Circular No. 06/2003/TT-NHNN on guiding certain contents regarding capital contribution to establish credit guarantee funds pursuant to Decision No. 193/2001/QĐ-TTg and Resolution No. 02/2003/NQ-CP dated January 17, 2003 of the Government.

CIRCULAR

OF THE STATE BANK OF VIETNAM YEAR

Regarding guidance on certain contents related to capital contribution for establishing credit guarantee funds pursuant to Decision No. 193/2001/QĐ-TTg and Resolution No. 02/2003/NQ-CP dated 17/01/2003 of the Government

Implementing Decision No. 193/2001/QĐ-TTg of the Prime Minister on the issuance of regulations on the establishment, organization, and operation of credit guarantee funds for small and medium-sized enterprises and Resolution No. 02/2003/NQ-CP dated January 17, 2003 of the Government on major policies and key solutions to be focused on and directed to implement economic and social development tasks in 2003, the State Bank guides the implementation of certain contents related to capital contribution for establishing credit guarantee funds for small and medium-sized enterprises (hereinafter referred to as credit guarantee funds) by credit institutions as follows:

I. CAPITAL CONTRIBUTION OF CREDIT INSTITUTIONS TO CREDIT GUARANTEE FUNDS:

Credit institutions shall base their decision to participate in capital contribution to credit guarantee funds established by provincial People's Committees and municipal People's Committees directly under the Central Government on their charter capital and reserve fund, the use of charter capital and reserve fund for the operations of credit institutions according to the Law on Credit Institutions, and the development situation of small and medium-sized enterprises in the locality. In cases where the above sources of capital are difficult, credit institutions may use long-term mobilized capital to contribute to the establishment of credit guarantee funds. When credit institutions use long-term mobilized capital to participate in capital contribution to establish credit guarantee funds, they must have a plan to replace long-term mobilized capital with charter capital and reserve fund within a maximum period of ten years.

The level of capital contribution of a credit institution to a credit guarantee fund compared to the charter capital of that credit guarantee fund shall not exceed the following ratio:

Banks: 6%

Non-bank credit institutions (Finance Companies): 10%

The total level of capital contribution and purchase of shares of a credit institution in all enterprises and credit guarantee funds compared to the charter capital and reserve fund of that credit institution shall not exceed the following ratio:

Banks: 30%

Non-bank credit institutions (Finance Companies): 40%

II. IMPLEMENTATION ORGANIZATION AND CONDITIONS FOR ENFORCEMENT

1. Branches of the State Bank of provinces and centrally-administered cities

Based on summarizing and evaluating the current operational status of small and medium-sized enterprises in the locality, the Directors of State Bank branches in provinces and centrally-administered cities shall be responsible for coordinating with local departments to advise the Chairmen of provincial and centrally-administered city People's Committees on the establishment of credit guarantee funds in the locality.

Upon request from the Chairman of the Provincial or Centrally-Administered City People's Committee, the Director of the State Bank branch shall send representatives to join the preparatory board for establishing the credit guarantee fund and the Management Board of the credit guarantee fund of the province or centrally-administered city.

2. Credit institutions

2.1. Send representatives to join the preparatory board for establishing the credit guarantee fund upon request from the Chairman of the Provincial or Centrally-Administered City People's Committee and join the Management Board of the credit guarantee fund when contributing capital to the credit guarantee fund established in the locality.

2.2. Guide small and medium-sized enterprises requiring credit guarantee from the credit guarantee fund when borrowing from credit institutions according to Decision No. 193/2001/QĐ-TTg, Circular No. 42/2002/TT-BTC, this Circular, and current regulations of the Governor of the State Bank regarding lending to customers.

2.3. Coordinate with the credit guarantee fund to monitor and supervise the process of using borrowed capital and repaying debt by customers, ensuring the safety of capital.

This Circular takes effect fifteen days after its publication in the Official Gazette. The provisions in Circular No. 1070/NHNN-TD dated October 3, 2002 cease to be effective.

4. Any difficulties or obstacles arising during the implementation of this Circular should be reported to the State Bank of Vietnam for research and resolution.