Circular No. 07/1999/TT-BTC guiding the temporary financial management regime for the Mekong Delta Housing Development Bank

1. The Southern Delta Housing Development Bank is a state enterprise with initial capital contributed by the state, operating independently, financially self-sufficient, covering its own operational costs and business risks, and bearing responsibility for business results, while ensuring the preservation and development of capital.

2. The Southern Delta Housing Development Bank shall implement the financial management and business accounting system according to the "Financial Management and Business Accounting Regulations for State Enterprises" issued together with Decree No. 59/CP dated October 3, 1996 of the Government, the guiding documents for implementing this regulation issued by the Ministry of Finance, and other financial regulations stipulated in the Law on Credit Organizations.

At the same time, the Southern Delta Housing Development Bank shall enjoy certain special regimes as prescribed in Decision No. 769/TTg dated September 18, 1997 and Decision No. 1121/QĐ-TTg dated February 14, 1998 of the Prime Minister, as guided below:

1. The tax exemption and reduction regime for the Southern Delta Housing Development Bank (as stipulated in Article 2 of Decision No. 1121/TTg dated December 4, 1998 of the Prime Minister) shall be implemented as follows:

1.1. The Southern Delta Housing Development Bank shall be entitled to a maximum reduction of 50% of the corporate income tax payable. The tax reduction period shall be two years from the date of commencement of taxable income as stipulated in the Corporate Income Tax Law and current guiding documents.

1.2. The Southern Delta Housing Development Bank may retain the portion of the proceeds from the use of the state-contributed registered capital to support interest rate differences for preferential loans compared to regular loans due to the implementation of the state housing policy in the Southern Delta region. The use of the retained proceeds from the state-contributed registered capital shall be carried out in accordance with the guidance provided in Point 3 of this Circular.

1.3. The Southern Delta Housing Development Bank shall be responsible for fully and promptly remitting to the state budget all taxes (excluding the exempted and reduced portions) and other revenues (if any) as required by law.

2. Distribution of post-tax profits, reserve fund allocation, and utilization:

2.1. Profit distribution

The annual realized profit of the Southern Delta Housing Development Bank is determined by subtracting total annual expenses from total annual revenue (including the difference in interest rates from the proceeds of the use of capital).

The annual realized profit shall be distributed as follows:

Pay corporate income tax (or corporate income tax) as required by law (excluding the exempted and reduced portions).

Allocate funds from the proceeds of the use of state budget capital to offset interest rate differences for preferential loans due to the implementation of the state housing policy in the Southern Delta region.

Pay fines for violations of budget revenue discipline, administrative violations, breach of contract, overdue debt penalties, etc...

The remaining profit shall be used for: Allocating 5% to establish the Supplementary Capital Reserve Fund, with a maximum level as prescribed by current regulations.

Establishing the Financial Provision Fund, Investment Development Fund, Unemployment Assistance Provision Fund, Reward Fund, and Welfare Fund in accordance with Circular No. 70 TC/TCDN dated November 5, 1996, issued by the Ministry of Finance, guiding the distribution regime of post-tax profits and management of funds of state-owned enterprises.

2.2. Usage Regime of Funds:

The Investment Development Fund, Financial Provision Fund, Unemployment Assistance Provision Fund, Reward Fund, and Welfare Fund of the Mekong Delta Housing Development Bank shall be used in accordance with the provisions set forth in Circular No. 70 TC/TCDN dated November 5, 1996, issued by the Ministry of Finance, guiding the distribution regime of post-tax profits and management of funds of state-owned enterprises.

The Supplementary Capital Reserve Fund shall be used to increase the registered capital annually.

3. Management and Utilization of Revenue from the Use of Registered Capital Provided by the State:

3.1. Plan Development:

At the beginning of the fourth quarter each year, the Mekong Delta Housing Development Bank forecasts the plan on the amount of revenue from the use of capital retained by the State to formulate a loan plan for low-income households and policy-targeted groups to be submitted for approval by the Board of Directors. The Mekong Delta Housing Development Bank is responsible for sending the financial plan, including the loan plan for low-income households and policy-targeted groups approved by the Board of Directors, to the Ministry of Finance (Department of Banking Finance and Financial Institutions) for monitoring.

Loan Plan for Low-Income Households and Policy-Targeted Groups Receiving Preferential Interest Rates:

a) Determination of Borrowers Eligible for Preferential Interest Rates:

Low-income households and policy-targeted groups that can repay their loans and have the ability to build houses are reported by the Mekong Delta Housing Development Bank to the State Bank of Vietnam to coordinate with the Ministry of Labor, Invalids, and Social Affairs to determine the standards for low-income households and policy-targeted groups eligible for preferential interest rates.

The list of low-income households and policy-targeted groups eligible for housing loans must be confirmed by the People's Committee of the Ward or Commune where they reside.

The head of the household is the representative of the borrowing household in credit transactions with the Mekong Delta Housing Development Bank.

b) Preferential Interest Rate for Housing Loans for the People of the Mekong Delta:

The Mekong Delta Housing Development Bank may apply reduced interest rates for borrowers in difficult areas, mountainous regions, and islands as specified by the Governor of the State Bank of Vietnam.

c) Loan Amount for Preferential Interest Rates: The maximum loan amount for policy-targeted groups and low-income households mentioned above shall not exceed VND 20 million per dwelling unit.

d) Based on the borrower category and the loan amount eligible for preferential interest rates, the Mekong Delta Housing Development Bank formulates the total annual loan amount, borrower categories, loan interest rates, and balances the difference in interest rates needed to be covered (the difference between preferential loan interest rates and normal medium- to long-term loan interest rates within the lending area of the Mekong Delta Housing Development Bank).

Formula for Building the Plan to Cover Interest Rate Differences:

Where:

* Monthly Loan Amount Eligible for Interest Rate Subsidy: This is the average monthly balance of loans eligible for preferential interest rates generated during the planning period (rounded to the nearest month). The average monthly loan balance is the arithmetic mean of the opening and closing balances of loans eligible for preferential interest rates during the planning period.

* Average Monthly Normal Medium- to Long-Term Loan Interest Rate is the actual average loan interest rate of the Mekong Delta Housing Development Bank at the same time as the loan contract signing (within the ceiling interest rate set by the Governor of the State Bank).

* Preferential Loan Interest Rate is the interest rate for loans to policy-targeted households and low-income households for housing construction as stipulated in point 3.1, part II above.

3.2. Handling the Actual Interest Rate Difference Arising at the End of the Fiscal Year Due to Loans to Policy-Targeted Groups and Low-Income Households for Housing Construction and Development:

The Mekong Delta Housing Development Bank bases the actual loan amount of the reporting year to determine the interest rate difference in the year that needs to be covered using the product method:

Calculation Formula: