Circular No. 05/1998/TT-NHNN guiding the handling of debts and preferential loans to mitigate the consequences of drought in the early months of 1998 according to Decision No. 90/1998/QĐ-TTg dated May 8, 1998 of the Prime Minister.

CIRCULAR

Guidelines for handling debts and preferential loans to address the consequences of drought in the early months of 1998 pursuant to Decision 90/1998/QĐ-TTg dated May 8, 1998 of the Prime Minister

To effectively implement Decision 90/1998/QĐ-TTg dated May 8, 1998 of the Prime Minister on measures to address the consequences of drought and natural disasters in the early months of 1998, the Governor of the State Bank of Vietnam guides the handling of debts incurred due to losses from drought and the provision of preferential loans in the provinces severely affected by drought: Dak Lak, Lam Dong, Dong Nai, Long An, Kien Giang, Binh Phuoc, Ca Mau, Bac Lieu, as stipulated in Article 2 of Decision 90/1998/QĐ-TTg as follows:

I. HANDLING DEBTS INCURRED DUE TO LOSSES FROM DROUGHT:

1. Extension of Debts:

Households of farmers with debts incurred due to severe losses from drought, if unable to repay their debts on time, shall be considered for debt extension upon request by the borrower according to current regulations on short-term, medium-term, and long-term loan extensions issued by the Governor of the State Bank of Vietnam.

2. Debt Write-off:

For households of farmers whose crops have been destroyed by more than 80% and cannot be restored, commercial state-owned banks and development banks shall process and prepare documentation for debt write-off including:

A copy of the statement requesting debt write-off.

A copy of the promissory note requesting debt write-off.

A record confirming the loss of assets due to drought by relevant authorities such as: People's Committee at the provincial level (district, commune, or ward), Department of Agriculture, Branch of Commercial Banks...

When determining losses, it must clearly and specifically describe both the physical assets and their value, as well as the specific damage to the bank loan.

The confirmation and request for debt write-off by the Provincial People's Committee. - The local branch of the State Bank of Vietnam will review the file and confirm the summary of the written-off debts.

The files for debt write-off by commercial banks will be compiled according to their system and submitted to the State Bank of Vietnam (Credit Department) no later than August 30, 1998, for consolidation and submission to the Government for resolution.

The procedures for preparing the application for debt write-off also apply to loans damaged by natural disasters affecting shrimp farming if the instructions for preparing the application for debt write-off in Circular 397/CV-NHNN14 dated May 9, 1998, are unclear or difficult to follow.

II. PROVIDING PREFERENTIAL LOANS:

1. Assign the Agricultural Bank of Vietnam to provide preferential loans to address losses caused by drought in the severely affected provinces as specified by the Prime Minister in Decision 90/1998/QĐ-TTg dated May 8, 1998.

2. Source of Loans:

The Prime Minister permits the use of 140 billion VND from the 2,000 billion VND loan fund for disaster relief following Typhoon No. 5 to provide loans to address losses caused by drought. The Vietnam Agricultural and Rural Development Bank will be lent 50% of this amount for a period of five years at the same interest rate as for loans to address the aftermath of Typhoon No. 5, and will self-fund the remaining 50% to implement the loan according to the Prime Minister's decision.

3. Borrowers:

Preferential loans will be provided to households of farmers to cover costs for replanting short-term and long-term crops: coffee, cashew, pepper, sugar cane that have been destroyed by more than 80% due to drought, based on approved lists from the People's Committees of the affected provinces: Dak Lak, Lam Dong, Dong Nai, Long An, Kien Giang, Binh Phuoc, Ca Mau, Bac Lieu.

4. Interest Rates on Loans:

Short-term loans: 0.5% per month - Medium-term loans: 0.6% per month

Overdue interest rates will be determined according to the general regulations of the Governor of the State Bank of Vietnam during each period.

5. Loan Periods:

The term of preferential loans will vary depending on the crop cycle, specifically:

Short-term loans for crops with a cycle under one year.

Medium-term loans for crops with a cycle of one year or longer but not exceeding five years.

6. Loan Procedures:

Based on the results of damage surveys, the Provincial People's Committee will establish and approve lists of households with crops destroyed by more than 80% who are eligible for preferential loans, similar to those for loans to address Typhoon No. 5 as stipulated in Article 6 of Decision 985/TTg dated November 20, 1997, of the Prime Minister. The Vietnam Agricultural and Rural Development Bank will base its guidance on these approved lists to facilitate quick and convenient loan procedures for farmers. Borrowers only need to submit a loan application form confirmed by the Commune People's Committee and directly sign the promissory note, sign and receive the loan, and bear responsibility for repaying principal and interest. In areas with difficult terrain, the Provincial People's Committee may delegate the Commune People's Committee to establish and approve lists of households eligible for preferential loans.

