Circular No. 01-TC/KBNN guides the recovery of loan funds, management, and utilization of loan funds for projects under Program 327.

CIRCULAR

DIRECTIVE OF THE MINISTRY OF FINANCE NO. 01 TC/KBNN OF JANUARY 7, 1997 GUIDING THE RECOVERY OF LOAN FUNDS, MANAGEMENT AND USE OF LOAN FUNDS FOR PROJECTS UNDER PROGRAM 327

Pursuant to Decision No. 556/TTg dated September 12, 1995 of the Prime Minister on adjusting and supplementing Decision No. 327/CT and Circular Joint No. 10/TT-LB dated December 11, 1996 of the Ministry of Planning and Investment, Ministry of Finance, and Ministry of Agriculture and Rural Development, after consultation with the Ministry of Planning and Investment, the Ministry of Finance guides the recovery of loans for Program 327 projects and the management and use of recovered funds as follows:

This technical regulation sets out technical requirements, testing methods, sampling procedures; management requirements; responsibilities of organizations and individuals producing, trading, and importing cigarettes.

1. The project owner and household borrowing under Program 327 shall be responsible for fully repaying the loan amount in full and on time to the State Treasury.

2. Higher-level agencies of the project owner (Ministries, sectors, Provincial People's Committees, City People's Committees) shall be responsible for monitoring and urging projects within their jurisdiction to ensure full and timely repayment of loans to the State Treasury; coordinating with the Ministry of Finance and the Ministry of Planning and Investment to handle overdue debts or debt write-offs according to their duties and authorities.

3. Funds recovered from projects managed by Ministries, Sectors, and localities shall be used to lend to Program 327 projects of those Ministries, Sectors, and localities according to plans agreed upon between the Ministry of Planning and Investment, the Ministry of Finance, and the direct superior agency of the project owner.

4. Procedures for lending from recovered funds shall be carried out as prescribed in Circular No. 80 TC/KBNN dated November 9, 1995 of the Ministry of Finance.

5. For projects affected by natural disasters, epidemics... during the process of using borrowed funds, impacting the ability of households and project owners to repay debts, they may be considered for debt write-off depending on specific circumstances.

II. RECOVERY OF LOAN FUNDS

1. Debt Recovery

State Treasuries shall base on the loan term and the amount due for repayment recorded on the promissory note to proceed with debt collection. Thirty days before the due date for repayment, the State Treasury that provided the loan shall notify the project owner in writing specifying the amount due for repayment. Upon receiving the debt collection notice from the State Treasury, the project owner shall be responsible for urging borrowing households to fully and timely repay the State Treasury.

2. Handling Overdue Debts

2.1. Upon the due date for repayment, if the project owner or borrower has not fully repaid the loan, the State Treasury will automatically transfer it to overdue status and the borrower must bear the penalty interest rate on the overdue amount. The overdue interest rate shall be applied according to the current overdue interest rate for national employment fund loans as stipulated in Resolution No. 120/HĐBT dated April 11, 1992.

2.2. Overdue debts shall be classified and handled according to each case, specifically as follows:

- In cases where the borrower uses the funds for the intended purpose but faces genuine difficulties in production and business operations, making it impossible to repay on time, they may be considered for debt write-off according to this Circular.

- For cases of intentional non-repayment, the State Treasury is permitted to automatically deduct the balance from the borrower's account at the State Treasury (if any), request banks (where the unit or individual has an account) to deduct from the borrower's account, or auction assets to recover the debt.

3. Handling Loan Losses

3.1. Cases Eligible for Debt Write-off

- Households and projects suffering losses due to objective reasons such as natural disasters, epidemics... despite the project owner and borrower's efforts to mitigate the situation, still cannot repay the loan on time.

- In cases where the borrower dies, goes missing... without assets to repay the debt, and there is no legitimate heir to assume responsibility for repayment.

Debt write-off shall be implemented for each specific case based on the review and examination by competent state agencies. During the period of debt write-off, project owners whose debts have been resolved by joint ministries do not need to pay overdue interest.

3.2. Conditions for Considering Debt Write-off

- The project must have complete documentation proving the extent of loss and risk due to force majeure confirmed by the local People's Committee.

- There must be complete documentation proving the financial situation of the borrower who is unable to repay the debt, verified and confirmed by the Program 327 Steering Committee and the provincial State Treasury.

3.3. Procedure for Handling Debt Write-off

a. The application file for debt write-off includes:

- A debt write-off application from the project owner.

- Documentation proving the extent of loss due to objective reasons and the borrower's financial capability, reviewed and confirmed by the Program 327 Steering Committee and the provincial State Treasury.

- An inspection report confirming the project's risk and inability to repay the debt, reviewed and confirmed by the State Treasury and the provincial Program 327 Steering Committee (Model 01/BB attached).

- A copy of the loan contract and promissory note with the State Treasury.

