests payable, calculated under the loan interest rate stated in credit contract; amount of loan interests already used for giving interest rate support to borrowers (state in number and in word); signature and seal of borrowers, commercial bank (signature for borrowers being individuals, households).
- Certificate of interest rate support is used as a document for examining, supervising and making report on the performance of loan interest rate support in accordance with the Form 03, 04 in the Appendix of the Circular No. 02/2009/TT-NHNN; the certificate of interest rate support is made into 2 copies, one copy is kept in credit file, one is sent to borrower.
- To draw certificate of interest rate support for each time of loan interest collection and write-down of loan interest entitled to interest rate support or to draw on a monthly basis in line with the time limit for sending report on interest rate support to the State Bank of Vietnam.
1.2. To timely reflect all issues that may arise during the implementation of interest rate support mechanism to the State Bank of Vietnam (Monetary Policy Department) and State Bank branches in provinces, cities where lending commercial banks are located for dealing with related issues under provisions of applicable laws.
1.3. To closely control loans entitled to interest rate support in conformity with provisions of applicable laws; to ensure credit quality, credit growth in correspondence with ability of capital mobilization and oriented objectives of the State Bank of Vietnam in 2009; to correctly comply with provisions of the State Bank of Vietnam on prudential ratios in business activity and foreign exchange control.
1.4. To reply in writing to borrowers for case of loan refusal, interest rate support refusal in accordance with provisions of applicable laws, clearly stating the reason for refusal. Written refusals shall be kept in credit file and one copy shall be sent to State Bank branches in provinces, cities under the central Government’s management for dealing with related issues.
1.5. To direct subsidiary branches to carry out the examination before, during and after lending for loans entitled to interest rate support in accordance with provisions in the Circular No. 02/2009/TT-NHNN and paragraph 5 Article 1 Decision No. 127/2005/QD-NHNN dated 3 February 2005 of the Governor of the State Bank on amendment, supplement of several articles of the Regulation on lending by credit institutions to borrowers, issued in conjunction with the Decision No. 1627/2001/QD-NHNN dated 31 December 2001 of Governor of the State Bank.
1.6. To direct subsidiary branches to intensify internal audit for loans entitled to interest rate support; in case of detecting any signal of taking advantage of mechanism of interest rate support to seek profit, please stop lending and interest rate support, at the same time, to make report to the State Bank branches in provinces, cities to carry out the examination, supervision and settlement in accordance with provisions of applicable laws.
1.7. To inform, propagate mechanism of interest rate support in accordance with provisions of applicable laws; to avoid propagation, spread that leads to unhealthy competition, affecting stability of monetary market and banking operation.
1.8. To follow up, on a daily basis, balance of loans entitled to interest rate support and amount of loan interests used as interest rate support; to provide State Bank of Vietnam with data of loans with interest rate support in accordance with the Telegram attached hereto.
1.9. To deal with cases of interest rate support in line with provisions in the Decision No. 131/QD-TTg and Circular No. 02/2009/TT-NHNN as follows:
a. Short term loans in Vietnamese Dong being subjects entitled to interest rate support in line with provisions in the Decision No. 131/QD-TTg and paragraph 3, Article 1 of the Circular No. 02/2009/TT-NHNN.
- Loan provided under the method of crop intervals by commercial banks to households, individuals in regions specializing in growing rice and in other regions alternately growing rice and other short term crop plants and that loan is used for production expense of crops in the year 2009.
- Loans provided under the normal lending mechanism by financed, trusted fund source
- Loans provided under the normal lending mechanism, guaranteed under the Decision No. 14/2009/QD-TTg dated 21 January 2009 of Prime Minister on the issuance of Regulation on providing guarantee to enterprises which borrow capital from commercial banks.
- Loans provided under the normal lending mechanism, belonging to program of interest rate support by state budget of provincial level in accordance with provisions of People’s Committee in provinces, cities under the central Government’s management.
- Loans arising in the 1st and 2nd February 2009, prior to the effective date of the Circular No. 02/2009/TT-NHNN; commercial banks should provide guidance to borrowers on submission of application for loan interest rate support.
- Loans belonging to area of socialization under provisions in the Decree No. 69/2008/ND-CP dated 30 May 2008, to give interest rate support to only short term loans in VND as current capital for units which carry out the socialization under the List provided for in the Decision No. 1466/QD-TTg dated 10 October 2008 of Prime Minister on detailed list of types, criteria of scale, standards of units which perform socialization in the area of education, training, vocational training, health care, culture, sport, environment.
- Loans of which period of debt repayment is adjusted
- Loans for purchase of goods, production-business expenses shall be paid under the method of deferred payment if those goods or products have not yet been sold up.
- Loans of which interest payment is deferred by borrower, but loan principals have not been classified as overdue debt.
- Loans for performance of domestic production-business plan, including performance in export processing zone and non-tariff areas which are economic areas within the territory of Vietnam (except for loans for trading in consumer goods in accordance with provisions in point b, paragraph 1.9 of this official dispatch).
b. Short term loans in Vietnamese dong not entitled to interest rate support in line with provisions in the Decision No. 131/QD-TTg and paragraph 4, Article 1 of the Circular No. 02/2009/TT-NHNN.
- Loans for import from oversea and export processing zone, non-tariff area, doing business domestically and in export processing zone, non-tariff area for consumer goods under provisions at point c, paragraph 4 Article 1 of the Circular No. 02/2009/TT-NHNN: Loan for purchase of foreign currency to make payment for import amount; loan for making payment of amount entrusted for import; loan for doing business, production materials and commercial banks determine that these consumer goods are originated from import; loan for doing business between export processing zone, non-tariff area and outside zone.
