Circular No. 05/2015/TT-NHNN guiding credit institutions to cooperate with Credit Guarantee Funds in lending with guarantees from Credit Guarantee Funds as prescribed in Decision No. 58/2013/QĐ-TTg dated October 15, 2013 of the Government Prime Minister.

CIRCULAR

Guidelines for credit institutions to coordinate with the Credit Guarantee Fund in lending with guarantees from Article 24the Credit Guarantee

Fund in accordance with regulations in Article 24Decision number 58/2013/QD-No.dated October 15, 2013 of Tthe Prime Minister hthe Government

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

Based on the Law on Credit Institutions No. 47/2010/QH12 dated June 16, 2010;

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

Based on Decree No. 56/2009/NĐ-CP dated June 30, 2009 of the Government on assistance for the development of small and medium-sized enterprises;

Based on Decision No. 58/2013/QĐ-TTg dated October 15, 2013 of the Prime Minister on the issuance of the Regulation on the establishment, organization, and operation of the Credit Guarantee Fund for small and medium-sized enterprises;

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 guiding credit institutions to coordinate with the Credit Guarantee Fund in lending with guarantees from the Credit Guarantee Fund in accordance with Decision No. 58/2013/QĐ-TTg dated October 15, 2013 of the Prime Minister.

Article 1. Scope of Regulation

This Circular guides credit institutions to coordinate with the Credit Guarantee Fund in lending with guarantees from the Credit Guarantee Fund in accordance with the Regulation on the establishment, organization, and operation of the Credit Guarantee Fund for small and medium-sized enterprises issued together with Decision No. 58/2013/QĐ-TTg dated October 15, 2013 of the Prime Minister (hereinafter referred to as the Regulation).

Article 2. Applicability

1. The Credit Guarantee Fund is established, organized, and operates in accordance with Decision No. 58/2013/QĐ-TTg dated October 15, 2013 of the Prime Minister.

2. Credit institutions that are established and operate under the Law on Credit Institutions (hereinafter referred to as the lender).

3. Small and medium-sized enterprises guaranteed by the Credit Guarantee Fund to borrow capital according to the provisions of the Regulation (hereinafter referred to as the customer).

4. Relevant organizations and individuals.

2. Before implementing lending with guarantees from the Credit Guarantee Fund, the lender and the Credit Guarantee Fund:

1. The lender, the Credit Guarantee Fund, and the customer must agree in writing to ensure that the lender has the right to accept and process collateral for guarantee in case the Credit Guarantee Fund refuses to fulfill its guarantee obligations in accordance with this Circular and relevant laws.

b) In case the parties wish to amend or supplement the cooperation agreement already signed, such amendments or supplements must be made in writing and form an integral part of the cooperation agreement.

a) Based on the management and operation methods of each Credit Guarantee Fund specified in Clause 1, Article 12 of the Regulation, implement framework agreements or individual agreements on coordinating lending with guarantees from the Credit Guarantee Fund (hereinafter referred to as the Coordination Agreement) to unify contents consistent with the Regulation and current laws regarding lending by credit institutions to customers;

b) In cases where the parties wish to amend or supplement the Coordination Agreement already signed, such amendments or supplements must be made in writing and become part of the Coordination Agreement.

Article 4. Contents of the Coordination Agreement between the Lender and the Credit Guarantee Fund

The Coordination Agreement between the Lender and the Credit Guarantee Fund includes the following basic contents:

1. Procedures for coordination among the parties in receiving and evaluating loan applications (independent evaluation, joint evaluation, establishing a joint evaluation team, etc.) and resolving the borrowing needs of customers with guarantees.

2. Contents related to coordination in providing disbursement documents; implementing monitoring and supervision of the use of borrowed funds, assets formed from borrowed funds, and repayment of loans to ensure compliance with the purpose of using borrowed funds and repayment of loans as agreed in the credit contract, as stipulated in the Regulation, and serving as the basis for the Credit Guarantee Fund to fulfill its guarantee obligations when necessary.

3. Coordination in considering restructuring the repayment period for customers; situations where disbursement of loan funds is stopped or early recovery of loans is required when customers violate the terms of the credit contract, violate the guarantee contract, or show signs of violating the law.

4. Measures for recovering overdue debts that the lender will apply in cases where customers fail to repay their debts at maturity or repay insufficiently, in accordance with Clause 2, Article 28 of the Regulation and relevant laws.

5. Specific circumstances under which the Credit Guarantee Fund may refuse to fulfill all or part of its guarantee obligations in accordance with the Regulation and relevant laws concerning the loan and the lender's risk control capability.

6. Responsibilities for coordination among the parties in transferring the right to accept and process collateral for guarantee to the lender in cases where the Credit Guarantee Fund refuses to fulfill its guarantee obligations.

7. Coordination in providing information and documents related to the Charter of organization and operation, management and operation methods, and authority to issue guarantee certificates of the Credit Guarantee Fund to the lender upon request.

8. Other contents agreed upon by the parties in accordance with the provisions of the law.

Article 5. Principles for lending with credit guarantee fund guarantees

1. Investment projects and business plans of customers that have been evaluated and decided to be guaranteed by the Credit Guarantee Fund in accordance with the Regulation.

2. The lender considers and decides to lend in Vietnamese dong to investment projects and business plans of customers guaranteed by the Credit Guarantee Fund in accordance with current laws on lending by credit institutions to customers, this Circular, and relevant laws.

3. The lender implements classification of debts, provision for and use of risk reserves in accordance with current regulations of the State Bank of Vietnam and relevant laws.