The General Director of the Vietnam Agricultural and Rural Development Bank will determine the maximum loan amount for each household without requiring collateral or guarantees, but rather based on the borrower's repayment capacity as evidenced by a commitment to repay and a list of assets serving as security confirmed by the Commune People's Committee, as per Directive 09/CT-NH1 dated August 27, 1997, of the Governor of the State Bank of Vietnam. If necessary, the value of land use rights or other assets of the borrower can be used as security for the loan.

7. Collection of Principal and Interest, and Extension of Loans:

The collection of principal and interest, and the extension of loans, will be carried out according to the current credit regulations.

8. Separate Accounting and Monitoring of Loans to Address Drought Damage:

III. TEMPORARY ALLOCATION OF FUNDS FOR PREFERENTIAL LOANS TO ADDRESS THE CONSEQUENCES OF DROUGHT IN THE EARLY MONTHS OF 1998

1. While awaiting reports on damages from the People's Committees of the provinces as stipulated in Clause 3, Article 2 of Decision 90/1998/QĐ-TTg dated May 8, 1998, of the Prime Minister to serve as the basis for allocating preferential loan funds, the State Bank of Vietnam temporarily allocates the first tranche of loan funds (as shown in Annex 01-hh attached to this Circular) to promptly provide loans to address damages. After receiving the damage investigation reports from the People's Committees of the provinces, the Central State Bank will consolidate and adjust the allocation among the provinces based on the extent of damage and the scope of funds designated by the Prime Minister to officially announce the preferential loan allocation.

2. The Vietnam Agricultural and Rural Development Bank may immediately withdraw the first tranche of 50 billion VND from the State Bank of Vietnam (at a ratio of 1/1) and organize the mobilization of the remaining capital to provide loans promptly.

2. The Agricultural Development Bank shall immediately withdraw VND 50 billion from the first loan disbursement by the State Bank at a ratio of 1/1 and organize the mobilization of the remaining capital for timely lending.

3. The Economic Research Department shall report the damage losses of the People's Committees of the provinces to the Governor for allocation of preferential loan quotas as prescribed by the Prime Minister.

4. The People's Committees of Dak Lak, Lam Dong, Dong Nai, Long An, Kien Giang, Binh Phuoc, Ca Mau, Bac Lieu provinces are requested to report the investigation results on the damage losses of farming households with crop areas suffering over 80% damage as stipulated in Clause 3, Article 2 of Decision No. 90/1998/QĐ-TTg of the Government Chairman regarding the State Bank of Vietnam (Economic Research Department) no later than July 10, 1998, for consolidation and allocation of formal preferential loan quotas.

IV. RESPONSIBILITY FOR IMPLEMENTATION

1. The Agricultural Development Bank shall be responsible for providing preferential loans according to the specified purposes and targets, and reporting progress periodically on the 10th, 20th, and 30th of each month to the Governor of the State Bank of Vietnam (through the Credit Department).

2. The Credit Department shall monitor the progress of lending and report to the Governor every ten days; it shall also consolidate and propose debt write-offs from localities for the Governor of the State Bank of Vietnam to submit to the Government for handling.

3. The Inspectorate of the State Bank of Vietnam shall be responsible for inspecting the provision of loans to the correct target groups and in accordance with established regulations.

4. The Directors of the State Bank of Vietnam Branches in the provinces shall be responsible for urging the Agricultural Development Bank branches in their respective areas to lend effectively, using State Bank of Vietnam funds for the intended purposes, and reporting to the People's Committees of the provinces, coordinating with relevant sectors to implement preferential loan disbursements to mitigate drought effects in accordance with the Government's policy.

This Circular takes effect from the date of signature.

ANNEX 01-HH

STATE BANK OF VIETNAM

NOTICE

QUOTAS FOR THE FIRST ROUND OF FUNDS FOR PREFERENTIAL LOANS TO MITIGATE DROUGHT AND NATURAL DISASTERS

Attached to Circular No. 05/1998/TT-NHNN dated June 9, 1998 of the State Bank of Vietnam

Unit: Billion VND

Note: - A total capital of 100 billion VND including: The State Bank of Vietnam will lend the Agricultural Development Bank 50.00 billion VND, and the Agricultural Development Bank will mobilize 50.00 billion VND on its own.