Joint Circular No. 01/TT-LB guiding procedures for mortgage and pledge of assets for state-owned enterprises and notarization procedures for mortgage, pledge, and bank loan guarantee contracts.

JOINT CIRCULAR

JOINT COMMUNICATION NO. 01/TT-LB OF THE STATE BANK OF VIETNAM AND THE MINISTRY OF FINANCE ON JANUARY 6, 1997 GUIDING THE BANK FOR THE POOR TO LEND FUNDS TO THE ASSOCIATION OF RURAL DEVELOPMENT TO SUPPORT POOR FARMERS

Implementing the guidance of the Prime Minister in Document No. 428/KTKH dated January 25, 1996 on the capital contribution for the Bank for the Poor, the Joint Ministry of the State Bank of Vietnam and the Ministry of Finance guides the Bank for the Poor to lend funds to the Association of Rural Development as follows:

I. GENERAL PROVISIONS:

1. The Bank for the Poor will allocate from its capital contribution a sum of 40 billion VND (Forty billion VND) to lend to the Association of Rural Development. This is a loan directed by the Government to create initial conditions for the operation of the Farmer Support Fund of the Association of Rural Development.

2. The Farmer Support Fund must use the entire borrowed amount from the Bank for the Poor to provide capital support to farmers in accordance with the provisions in the following documents: Document No. 4035/KTKH dated July 26, 1995 of the Government on the establishment of the Farmer Support Fund of the Association of Rural Development; Circular No. 73/TC-TCNH dated October 9, 1995 of the Ministry of Finance guiding the financial management regulations for the Farmer Support Fund of the Association of Rural Development; the State Bank of Vietnam's guidance on managing the farmer support fund of the Association of Rural Development and the temporary organization and operation regulations of the Farmer Support Fund issued pursuant to Decision No. 80/QĐ/HND dated March 2, 1996 of the Central Executive Board of the Association of Rural Development.

3. The Association of Rural Development (the borrower) shall bear full responsibility under the law for the use of the loaned capital, recovery of the capital, and timely repayment of the principal and interest to the Bank for the Poor. In case the loaned capital faces unavoidable risks, the Association of Rural Development shall be responsible for working with relevant ministries and sectors to find solutions and mobilize all available resources to fully repay the loaned capital to the Bank for the Poor.

II. SPECIFIC PROVISIONS:

1. The Bank for the Poor will lend funds to the Association of Rural Development at an interest rate equal to the interest rate for loans to poor households minus 0.35% per month (before October 1, 1996) and minus 0.5% per month (from October 1, 1996). When the Bank for the Poor changes the interest rate for loans to poor households, it must promptly notify the Association of Rural Development so that both parties can adjust the interest rate on the signed loan agreement.

2. The loan term is five years from the date of the first loan disbursement; if the loan term expires and the Association of Rural Development still needs to continue using the 40 billion VND loan, the Association of Rural Development must submit a request to the Joint Ministry for consideration and submission to the Government for decision. The schedule for repayment of principal and interest shall be agreed upon by both parties in the loan agreement.

3. Loan procedures:

The Association of Rural Development must follow the legal regulations and guidelines of the Bank for the Poor for loan procedures as follows:

- Loan application form;

- Loan agreement;

- Debt acknowledgment letter.

In cases where the loan is disbursed at the provincial level, the direct recipient of the loan is the Provincial Association of Rural Development which must issue a debt acknowledgment letter with the Provincial Bank for the Poor (the direct lender); the debt acknowledgment letter is the original document made in four copies: One copy retained by the Provincial Bank for the Poor; one copy by the Provincial Association of Rural Development; one copy sent immediately on the day of acknowledgment to the National Association of Rural Development; and one copy to the National Bank for the Poor. After the full disbursement of 40 billion VND, the National Association of Rural Development and the National Bank for the Poor will prepare a statement, reconcile, confirm the debt, and the National Association of Rural Development will issue a debt acknowledgment letter for the full 40 billion VND with the National Bank for the Poor.

4. Disbursement of the loan: The Farmer Support Fund of the Association of Rural Development is responsible for promptly disbursing the loan to supported farmers and organizing the management and accounting of the loan and support funds for farmers according to the state financial-accounting system.

To facilitate and expedite the disbursement of the loan during the initial period when the Farmer Support Fund is just starting operations, the National Association of Rural Development may contract with the Provincial Bank for the Poor to directly disburse the support funds to the Provincial Associations of Rural Development.

5. Quarterly, the National Association of Rural Development shall submit reports on the use of the loan and repayment to the Ministry of Finance and the State Bank of Vietnam, and shall be subject to inspection and supervision by the Joint Ministry regarding the use of the loan. Any difficulties encountered during the operation of the Farmer Support Fund should be promptly reported to the Joint Ministry for consideration and submission to the Government for resolution.

III. IMPLEMENTATION PROVISIONS

1. This Circular takes effect from the date of signature.

2. The Bank for the Poor and the National Association of Rural Development are responsible for implementing this Circular.

3. Amendments and supplements to the provisions of this Circular shall be decided by the Governor of the State Bank of Vietnam and the Minister of Finance.