- A copy of the decision approving the project and the plan for loan allocation by the competent authority.

b. Review Process:

- For project owners: After the loan is lost and unable to be repaid, the project owner and borrower submit a debt write-off application (specifying the extent of loss, cause of loss, repayment capability, amount and duration of requested write-off) confirmed by the local People's Committee.

- At the provincial level: The State Treasury, together with the provincial Program 327 Steering Committee, reviews and examines the debt write-off applications throughout the province, compiling a report for the provincial People's Committee to consider. Based on the State Treasury's report, the Chairman of the provincial People's Committee issues a letter requesting the Ministry of Planning and Investment and the Ministry of Finance (Central State Treasury) to decide on debt write-off.

For centrally-managed projects facing force majeure risks, similar procedures must also be followed and reported to the central ministry for consolidation and reporting to the Ministry of Finance and the Ministry of Planning and Investment for consideration and decision.

- At the central level: After receiving the debt write-off request (with project files) from the provincial People's Committee or central ministry, the State Treasury classifies the projects, compiles a report for the Ministry of Finance (lead agency) to coordinate with the Ministry of Planning and Investment to consider and handle debt write-off. During the consideration and handling process, the Ministry of Finance and the Ministry of Planning and Investment will inspect and re-examine some projects before making a decision on debt write-off.

The debt freeze shall only be implemented upon the written agreement of the Ministry of Planning and Investment and the decision of the Minister of Finance.

III- MANAGEMENT AND USE OF RECOVERED FUNDS

1- Reallocation of recovered funds

- Recovered loan funds for projects under local management shall be used to provide loans for projects included in the loan plan from recovered funds at that locality.

- Recovered loan funds for projects under central management shall be transferred by provincial or municipal State Treasury offices to the Central State Treasury for use in providing loans for projects under central management.

2- Procedures for lending from recovered funds

- Projects borrowing funds from recovered sources must be included in the plan agreed upon by the Ministry of Planning and Investment and the Ministry of Finance, and announced by the superior authority of the project's sponsor and the Central State Treasury. The lending procedures shall be carried out in accordance with the provisions set forth in Circular No. 80 TC/KBNN dated November 9, 1995 issued by the Ministry of Finance.

- For projects that have reached their repayment deadline and wish to borrow again, they must meet the following conditions:

+ Using borrowed funds for the intended purpose and achieving effectiveness as approved in the project.

+ Submitting a report on the use of borrowed funds, which has been approved by the superior authority of the project's sponsor.

Projects that are refinanced with the same scale and purpose of fund usage do not need to re-establish and review the project. In cases where the project is expanded, the superior authority of the project's sponsor must re-examine the project.

IV - EFFECTIVE PROVISIONS

This Circular takes effect from the date of signature. Ministries, agencies equivalent to ministries, People's Committees of provinces and centrally governed cities, project sponsors, and related units are responsible for implementing this Circular.

During implementation, any difficulties should be promptly reported to the Ministry of Finance, the Ministry of Planning and Investment, and the Central Committee 327 Task Force for study and resolution.

The Central State Treasury is responsible for guiding the implementation of this Circular.

MODEL 01/BB

SOCIALIST REPUBLIC OF VIETNAM

Independence - Freedom - Happiness

...Date...Month...Year 199...

RECORD

CONFIRMATION OF PROJECTS WITH UNAVOIDABLE RISKS AND LOAN CAPITAL
PROGRAM 327

Project Name:...

Project Sponsor:...

Project Implementation Address:...

Approved Loan Amount...Loan Term...months...

Date of Loan Receipt at State Treasury.../.../199...

Purpose of Loan Usage:...

Authority Approving the Project:...

I- PARTICIPANTS IN THE REVIEW INCLUDE:

1- State Treasury Representative:...

2- Planning and Investment Department Representative:...

3- Ministry or Sector Representative (if the project is approved for a loan by a central ministry or sector).

II- CONTENT OF THE REVIEW

1- Causes of Unavoidable Risks, Time of Occurrence:...

..................................... .....................................

2- Description of Damage Situation, Loss Level Regarding the Project Sponsor's Common Assets and Specific Losses Related to Program 327 Loan Capital:...

..................................... ..................................... .....................................

3- Remaining Asset and Financial Status of the Project Sponsor (or Successor) After Experiencing Unavoidable Risks:...

..................................... ..................................... .....................................

4- Ability to Repay the Loan to the State Treasury: (Unable to repay, amount capable of being repaid):...

.....................................

III- RECOMMENDATIONS OF THE DELEGATION

(If requesting a debt freeze without interest, the amount and duration of the debt freeze must be clearly stated)

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- Office of the President of the StateState Treasury Representative - Office of the President of the StatePlanning and Investment Department Representative- Office of the President of the Stated.1. Amount of taxable income in Vietnam: - Office of the President of the StateMinistry or Sector Representative

(Signature, đStamp) (Signature, đStamp) If it is a central project)