Circular No. 09/2009/TT-NHNN detailing the implementation of interest rate support for loans to purchase machinery, equipment, materials for agricultural production, and construction materials for housing in rural areas.

CIRCULAR

Detailed regulations on interest rate support for loans to purchase machinery, equipment, materials for agricultural production and construction materials for rural housing

农业生产与农村地区住房建筑材料生产

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Pursuant to Resolution No. 30/2008/NQ-CP dated December 11, 2008 of the Government on urgent measures to prevent economic decline, maintain economic growth, and ensure social welfare;

Pursuant to Resolution No. 12/NQ-CP dated April 6, 2009 of the Government on the regular meeting of the Government in March 2009;

Pursuant to Decision No. 497/QĐ-TTg dated April 17, 2009 of the Prime Minister on interest rate support for loans to purchase machinery, equipment, materials for agricultural production and construction materials for rural housing;

After reaching consensus with the Ministry of Industry and Trade, the Ministry of Finance, and the Ministry of Agriculture and Rural Development, the State Bank of Vietnam hereby issues detailed regulations on interest rate support for short-term and medium-term loans in Vietnamese dong made by organizations and individuals to purchase machinery, equipment, materials for agricultural production and construction materials for rural housing (hereinafter referred to as interest rate support) as follows:

Article 1. Purpose of interest rate support

The State will provide interest rate support for short-term and medium-term bank loans in Vietnamese dong made by organizations and individuals (hereinafter referred to as borrowers) to purchase machinery, mechanical equipment, means of transport, materials for agricultural production and construction materials for rural housing in order to reduce investment costs, enhance production capacity, and promote industrial development through stimulating investment and consumption in rural areas.

Article 2. Objectives and scope of application of interest rate support regulations

1. Credit institutions shall provide interest rate support for short-term and medium-term loans in Vietnamese dong made by borrowers to purchase machinery, equipment, means of transport, materials for agricultural production and construction materials for rural housing, including:

a) Commercial banks as stipulated in Clause 1, Article 2 of Decision No. 131/QĐ-TTg dated January 23, 2009 of the Prime Minister on interest rate support for organizations and individuals borrowing from banks for production and business activities.

b) Financial companies as stipulated in Clause 1, Article 1 of Decision No. 333/QĐ-TTg dated March 10, 2009 of the Prime Minister amending and supplementing certain provisions of Decision No. 131/QĐ-TTg and guiding documents issued by the State Bank of Vietnam.

2. Borrowers are households, farm owners, individuals, cooperative groups, cooperatives, enterprises borrowing short-term and medium-term loans in Vietnamese dong to purchase machinery, equipment, means of transport, materials for agricultural production and construction materials for rural housing.

3. The types of loans eligible for interest rate support are short-term and medium-term loans in Vietnamese dong under credit contracts signed and disbursed from May 1, 2009 to December 31, 2009 to purchase machinery, equipment, means of transport, materials for agricultural production and construction materials for rural housing included in the detailed list of domestically produced goods eligible for interest rate support on loans as specified in Decision No. 2095/QĐ-BCT dated April 29, 2009 of the Ministry of Industry and Trade.

4. Short-term and medium-term loans to purchase machinery, equipment, means of transport, materials for agricultural production and construction materials for rural housing that have already received interest rate support according to Decision No. 131/QĐ-TTg and Decision No. 443/QĐ-TTg dated April 4, 2009 of the Prime Minister and this Circular.

Article 3. Principles, conditions, time limits, loan amounts, and interest rate support, loan application documents, methods of interest rate support

1. The principle of interest rate support is that commercial banks and financial companies provide short-term and medium-term loans to purchase machinery, equipment, means of transportation, materials for agricultural production, and construction materials for rural housing according to normal lending mechanisms and implement interest rate support in accordance with the regulations of the Prime Minister and guidelines from the State Bank of Vietnam.

2. Conditions for customers to receive interest rate support:

a) Being confirmed by the People's Committee of communes, wards, towns as eligible borrowers for interest rate support loans under Decision No. 497/QĐ-TTg.

b) Using borrowed funds to purchase machinery, equipment, means of transportation, materials for agricultural production, and construction materials for rural housing included in the detailed list of domestically produced goods eligible for interest rate support loans as stipulated in Decision No. 2095/QĐ-BCT dated April 29, 2009 of the Ministry of Industry and Trade.

3. Time limit for interest rate support for loans under credit contracts signed and disbursed during the period from May 1, 2009 to December 31, 2009:

a) Up to 24 months from the date of loan disbursement, for loans to purchase machinery, equipment, means of transportation for agricultural production and processing, and computers; interest rate support will be implemented from May 1, 2009 to December 31, 2011.

b) Up to 12 months from the date of loan disbursement, for loans to purchase agricultural materials and construction materials for housing; interest rate support will be implemented from May 1, 2009 to December 31, 2010. Loans subject to interest rate support that are overdue, extended, or have actual loan periods exceeding the supported loan period shall not be eligible for interest rate support during the overdue, extended, or excess periods.

4. Loan amounts and interest rate support levels:

a) For machinery, equipment, means of transportation for agricultural production and processing, and computers: The maximum loan amount is 100% of the value of the goods (for computers, the maximum loan amount does not exceed VND 5 million per unit); specific loan amounts are determined by commercial banks and financial companies based on normal lending mechanisms. The interest rate support level is 100% of the loan interest rate.

b) For agricultural materials: The maximum loan amount is 100% of the value of the goods but not exceeding VND 7 million per hectare; specific loan amounts are determined by commercial banks and financial companies based on normal lending mechanisms. The interest rate support level is 4% per year of the loan interest rate.

c) For various construction materials for housing: The maximum loan amount is 100% of the value of the goods but not exceeding VND 50 million; specific loan amounts are determined by commercial banks and financial companies based on normal lending mechanisms. The interest rate support level is 4% per year of the loan interest rate.

5. Documents for interest rate support loans:

- A loan application form confirmed by the People's Committee of communes, wards, towns as eligible borrowers for interest rate support loans under Decision No. 497/QĐ-TTg;

- A plan or proposal for using machinery, equipment, means of transportation, materials for production and construction materials for housing;

- A credit agreement;

- A collateral agreement for the loan in accordance with the law on secured transactions if the loan is secured;

- Other loan application documents according to normal lending mechanisms.

6. The method of implementing interest rate support is that when collecting loan interest, commercial banks and financial companies reduce the amount of interest payable by the borrower by the amount of interest supported. The State Bank of Vietnam will transfer the supported loan interest based on reports of the supported interest amounts submitted by commercial banks and financial companies.

Article 4. Procedures and responsibilities of borrowers, commercial banks, and finance companies in implementing interest rate support

1. For borrowers with loans falling within the scope of interest rate support:

a) From May 1 to December 31, 2009, when initially borrowing from commercial banks or finance companies, borrowers shall submit a request for interest rate support to such commercial banks or finance companies according to Appendix 01 of this Circular.

b) Provide complete and truthful information and documents to prove the purpose of the loan eligible for interest rate support and bear responsibility for the accuracy of the provided information and documents. Use the borrowed funds for the intended purpose as stated in the credit agreement that falls within the scope of interest rate support. If the borrowed funds are not used for the intended purpose, then the borrower will not be entitled to interest rate support and must repay the previously supported interest to the commercial bank or finance company, and will be subject to legal sanctions.

c) Comply with the procedures for borrowing and interest rate support, as well as reporting requirements set forth by commercial banks and finance companies.

d) Record the payment of interest on the loan according to the amount of interest due to the commercial bank or finance company after receiving interest rate support in accordance with the law.

đ) Request commercial banks and finance companies to implement interest rate support in accordance with the regulations of the Prime Minister and guidelines issued by the State Bank of Vietnam.

2. For commercial banks and finance companies:

a) Implement interest rate support for borrowers in accordance with the regulations of the Prime Minister and guidelines issued by the State Bank of Vietnam; they may not refuse to provide interest rate support if the loan falls within the scope of interest rate support; report periodically to the State Bank of Vietnam for inspection and supervision of interest rate support implementation.

b) Based on the purpose of using the loan eligible for interest rate support, record the contents related to interest rate support in the credit agreement in accordance with the provisions of the law; refuse requests for interest rate support that do not comply with the law.

c) The Chairman of the Board of Directors and General Director (Director) of commercial banks and finance companies are responsible and will be subject to legal sanctions for cases of providing interest rate support that do not comply with the law. For commercial banks and finance companies, if there is a violation, it will be considered in the annual classification, additional capital increase, and issuance of permits for expanding the business content and network of commercial banks and finance companies.

d) Apply mechanisms, loan amounts, and loan interest rates consistent with the regulations stipulated in the Credit Regulations for Customers issued together with Decision No. 1627/2001/QĐ-NHNN dated December 31, 2001, and other relevant legal documents for loan needs eligible for interest rate support.

đ) Conduct pre-loan, during-loan, and post-loan inspections to ensure compliance with the legal provisions for interest rate support. If it is discovered that the borrower has misused the loan for purposes not eligible for interest rate support, recover the previously supported interest; if recovery is not possible, report to the competent state authority for handling or initiating legal action against the borrower's breach of the credit agreement.

e) Guide borrowers to ensure convenient, safe, and appropriate borrowing.

g) When collecting interest from borrowers, commercial banks and finance companies shall reduce the interest payable by the borrower by the amount of interest supported under the law. If the interest collection period has not arrived by December 31, 2011, commercial banks and finance companies must calculate the interest payable by the borrower and reduce the interest payable by the amount of interest supported. Interest calculation and collection shall be carried out in accordance with the law; record and track the interest payable under the interest rate support program as follows:

- Record all interest income in accordance with the current financial regulations; interest supported by the State Bank of Vietnam shall be recorded in a separate account (account "Receivables" - Sub-account: Receivable from the State Bank of Vietnam for interest rate support in 2009-2011).

- Maintain detailed records (or databases) of each loan supported by interest rate (borrower, loan amount, term and interest rate, amount of interest support...) to send to the borrower for tracking, statistics, internal audit, reporting to the State Bank of Vietnam, and inspection by the competent state authority.

h) Prepare a certificate of interest rate support signed by both the borrower and the lending commercial bank or finance company (signed and stamped) as evidence for inspection and supervision. The certificate of interest rate support shall be prepared in two copies, one copy kept in the credit file, and one copy sent to the borrower. The certificate of interest rate support shall be prepared each time interest is collected and the supported interest is reduced, or prepared monthly in accordance with the reporting deadline for interest rate support to the State Bank of Vietnam. For farmers borrowing, the certificate of interest rate support shall be prepared at the end of each quarter during the interest rate support period.

i) Submit registration forms for plans and reports on the amount of interest rate support to the State Bank of Vietnam according to Appendices 02, 03, and 04 of this Circular:

- Quarterly plan registration form for interest rate support according to Appendix 02 of this Circular, submitted no later than the 10th day of the first month of the quarter; the second quarter 2009 plan registration form for interest rate support shall be submitted no later than May 15, 2009.

- Monthly report on the implementation of interest rate support according to Appendices 03 and 04 of this Circular, submitted no later than the 10th day of the following month, ensuring accuracy and timely submission.

k) Monitor and accurately record in a timely manner all loans with interest rate support to serve internal auditing, report to the State Bank of Vietnam, and for supervision by competent state agencies; open accounts or apply appropriate management systems to account for and record separately loans with interest rate support.

l) Maintain loan files for loans with interest rate support in accordance with the provisions of the law.

Article 5. Responsibilities of the State Bank of Vietnam

1. Transfer up to 90% of the supported interest on loans monthly based on reports from commercial banks and finance companies. The transfer of the remaining supported interest on loans annually will be carried out after receiving the final report on interest rate support from commercial banks and finance companies.

2. Take the lead and coordinate with the Ministry of Finance, the Ministry of Industry and Trade, and the Ministry of Agriculture and Rural Development to conduct inspections and supervision of the implementation of legal provisions on interest rate support when necessary.

3. Responsibilities of units under the State Bank of Vietnam to assist the Governor of the State Bank in implementing matters related to the organization of the interest rate support mechanism:

a) Department of Monetary Policy: Coordinate with units under the State Bank of Vietnam to handle issues related to the interest rate support mechanism; receive registration plans for interest rate support and reports on the situation of interest rate support from commercial banks and finance companies; notify the transfer of interest rate support funds to commercial banks and finance companies; guide the settlement of interest rate support funds; prepare reports for submission.

b) Department of Finance and Accounting: Handle accounting issues related to the interest rate support mechanism (original vouchers for accounting, transferring interest rate support funds...).

c) Trading Department: Carry out accounting and transfer of interest rate support funds to commercial banks.

d) Banking Inspection and Supervision Authority (State Bank Inspectorate): Conduct inspections, supervision, and handling of commercial banks, finance companies, and borrowers who violate legal provisions on interest rate support.

đ) Branches of the State Bank of Vietnam in provinces and centrally-run cities: Carry out inspections, supervision, and audits within their authority regarding the implementation of legal provisions on interest rate support; report and propose solutions to the Governor of the State Bank of Vietnam and the Chairman of the People's Committee of provinces and centrally-run cities for any arising issues.

Article 6. Responsibilities of People's Committees of communes, wards, and towns

Confirm that borrowers are eligible for subsidized loans according to Decision No. 497/QĐ-TTg.

Article 7. Implementation Organization

1. This Circular takes effect from the date of signature.

2. The Head of the Office, Heads of the Department of Monetary Policy, Heads of units under the State Bank, Governors of State Bank branches in provinces and centrally-run cities, Chairmen of the Board of Directors and General Managers (Directors) of commercial banks and finance companies, and borrowers are responsible for implementing this Circular./.