Article 6. Implementation of Guarantee Obligations

1. When the loan repayment period specified in the credit contract expires or when the specific repayment period arrives in cases of early debt recovery where the customer cannot repay the debt or repay it insufficiently, the lender identifies the reasons for non-repayment and applies the debt collection measures agreed upon in the Coordination Agreement. Within seven working days after applying these debt collection measures, if the customer still cannot repay the debt, the lender shall submit a request letter accompanied by relevant legal and valid documents and certificates (if any) to the Credit Guarantee Fund to fulfill its guarantee obligations.

2. Within ten working days from the date of receiving the request letter from the lender, the Credit Guarantee Fund must complete the fulfillment of the guaranteed obligations it has committed to. In case of refusal to fulfill the guarantee obligation, the Credit Guarantee Fund must send a letter to the lender detailing the reasons for refusal. If the Credit Guarantee Fund does not send a refusal letter within this time limit, it will be deemed to have accepted the fulfillment of the guaranteed obligations it has committed to.

3. Within seven working days from the date of receiving the refusal letter from the Credit Guarantee Fund, the lender must send a response letter accepting or rejecting the refusal of the Credit Guarantee Fund. If the lender does not send a response letter within this time limit, it will be deemed to have accepted the refusal of the Credit Guarantee Fund.

Article 7. Transfer and Disposal of Collateral

Upon receipt of the lender's approval letter for the refusal to fulfill the guarantee obligation or if the lender does not send a response letter regarding the refusal to fulfill the guarantee obligation beyond the time limit stipulated in Clause 3 of Article 6 of this Circular, the Credit Guarantee Fund shall handle the collateral of the customer as follows:

1. In case of refusal to fulfill the entire guarantee obligation: The Credit Guarantee Fund immediately transfers the right to receive and dispose of the customer’s guarantee collateral to the lender according to the contents of the agreements stipulated in Article 3 of this Circular. The lender shall return the original guarantee certificate to the Credit Guarantee Fund immediately after the Credit Guarantee Fund has fully transferred the collateral.

2. In case of refusal to fulfill part of the guarantee obligation:

a) For the portion of the guarantee obligation that is approved: The Credit Guarantee Fund immediately repays the debt on behalf of the customer (including principal and corresponding interest).

b) For the portion of the guarantee obligation that is not approved: The Credit Guarantee Fund collaborates with the lender to dispose of the customer’s guarantee collateral. The amount obtained from disposing of the collateral, after deducting related costs associated with the disposal process, will be paid towards the outstanding debt of the customer at the lender (the refused portion includes both principal and corresponding interest). Any remaining amount will be paid towards the outstanding debt of the customer at the guarantor. In case, after fully repaying the principal, interest, and related costs arising from the loan, there is still money left from the proceeds of the collateral disposal, the Credit Guarantee Fund shall transfer it to the customer's account.

Article 8. Responsibilities of the Lender

1. Closely coordinate with the Credit Guarantee Fund in implementing loans to customers in accordance with this Circular and relevant current laws, ensuring safety and compliance with legal regulations.

2. Report on the loan situation to small and medium-sized enterprises guaranteed by the Credit Guarantee Fund to the State Bank of Vietnam (Department of Credit for Economic Sectors) on a monthly basis (before the 10th day of the following month) pursuant to Appendix No. 01 issued together with this Circular.

3. In the course of implementation, if there are difficulties or obstacles, compile and report them to the State Bank of Vietnam (Department of Credit for Economic Sectors).

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 summarizing the implementation of lending activities by lenders to small and medium-sized enterprises guaranteed by the credit guarantee fund;

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

2. Banking inspection and supervision agencies and branch inspection and supervision agencies shall conduct inspections, supervision, and handle violations by lenders in complying with the provisions of this Regulation and this Circular within their authority.

3. Branches of the State Bank of Vietnam in provinces and centrally-administered cities are responsible for:

a) On a monthly basis (no later than the 15th day of the following month), the State Bank branches in provinces and centrally-administered cities shall report the loan situation to small and medium-sized enterprises guaranteed by the local Credit Guarantee Fund to the State Bank of Vietnam (through the Department of Credit for Economic Sectors) pursuant to Appendix No. 02 issued together with this Circular;

b) Coordinate with departments and agencies at the local level to resolve issues arising during the implementation of loans guaranteed by the local Credit Guarantee Fund. In cases exceeding their authority, promptly report to the People's Committees of provinces and centrally-administered cities, the Ministry of Finance, and the State Bank of Vietnam (Department of Credit for Economic Sectors) for consideration and resolution.

Article 10. Effective Date

1. This Circular takes effect from June 18, 2015.

2. Circular No. 01/2006/TT-NHNN dated February 20, 2006, of the State Bank of Vietnam guiding certain contents regarding the establishment of Credit Guarantee Funds for small and medium-sized enterprises ceases to be effective from the date this Circular takes effect.

3. For credit contracts signed before the date this Circular takes effect, they shall continue to be implemented according to the agreements already signed until the expiration of the contract term.

Article 11. Implementation Organization

The Director of the Office; the Head of the Department of Credit for Economic Sectors; Heads of units under the State Bank; Governors of State Bank branches in provinces and centrally-administered cities; Chairmen of Management Councils, Chairmen of Board of Members, and General Directors (Directors) of credit organizations, Credit Guarantee Funds, and small and medium-sized enterprises borrowing funds are responsible for organizing the implementation of this Circular./.