DECREE NO. 116/2018/ND-CP AMENDING AND COMPLEMENTING CERTAIN ARTICLES OF DECREE NO. 55/2015/NĐ-CP OF THE GOVERNMENT ON CREDIT POLICIES TO SUPPORT AGRICULTURAL AND RURAL DEVELOPMENT

DECREE

Amending and supplementing certain Articles of Decree No. 55/2015/NĐ-CP dated June 9, 2015 of the Government on credit policies to serve the development of agriculture and rural areas

Pursuant to the Law on Government Organization dated June 19, 2015;

Pursuant to the Law on the State Bank of Vietnam dated June 16, 2010;

Pursuant to the Law on Credit Institutions dated June 16, 2010, and the Law Amending and Supplementing Certain Provisions of the Law on Credit Institutions dated November 20, 2017;

At the proposal of the Governor of the State Bank of Vietnam;

The Government promulgates this Decree amending and supplementing certain Articles of Decree No. 55/2015/NĐ-CP dated June 9, 2015 of the Government on credit policies to serve the development of agriculture and rural areas.

Article 1. Amending and supplementing certain Articles of Decree No. 55/2015/NĐ-CP dated June 9, 2015 of the Government on credit policies to serve the development of agriculture and rural areas, including:

1. Amending Clause 2 of Article 2 and supplementing Clause 3 to Article 2 as follows:

"2. Borrowers from credit institutions are individuals and legal entities, including:

a) Individuals residing in rural areas or engaged in agricultural production and business activities, or owners of farms;

b) Legal entities include:

(i) Cooperatives and cooperative unions located in rural areas or participating in agricultural production and business activities;

(ii) Enterprises operating in rural areas, except real estate enterprises, mining enterprises, electricity production units, and enterprises not falling within the scope defined in point b clause 2 of this Article located in industrial parks or export processing zones;

(iii) Enterprises supplying agricultural inputs for agricultural production and enterprises producing, purchasing, processing, and marketing agricultural products and by-products."

3. Households, cooperative groups, and other organizations without legal status when participating in borrowing relationships, the members of such households, cooperative groups, and other organizations without legal status are the subjects establishing and performing loan transactions or authorizing representatives to establish and perform loan transactions. Such authorization must be documented in writing, except where otherwise agreed. When there is a change in the representative, it must be notified to the parties involved in the borrowing relationship. If a member of a household, cooperative group, or organization without legal status participating in the borrowing relationship is not authorized by other members to act as a representative, that member is the subject of the borrowing relationship established and performed by themselves.

Households, cooperative groups, and other organizations without legal status referred to in this clause include:

a) Households residing in rural areas or engaged in agricultural production and business activities;

b) Businesses operating in rural areas;
c) Cooperative groups located in rural areas or participating in agricultural production and business activities;
d) Private enterprises operating in rural areas, except real estate enterprises, mining enterprises, electricity production units, and private enterprises not falling within the scope defined in point d clause 3 of this Article located in industrial parks or export processing zones;
e) Private enterprises supplying agricultural inputs for agricultural production and private enterprises producing, purchasing, processing, and marketing agricultural products and by-products."
2. Amending Clause 4 and supplementing Clause 13 to Article 3 as follows:

"4. A farm owner is an individual conducting business in agriculture in accordance with laws and meeting the economic criteria for farms as prescribed by competent authorities.

13. High-tech agricultural production and business projects and plans are projects and plans implemented in high-tech agricultural zones, high-tech agricultural regions; high-tech agricultural production and business projects and plans of high-tech agricultural enterprises; other high-tech agricultural production projects aimed at clean agriculture, environmentally friendly agriculture, and climate-smart agriculture as prescribed by competent authorities."

3. Amending Point a and Point b of Clause 2 of Article 9 as follows:

"a) Up to VND 100 million for individuals and households residing outside rural areas engaged in agricultural production and business activities (except cases specified in Point c Clause 2 of this Article);

b) Up to VND 200 million for individuals and households residing in rural areas;"

"4. Individuals and households borrowing from credit institutions in accordance with Article 4 of this Decree are exempt from fees for notarization of mortgage contracts at notary offices and other competent state agencies, and registration fees for secured transactions at secured transaction registration agencies."

4. Amending Clause 4 of Article 9 as follows:

5. Supplementing Clause 3 to Article 11 as follows:

"3. For perennial crops, credit institutions and borrowers agree on grace periods for principal and interest payments consistent with the establishment phase of perennial crops."

