Directive No. 03/2004/CT-NHNN on lending to state-owned agricultural and forestry farms

DIRECTIVE OF THE GOVERNOR OF THE STATE BANK

On lending capital to state-owned agricultural and forestry farms

State-owned agricultural and forestry farms are types of state enterprises in the agricultural sector that have been and are currently restructuring their production, making significant positive contributions to economic and social development, industrialization, modernization of agriculture and rural areas. In recent times, credit organizations have provided loans to state-owned agricultural and forestry farms and households receiving contracts (hereinafter referred to as agricultural and forestry farms and contract households) in accordance with the restructuring of production, facilitating the transformation of crop and livestock structures, improving the efficiency of land and forest resource utilization, forming specialized agricultural and forestry product zones linked to processing, export, and solving employment for rural workers.

However, banking credit activities for agricultural and forestry farms still face some obstacles: limited own capital of agricultural and forestry farms and slow progress in restructuring production; production and business efficiency heavily depend on natural conditions and market price fluctuations both domestically and internationally. Therefore, the credit relationship between credit organizations and agricultural and forestry farms encounters difficulties; loan amounts have high bad debt ratios; there are cases where the determination and agreement on loan terms, repayment periods, and debt extension are not suitable with the production and business cycles of crops and livestock, project investment repayment periods, and the ability of credit organizations to provide medium and long-term loans. Additionally, agricultural and forestry farms receive substantial preferential state credit (supportive credit from the state, Program 327, Credit Support Program for Employment Resolution 120), but they also face difficulties and issues related to preferential credit mechanisms such as loan terms, repayment periods, and disbursement of borrowed funds.

To ensure safe and effective expansion of lending to agricultural and forestry farms and contract households in line with the Central Committee's Resolution on continuing to reorganize, reform, and develop state-owned agricultural and forestry farms and Decision No. 179/2003/QD-TTg dated September 3, 2003 of the Prime Minister regarding the program and plan of the Government to implement the Central Committee's Resolution on continuing to reorganize, reform, and develop state-owned agricultural and forestry farms, the Governor of the State Bank requests credit organizations to implement certain measures as follows:

1. Credit organizations should proactively approach and assess production and business plans, investment projects to allocate capital to meet the borrowing needs of agricultural and forestry farms and contract households that are effective and capable of repaying debts, based on the credit organization's ability to mobilize capital and the spirit of business autonomy and responsibility for their lending decisions.

2. The provision of capital to agricultural and forestry farms shall be carried out according to the current credit mechanism stipulated in the Lending Regulations of credit organizations for borrowers issued together with Decision No. 1627/2001/QD-NHNN dated December 31, 2001 of the Governor of the State Bank, Decree No. 178/1999/NĐ-CP dated December 29, 1999 and Decree No. 85/2002/NĐ-CP dated October 25, 2002 of the Government on securing loans, Circular No. 05/2002/TT-NHNN dated September 27, 2002 of the State Bank guiding the implementation of Decision No. 80/2002/QĐ-TTg dated June 24, 2002 of the Prime Minister on policies encouraging the consumption of agricultural products through contracts, and other relevant regulatory legal documents. The determination and agreement on loan terms, repayment periods, and debt extension for loans to agricultural and forestry farms shall be applied specifically as follows:

a) For loans to care for crops, livestock, and forests already put into operation, the determination and agreement on loan terms and repayment periods shall be consistent with the business cycle, including the growth, harvest, and consumption time of each type of crop, livestock, and forest area.

b) For loans to care for, encircle, protect, or plant new forests according to plans funded by the state budget, credit organizations shall consider providing loans and agreeing with agricultural and forestry farms on loan terms, principal and interest repayment periods consistent with the state budget management organization's disbursement plan.

c) For loans to purchase agricultural and forestry products from contract workers' households and local residents within project areas, the determination and agreement on loan terms and repayment periods shall be consistent with the storage, processing, and consumption time of agricultural and forestry products.

d) For loans to invest in new industrial crop planting, raw material forest planting, livestock breeding, and poultry farming linked to processing, credit organizations shall consider providing loans based on their medium and long-term lending capital; the determination and agreement on loan terms and repayment periods shall be consistent with the grace period (construction period) and the repayment period of the project.

đ) In cases where agricultural and forestry farms encounter difficulties and cannot repay loans on schedule due to natural disasters, epidemics, or market price fluctuations, credit organizations shall consider adjusting repayment periods or extending debts for these farms.

3. For the borrowing needs of contract households, credit organizations shall consider and provide loans in accordance with the provisions of Decision No. 67/1999/QD-TTg dated March 30, 1999 of the Prime Minister on certain banking credit policies to serve agricultural and rural development and Circular No. 05/2002/TT-NHNN dated September 27, 2002 of the State Bank. The determination and agreement on loan terms and repayment periods shall be consistent with the business cycle of crops and livestock, the ability of contract worker households to repay debts, and the sale and purchase period of agricultural and forestry products according to contracts signed with agricultural and forestry farms.

4. Conduct a review and classification of non-performing debts, clarify the causes to handle according to the current mechanism. In cases where agricultural and forestry farms still have non-performing debts due to objective reasons, with a need for loans to invest in production plans, business operations, or investment projects that have been assessed as effective and capable of repaying the debt, credit organizations shall consider and provide loans to create conditions for agricultural and forestry farms to expand and improve the efficiency of their production and business operations.

5. Conduct an analysis and evaluation of the situation regarding borrowing and the ability to repay preferential loans under state policies directly disbursed by credit organizations to develop solutions for loan recovery and make recommendations to competent state agencies to address difficulties and obstacles in lending mechanisms, in accordance with the production and business conditions of agricultural and forestry farms.

6. Implementation

a) This Directive takes effect fifteen days from the date of publication in the Official Gazette.

The heads of units under the State Bank, the Governors of the Vietnam National Bank Branches in provinces and centrally-administered cities, the Chairmen of the Boards of Directors and General Directors (Directors) of credit organizations are responsible for implementing this Directive./.