- Loans for payment of taxes to state budget
- Loans for creating, trading in gold, silver and gems.
- Loans for investors who construct, by themselves, projects to form fixed assets; loans for investors to reserve materials, make payment to contractor where, under signed economic contract, investors are not required to take responsibility for those construction expenses
- Loans for importing goods, services under the method of temporary import for re-export
c. Dealing with other cases
- Credits extended in Vietnamese Dong under methods other than loan provision, such as factoring, finance leasing, discount of valuable papers, compulsory loan under the mechanism of guarantee shall not be entitled to interest rate support.
- In case where borrower has a demand for short term loan in Vietnamese Dong with mortgage or security asset being valuable paper, savings book and other money based means (hereinafter referred to as valuable paper), and this loan is entitled to interest rate support: For valuable papers which were bought or available (arose) prior to 01 February 2009, commercial bank shall give interest rate support to entire loan outstanding arisen; for those which were bought or available (arose) since 1 February 2009, commercial bank shall request borrower to calculate entire value of valuable papers as own capital stated in the plan of production, business and shall only give interest rate support to the loan outstanding which is equal to the difference between the balance of loan and own capital of borrower (including value of valuable papers).
- The write-down of loan interest amount used as interest rate support shall be performed at the same time with the collection of loan interest of commercial bank. Upon the maturity of loan interests, if borrower is still not capable of making payment of loan interest, then the write-down of the loan interest used as interest rate support shall not be performed.
- Documents to prove the purpose of using loan funds as subject entitled to interest rate support according to provisions by commercial bank in the Process of examination, supervision over loan funds of borrowers under provisions in paragraph 5, Article 1 of the Decision No. 127/2005/QD-NHNN of the Governor of the State Bank, including: invoice of goods purchase certified by related parties, export documents, etc. Where production- business expenses are not required, by provisions of applicable laws, to be supported by invoice in accordance with provisions of Ministry of Finance, commercial banks shall carry out on-site examination and draw minutes of examination, certified by commercial bank and borrower to specify production-business expenses in correspondence with value of assets actually created from loan funds.
- Legal documents related to System of national economic industries are used as basis for setting up statistic norms of loan by economic industry as stated at the Decision No. 477/2004/QD-NHNN dated 28 April 2004 of the Governor of the State Bank, including: Decree No. 75/CP dated 27 October 1993 of the Government on the issuance of system of national economic industries; Decision No. 143/TCTK/PPCD dated 22 December 1993 of the General Statistic Office on the issuance of system of economic industries of level II, level III and level IV and list of system of national economic industries. Commercial banks shall base on provisions in these documents and Decision No. 477/2004/QD-NHNN to determine whether loans are entitled to interest rate support or not.
- Number of borrowers entitled to interest rate support under Form 03, 04 in the Appendix of the Circular No. 02/2009/TT-NHNN shall be listed by location of lending commercial banks; currency unit of these forms shall be Vietnamese Dong (in stead of billion dong) for being consistent with the currency unit stated in the certificate of interest rate support.
- If loans provided under the method of co-financing belong to subjects entitled to interest rate support, then, co-financing commercial banks shall directly disburse and account balance of loans already given interest rate support under provisions of applicable laws.
1.10. For the case of finance companies and loans which are summarized by mining industry related to the mechanism of interest rate support, the State Bank of Vietnam shall coordinate with Ministry of Finance to study and submit Prime Minister for decision. Upon availability of decision by Prime Minister, State Bank of Vietnam shall provide guidance to commercial banks and borrowers for implementation.
2. For State Bank branches in provinces, cities under the central Government’s management:
a. To timely implement duties assigned at point dd, paragraph 2, Article 4 of the Circular No. 02/2009/TT-NHNN;
b. To take initiative in receiving and dealing with issues related to mechanism of interest rate support according to reflection, complaints by commercial banks and borrowers in the area of province, city.
c. Periodically to send report to State Bank of Vietnam (Monetary Policy Department) on the 10th of every month at the latest, about the performance of interest rate support mechanism in the area of province, city in the previous month, including: Form 03-Appendix of the Circular No. 02/2009/TT-NHNN; performance of interest rate support mechanism and recommendation for solutions of arisen issues.
3. This Official Dispatch shall be effective from the date of signing. For loans which are entitled to interest rate support, but not in line with provisions in point b and c, paragraph 1.9 mentioned above, commercial banks and borrowers shall adjust credit contracts since the effective date of this document.
FOR THE GOVERNOR OF THE STATE BANK OF VIETNAM DEPUTY GOVERNOR Nguyen Dong Tien |
NAME OF COMMERCIAL BANK:........
REPORT ON DATA OF LOANS ENTITLED TO INTEREST RATE SUPPORT OF COMMERCIAL BANK
(Till the date....../......./.....)
(Till the date....../......./.....)
Unit: billion dong
Norm | Amount accumulated to Friday of the preceding week | Amount accumulated till the Friday of reporting period | |
1. Balance of loans entitled to interest rate support | |||
2. Loan interests already used to give interest rate support to borrowers | |||
DRAWER | .........., date.......... GENERAL MANAGER | ||
Instructions for drawing table
- Deadline for sending report: at 15h of Friday on a weekly basis
- Reporting recipient: Monetary Policy Department (Email: [email protected], fax: 04 38246953- 38240132, telephone number: 04 38246955)
- Commercial banks shall send report in writing, via fax, via email. If data is supplied through direct phone call, commercial bank should send in advance a written registration of full name, title of person who shall make phone call.
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