6. Amending the name of Article 12, Clause 2 of Article 12, and supplementing Clauses 3 and 4 to Article 12 as follows:

"Article 12. Restructuring debt repayment terms, writing off debts, and new loans"

2. In cases where customers suffer losses to borrowed capital or assets formed from such capital due to the consequences of natural disasters or epidemics occurring on a wide scale, or due to objective and irresistible causes as stipulated in Clause 3, Article 14 and Clause 3, Article 15 of this Decree, and financial institutions assess that such customers have no ability or cannot repay their loans, the People's Committee of the province or centrally governed city (the provincial-level People's Committee) shall compile and evaluate specific losses, report to the Prime Minister, the State Bank of Vietnam, and the Ministry of Finance for consideration to write off debts without interest calculation for the damaged debt balance; the maximum write-off period is two years. For cases stipulated in Clause 3, Article 14 and Clause 3, Article 15 of this Decree, the maximum write-off period is three years. Debts written off shall be kept in the same loan classification group as before the write-off was implemented. The amount of interest that financial institutions are unable to collect due to the write-off for customers shall be covered by the state budget corresponding to the local budget. In cases where the local budget is difficult, the provincial-level People's Committee shall report to the Ministry of Finance to take the lead and coordinate with the State Bank of Vietnam and the Ministry of Planning and Investment to report to the Prime Minister for consideration and decision to support from the central government reserve fund.

3. Documents, procedures, and formalities for requesting debt write-off

a) Documents for requesting debt write-off include:

(i) Notification of the provincial-level People's Committee regarding the occurrence of widespread natural disasters or epidemics;

(ii) Request for debt write-off issued by the customer;

(iii) Documentation proving the customer has outstanding loan balances at financial institutions, including copies of credit contracts and debt collection documents;

(iv) Minutes confirming the customer's loss of borrowed capital or assets formed from such capital due to widespread natural disasters or epidemics or due to objective and irresistible causes, with confirmation from the financial institution, the customer, and the competent authority (confirmation from the provincial-level People's Committee for enterprises and cooperative unions; confirmation from the district-level People's Committee for individual businesses, cooperatives, and farmstead owners; confirmation from the commune-level People's Committee for individuals and households);

(v) Assessment report by the branch of the financial institution or people's credit cooperative regarding the extent of damage and the customer's repayment capacity; production and business plans, post-write-off repayment plans; proposal by the branch of the financial institution or people's credit cooperative regarding the write-off period for the customer.

b) Procedures and formalities for requesting debt write-off

(i) Within thirty days from the date of notification of widespread natural disasters or epidemics by the provincial-level People's Committee or from the date of damage caused by objective and irresistible causes, the branch of the financial institution or people's credit cooperative shall cooperate with the customer to prepare the documents for requesting debt write-off as specified in point a, Clause 3 of this Article and compile a list of customers requesting debt write-off according to Form No. 01 attached to this Decree and send it to the Department of Finance and the State Bank of Vietnam branch in the provinces or centrally governed cities;

(ii) Within fifteen days from the date of receipt of the request for debt write-off documents and the list of customers requesting debt write-off from the branch of the financial institution or people's credit cooperative, the State Bank of Vietnam branch in the provinces or centrally governed cities shall take the lead and coordinate with the Department of Finance to check and confirm the legality of the documents and data, and compile a list of customers requesting debt write-off to report to the provincial-level People's Committee for confirmation and preparation of a report according to Form No. 02 attached to this Decree along with a request for debt write-off to be sent to the State Bank of Vietnam and the Ministry of Finance;

(iii) Within fifteen days from the date of confirmation of the list of customers requesting debt write-off by the provincial-level People's Committee, the branch of the financial institution shall compile all documents and materials as specified in points (i) and (ii) of point b, Clause 3 of this Article and report to the headquarters of the financial institution for verification to ensure the accuracy of the requested debt write-off documents; based on the results of the verification, the headquarters of the financial institution shall compile a list of customers requesting debt write-off according to Form No. 03 attached to this Decree and compile all documents for requesting debt write-off to report and propose to the State Bank of Vietnam and the Ministry of Finance for specific consideration and handling of debt write-off;

(iv) Within thirty days from the date of receipt of complete documents for requesting debt write-off as specified in points (ii) and (iii) of point b, Clause 3 of this Article, the State Bank of Vietnam shall take the lead and coordinate with the Ministry of Finance to consider and decide or report to the Prime Minister for decision on debt write-off as stipulated in Clause 4 of this Article.

4. The State Bank of Vietnam shall take the lead and coordinate with the Ministry of Finance to consider and decide on debt write-off in cases where the total amount of requested debt write-off by financial institutions in the same disaster or epidemic wave or the same risk wave due to objective and irresistible causes as stipulated in Clause 3, Article 14 and Clause 3, Article 15 of this Decree is up to one billion VND; take the lead and coordinate with the Ministry of Finance to report to the Prime Minister for consideration and decision if the total amount of requested debt write-off by financial institutions exceeds one billion VND. If the State Bank of Vietnam and the Ministry of Finance cannot reach an agreement on debt write-off in cases where the total amount of requested debt write-off by financial institutions is up to one billion VND, the State Bank of Vietnam shall report to the Prime Minister for consideration and decision.

7. Supplement Clause 4 to Article 14 as follows:

"4. Management of linked lending cash flow in agricultural production

a) Management of linked lending cash flow along the value chain:

Based on the value chain linkage contract between the lead organization and the organizations or individuals participating in the linkage (hereinafter referred to as the linked parties), the financial institution shall enter into a loan agreement with the lead organization and/or the linked party and manage the linked chain loan cash flow according to the following principles:

(i) The lead entity and the associated parties shall open accounts at credit institutions for loans and commit to conducting all monetary transactions related to the value chain through these accounts.

