Circular No. 06/1999/TT-NHNN14 guiding the implementation of debt loss processing and preferential loans to mitigate flood consequences in central provinces pursuant to Decision No. 1073/QĐ-TTg dated November 17, 1999 of the Prime Minister.

CIRCULAR

Guidelines for handling debts damaged and providing preferential loans to mitigate flood consequences in central provinces

 to address the aftermath of floods in central provinces

pursuant to Decision No. 1073/QD-TTg dated November 17, 1999 of the Prime Minister

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In order to implement Article 6 of Decision No. 1073/QD-TTg dated November 17, 1999 of the Prime Minister on mitigating the aftermath of floods in central provinces: Quang Binh, Quang Tri, Thua Thien-Hue, Da Nang, Quang Nam, Quang Ngai, Binh Dinh, the Governor of the State Bank of Vietnam guides credit organizations and branches of the State Bank of Vietnam in the seven central provinces mentioned above to implement the following contents:

I - HANDLING DEBTS DAMAGED BY FLOODS

Credit organizations shall review all debts of customers related to damage caused by recent floods to take appropriate measures.

1/ Extending debt repayment deadlines, deferring debt repayment:

For households and businesses with bank loans that have been damaged by floods who are unable to repay their loans on time, based on the borrower's request, credit organizations shall consider extending the loan repayment period according to the current regulations on short-term, medium-term, and long-term loan extensions issued by the Governor of the State Bank of Vietnam.

In cases where the damaged loan has already been extended but the borrower still cannot repay it at maturity, credit organizations may consider further deferring the debt (extending the loan) for one production cycle for short-term loans or half the agreed term for medium- and long-term loans.

2/ Preparing files to handle write-off or cancellation of debts:

- For loans from households and businesses at credit organizations that have suffered losses due to floods ranging from 30% to less than 80%, if borrowers truly find it difficult to repay the debt, credit organizations shall prepare files to request a maximum five-year suspension of debt repayment.

- For cases where losses exceed 80%, if households and businesses are unable to repay the debt, credit organizations shall prepare files to request debt cancellation.

During the period of preparing files to request suspension or cancellation of debts, credit organizations shall temporarily not collect interest.

- Procedures and files for requesting suspension or cancellation of debts: Credit organizations shall follow the procedures stipulated in Circular No. 11/TC-NHNN dated August 22, 1994 jointly issued by the State Bank of Vietnam and the Ministry of Finance guiding the handling of stagnant debts for enterprises.

The record of flood damage shall be carried out in accordance with the provisions of Joint Circular No. 03/1997/TTLT/NHNN-BTC dated November 22, 1997 of the State Bank of Vietnam and the Ministry of Finance guiding the handling of overdue loans of state-owned banks after inspection.

- All files and summary tables must be reported by system and submitted to the State Bank of Vietnam (Credit Department) no later than the end of February 2000 for submission to the Prime Minister for consideration and decision. For People's Credit Funds, the provincial and city branches of the State Bank of Vietnam shall aggregate and report to the Central State Bank.

II - PROVIDING NEW LOANS TO MITIGATE FLOOD CONSEQUENCES

1/ Regular lending:

Credit organizations shall concentrate capital to meet the borrowing needs of central provinces affected by floods under normal credit mechanisms. In case of difficulties in sourcing funds, they shall report to the Central State Bank for consideration and resolution.

2/ Preferential lending:

The State Bank of Vietnam assigns state-owned commercial banks and the Vietnam Development Bank to provide preferential loans to households to mitigate flood consequences in central provinces, specifically:

a/ Source of lending:

The State Bank of Vietnam will allocate the capital assigned by the Prime Minister for flood recovery to state-owned commercial banks and the Vietnam Development Bank for them to lend to households. The re-lending to these banks shall be carried out in accordance with the regulations of the Governor of the State Bank of Vietnam.

Initially, the Central State Bank will temporarily allocate the loan quota at each province and city (as per the attached notification).

b/ Purpose of lending:

Short-term loans for purchasing seeds, fertilizers, pesticides, and other materials for agricultural and fishery production.

Medium- and long-term loans for aquaculture, repair and purchase of fishing gear, repair of boats, and construction of housing.

c/ Interest rate on loans:

- Short-term loans: 0.3% per month.

- Medium- and long-term loans: 0.4% per month.

d/ Loan term:

The loan term must be consistent with the production and business cycle and service life, and shall be determined as follows:

- Short-term loans up to a maximum of 12 months.

- Medium- and long-term loans from over 12 months to 5 years.

e/ Loan amount and loan procedures:

Branches of state-owned commercial banks and branches of the Vietnam Development Bank shall provide preferential loans based on the list and loan amounts approved by the Chairman of the Provincial People's Committee, guiding households to quickly and smoothly complete loan procedures without collateral but must bear responsibility for timely repayment of principal and interest to the banks.

f/ Regarding allocation of preferential loan quotas to mitigate flood consequences.

Branches of the State Bank and state-owned commercial banks, and branches of the Vietnam Development Bank in the locality shall advise the Chairman of the Provincial People's Committee to promptly assess the damage to credit capital and the need for preferential loans to mitigate flood consequences for households in the locality (of each bank) and report to the Central State Bank (Credit Department) before December 15, 1999, according to the attached reporting form in this Circular.

Based on the aggregated demand for loans from provinces and cities, the State Bank will allocate preferential loan quotas to mitigate flood consequences for each province and city and each bank assigned the task of lending within the quota permitted by the Prime Minister.

During the period before being officially assigned targets, the Branch Director of the State Bank of Vietnam in provinces and cities shall base on the temporary targets assigned by the Central State Bank through this Circular to report to the Chairman of the People's Committee of the province/city based on the approved list to specifically assign targets for each branch of the bank operating in their jurisdiction (Vietnam Agribank, Vietnam Commercial Joint Stock Bank, Foreign Trade Bank, Vietnam Development Bank).

The State-owned commercial banks and Vietnam Development Bank shall instruct their branches in the central provinces and cities affected by floods to temporarily use business capital to provide preferential loans according to the list approved by the Chairman of the People's Committee of the province/city, ensuring that loan disbursement is not hindered.

III - RESPONSIBILITY FOR IMPLEMENTATION.

1/ Credit institutions are responsible for guiding and organizing the implementation of the contents and directives of the State Bank of Vietnam in this Circular; they must regularly report progress and implementation status to the Governor of the State Bank of Vietnam (through the Credit Department) on the 15th and 30th of each month using the attached form.

2/ The Directors of the State Bank of Vietnam branches in provinces and cities are responsible for urging, monitoring, and inspecting credit institutions within their jurisdiction in handling loans from banks damaged by floods and issuing new loans in accordance with regulations; they must regularly report results monthly, reflecting difficulties and proposing solutions to the Central State Bank and the People's Committee of the province/city.

This Circular takes effect from the date of issuance. Any issues arising during implementation should be reported immediately to the Central State Bank for consideration and resolution.

TEMPORARY CAPITAL TARGETS FOR PREFERENTIAL LOANS TO MITIGATE THE AFTERMATH OF FLOODS IN CENTRAL PROVINCES AND CITIES IMPLEMENTING DECISION NUMBER 1073/QD-TTG OF THE PRIME MINISTER
(Annexed to Circular No. 06/1999/TT-NHNN14 dated December 2, 1999 of the Governor of the State Bank of Vietnam)

Unit of measurement: 1 dong