Circular No. 01/2016/TT-NHNN guiding policies for loans to develop supporting industries

CIRCULAR

Guidelines for lending policies to develop supporting industries

Pursuant to the Law on the State Bank of Vietnam No. 46/2010/QH12 dated June 16, 2010;

No. 06/2013/UBTVQH13 dated March 18, 2013;

Pursuant to Decree No. 156/2013/NĐ-CP dated November 11, 2013, of the Government stipulating the functions, tasks, powers, and organizational structure of the State Bank of Vietnam;

Pursuant to Decree No. 111/2015/NĐ-CP dated November 3, 2015 of the Government on the development of support industries;

At the proposal of the Director of the Department of Credit for Economic Sectors;

The Governor of the State Bank of Vietnam issues this Circular to guide the lending policies to develop supporting industries as prescribed in Decree No. 111/2015/NĐ-CP dated November 3, 2015 of the Government on developing supporting industries.

Article 1. Scope of Regulation

Article 1. This Circular guides the lending policies to develop supporting industries as prescribed in Decree No. 111/2015/NĐ-CP dated November 3, 2015 of the Government on developing supporting industries (hereinafter referred to as Decree No. 111/2015/NĐ-CP).

Article 2. Borrowing state investment credit funds to implement projects producing products listed in the Priority Supporting Industry Products List under Decree No. 111/2015/NĐ-CP does not fall within the scope regulated by this Circular.

Article 2. Applicability

Point 1. Credit institutions, foreign bank branches shall provide loans for projects producing priority supporting industry products as stipulated in Article 11 of Decree No. 111/2015/NĐ-CP (hereinafter referred to as Priority Supporting Industry Production Projects).

Point 2. Borrowers (organizations and individuals) who borrow funds to invest in Priority Supporting Industry Production Projects.

Point 3. Organizations and individuals related to providing loans to develop supporting industries as prescribed in Decree No. 111/2015/NĐ-CP.

Article 3. Lending Policies for Priority Supporting Industry Production Projects

Clause 1. Credit institutions, foreign bank branches shall apply interest rates for short-term loans in Vietnamese dong for short-term loan portions serving Priority Supporting Industry Production Projects not exceeding the maximum short-term loan interest rate in Vietnamese dong for credit institutions, foreign bank branches for borrowers to meet capital needs for certain economic sectors and industries as decided by the Governor of the State Bank of Vietnam during each period.

Clause 2. Small and medium-sized enterprises when borrowing funds from credit institutions based on guarantees provided by credit guarantee organizations for small and medium-sized enterprises as prescribed to invest in Priority Supporting Industry Production Projects, in addition to the preferential lending policies stipulated in Clause 1 of this Article, may also be considered for loans up to 70% of the investment capital when meeting the conditions specified in Point a, Clause 2, Article 12 of Decree No. 111/2015/NĐ-CP.

Article 4. Principles for Lending

Clause 1. Priority Supporting Industry Production Projects subject to the lending policies stipulated in Clauses 1 and 2 of Article 3 of this Circular are projects confirmed as eligible for incentives according to Article 11 of Decree No. 111/2015/NĐ-CP.

Clause 2. Credit institutions, foreign bank branches shall examine, appraise, and decide on lending for Priority Supporting Industry Production Projects as stipulated in Clauses 1 and 2 of Article 3 of this Circular in accordance with current laws and bear full responsibility for their lending decisions.

Article 5. Credit Guarantee Organizations for Small and Medium-Sized Enterprises Borrowing Funds

Credit guarantee organizations for small and medium-sized enterprises borrowing funds as stipulated in Clause 2 of Article 3 of this Circular include:

Point 1. The Credit Guarantee Fund for Small and Medium-Sized Enterprises established and operating pursuant to Decision No. 58/2013/QĐ-TTg dated October 15, 2013 of

Point 2. The Vietnam Development Bank implementing guarantees pursuant to Decision No. 03/2011/QĐ-TTg dated January 10, 2011 of

Point 3. Other organizations permitted to provide guarantees for small and medium-sized enterprises borrowing funds at credit institutions in accordance with the law.

Article 6. Classification of debts, provision for impairment and risk management

The classification of debts, extension of debts, transfer of overdue debts, provision for impairment and utilization thereof to manage risks of credit institutions and foreign bank branches for loans for priority development projects of supporting industries shall be carried out in accordance with the current regulations of the State Bank of Vietnam.

Article 7. Responsibilities of Borrowers

1. Provide complete and truthful information and documents related to borrowing and bear responsibility for the accuracy of such information and documents provided to credit institutions and foreign bank branches.

2. Borrowers are responsible for using borrowed funds for their intended purposes and repaying the full principal and interest on time as stipulated in the signed credit contracts; fulfill all commitments in the credit contracts and relevant laws.

Article 8. Responsibilities of Credit Institutions and Foreign Bank Branches

1. Credit institutions and foreign bank branches providing loans for the development of supporting industries in accordance with this Circular, lending regulations, regulations on limits and safety ratios in credit institution operations, and relevant laws.

2. Quarterly (before the 10th day of the following month), credit institutions and foreign bank branches with outstanding loans for the supporting industry sector report the results of lending for the development of supporting industries to the State Bank of Vietnam (Department of Credit Policies for Economic Sectors and Banking Supervision Department) according to Form 01 and Form 02 attached to this Circular and bear responsibility for the completeness, truthfulness, and accuracy of reported information and data.

Article 9. Responsibilities of Units under the State Bank of Vietnam

1. Department of Credit for Economic Sectors:

a) Serve as the focal point for monitoring and consolidating the lending activities of credit institutions and foreign bank branches in accordance with this Circular;

b) Take the lead and coordinate with related units to handle any issues arising during the implementation of this Circular.

2. Department of Monetary Policy:

Advise the Governor of the State Bank of Vietnam on determining the maximum short-term interest rate in Vietnamese dong applicable during each period as stipulated in Clause 1, Article 3 of this Circular.

3. Banking Inspection and Supervision Authority:

a) Conduct inspections, audits, and supervision of lending by credit institutions and foreign bank branches to customers within their authority;

b) Coordinate with the Department of Credit Policies for Economic Sectors and other relevant units to address issues arising during implementation.

4. State Bank branch in provinces and centrally-administered cities:

a) Monitor and consolidate the lending situation of credit institutions and foreign bank branches to implement policies for developing supporting industries at the local level;

b) Coordinate with provincial departments and agencies to resolve difficulties arising during the implementation of lending to develop supporting industries at the local level. In cases exceeding their authority, they must promptly report to the People's Committee of the province or centrally-administered city, the State Bank of Vietnam (Department of Credit Policies for Economic Sectors) for consideration and resolution.

Article 10. Effective Date

1. This Circular takes effect from February 22, 2016.

2. For loan contracts signed before the date this Circular takes effect, they will continue to be implemented according to the agreements already signed until the end of the loan contract term. Any amendments or supplements to loan contracts must comply with the provisions of this Circular.

Article 11. Implementation Organization

The Director of the Office, Heads of the Department of Credit Policies for Economic Sectors and Heads of units under the State Bank of Vietnam, Governors of State Bank branches in provinces and centrally-administered cities; Chairmen of Management Boards, Chairmen of Member Councils and General Directors (Directors) of credit institutions and foreign bank branches are responsible for implementing this Circular./.