(ii) In the case where the lead entity temporarily advances production costs to the associated parties:

- The credit institution shall provide a loan to the lead entity to pay for: the purchase of raw materials and input services to temporarily advance to the associated parties; the purchase of products from the associated parties after deducting the advance payments made by the lead entity to the associated parties; processing and consumption costs of the lead entity's products.

- The credit institution shall collect debts from the lead entity based on revenue from sales according to consumption contracts signed with consumers and other lawful sources of income.

(iii) In the case where the lead entity does not temporarily advance production costs to the associated parties:

- The credit institution shall provide a loan to the associated party to pay for the purchase of raw materials and input services for joint production.

- The credit institution shall collect debts from the associated party based on revenue from sales to the lead entity.

- The credit institution shall provide a loan to the lead entity to pay for: the purchase of products from the associated party; processing and consumption costs of the lead entity's products. The disbursement to the lead entity to pay for the purchase of products from the associated party shall be linked to the collection of debts from the associated party.

- The credit institution shall collect debts from the lead entity based on revenue from sales according to consumption contracts signed with consumers and other lawful sources of income.

b) Managing the flow of funds for joint venture loans:

(i) In cases where the parties involved in the joint venture only sign joint venture contracts to implement one or more stages of the joint venture chain as stipulated in Clause 6, Article 3 of this Decree, the credit institution shall enter into loan agreements with the parties to implement each stage of the joint venture chain.

(ii) The credit institution and the parties involved in the joint venture shall agree specifically on the repayment terms suitable for the actual time frame of each stage in the joint venture. The credit institution shall act as an intermediary for payment between the parties involved in the joint venture who have opened accounts at the credit institution upon their request.

8. Amend Clause 1 of Article 15 and supplement Clause 2a and Clause 4 to Article 15 as follows:

"1. Customers with projects or plans for production and business operations in high-tech agricultural zones or high-tech agricultural areas shall be eligible for unsecured loans up to 70% of the value of the project or plan by credit institutions.

2a. Enterprises that have not been granted a certificate of a high-tech agricultural enterprise but have projects or plans for production and business operations applying high technology in agriculture outside high-tech agricultural zones or high-tech agricultural areas shall be eligible for unsecured loans up to 70% of the value of the project or plan by credit institutions.

4. Credit institutions may accept assets formed from borrowed capital for projects or plans for production and business operations applying high technology in agriculture and other assets as collateral for customer loans in accordance with the provisions of the law."

9. Supplement Clause 5 and Clause 6 to Article 18 as follows:

"5. The Ministry of Agriculture and Rural Development shall take the lead and coordinate with the Ministry of Science and Technology and other ministries and agencies at the same level to submit to the Prime Minister regulations on criteria for determining projects or plans for production and business operations applying high technology in agriculture as stipulated in Clause 2a of Article 15 of this Decree.

6. Provide specific guidance on criteria for determining farm economies as stipulated in Clause 4 of Article 3 of this Decree."

10. Amend Clause 1 and Clause 4 of Article 19 as follows:

"1. Take the lead and coordinate with the Ministry of Justice to guide the non-collection of fees for certifying mortgage contracts and registration fees for secured transactions as stipulated in Clause 4 of Article 9 of this Decree.

4. Take the lead and coordinate with the State Bank of Vietnam and the Ministry of Planning and Investment to report to the Prime Minister for consideration and decision on supporting difficult localities with the amount of interest that credit institutions do not collect due to debt write-offs from the central government budget reserve fund under the mechanism of central government support for local budgets to implement current social welfare policies."

11. Amend Clause 3 of Article 20 as follows:

"3. Coordinate with the Ministry of Finance in allocating state budget funds to implement debt write-offs for customers as stipulated in this Decree."

12. Supplement Clause 5 and Clause 6 to Article 22 as follows:

"5. Guide and direct People's Committees at all levels and Departments of Finance to coordinate in inspecting and confirming applications for debt write-offs as stipulated in this Decree.

6. Allocate local budget funds to implement the provision of interest that credit institutions do not collect due to debt write-offs as stipulated in this Decree and handle any issues arising during implementation."

13. Supplement Clause 4 to Article 23 as follows:

"4. Utilize reserves to address risks associated with principal debts in accordance with the provisions of the law."

Article 2. Point c Clause 3 Article 14 is repealed.

Article 3. Transitional Provisions

Credit institutions and customers shall continue to implement the contents in signed credit contracts in accordance with the laws at the time of signing the contract or agree to amend and supplement the credit contract in compliance with this Decree.

Article 4. Implementation provisions

1. This Decree takes effect from October 25, 2018.

2. The Ministers, Heads of ministerial-level agencies, Heads of government-affiliated agencies, Chairpersons of provincial and centrally-run city People's Committees, and related organizations and individuals are responsible for implementing this Decree./.