Circular No. 130/NH-TT guiding the implementation of monetary, credit, and payment work to carry out the regulations on reform policies and accounting for state-owned enterprises as stipulated in Decision No. 217-HĐBT dated November 14, 1987 of the Council of Ministers.

CIRCULAR

NUMBER 130/NH-TT OF DECEMBER 30, 1987 GUIDELINES FOR IMPLEMENTING CURRENCY, CREDIT, AND PAYMENT WORK TO IMPLEMENT THE REGULATION ON POLICIES FOR REFORMING PLANNING AND BUSINESS ACCOUNTING IN SOCIALIST ENTERPRISES FOR STATE OWNED ENTERPRISES ISSUED ACCOMPANYING DECISION NO. 217-HĐBT OF NOVEMBER 14, 1987 OF THE COUNCIL OF MINISTERS OF THE COUNCIL OF MINISTERS

Implementing Decision No. 217-HĐBT dated November 14, 1987 of the Council of Ministers on policies for reforming planning and business accounting in socialist enterprises for state-owned enterprises; the State Bank of Vietnam guides certain basic points regarding currency work, credit, and payment as follows:

1. Regarding opening and using accounts (Article 34):

- State-owned enterprises have the right to choose the most convenient bank within the system serving them within the province, city, or centrally-administered special economic zone to open their main deposit account (including working capital deposits, construction fund allocations, and specialized funds) and establish credit relations. If there are affiliated units (accounting entities), they may also open sub-accounts (dedicated to receipts or payments, or both) at the bank where the affiliated unit operates for convenience in transactions. Foreign currency deposits will be addressed in Point 6 below.

- The bank shall accept deposits into and make payments from the account based on valid documentation upon the instruction of the account holder. If the enterprise violates the law and the People's Court or Economic Arbitration has issued a decision imposing a fine, the bank shall be responsible for implementing such decisions.

The balance of deposits held by enterprises at banks shall be kept confidential and earn interest.

2. Regarding compliance with cash management regulations (Article 35):

To ensure flexibility for both parties, quarterly, enterprises shall prepare estimates of cash deposits and withdrawals at the bank (broken down by month) including cash needed to be withdrawn from other local banks, and submit these to the bank where the account is opened before the 15th day of the last month of the current quarter.

Enterprises that both receive and pay out cash may agree with the bank to retain a certain amount of cash for use at the unit, with the remainder deposited into the bank.

3. Regarding monitoring the expenditure of the wage fund (Article 36):

- From the beginning of the plan year, enterprises shall register with the bank where the account is opened their projected annual wage fund plan broken down by quarter. When the official wage plan (at the latest by the first quarter of each year) or any adjustments are made, enterprises must re-register with the bank.

- Monthly, enterprises shall withdraw cash from the bank to pay wages and bonuses to employees according to the cash wage and bonus allocation already registered.

- At the end of each quarter, enterprises shall preliminarily calculate the wage expenditures compared to the plan completion rate. If expenditures exceed or fall short of the plan, the excess or shortfall shall be deducted or added to the wage budget of subsequent quarters.

- By the end of the year, when confirmed data on plan completion rates (based on assigned indicators and registered indicators) are available, enterprises shall settle the wage fund and report to the supervising authority, simultaneously sending a copy to the primary bank where the enterprise maintains its relationship. Enterprises and the bank shall review, if insufficient wages have been paid relative to the allowable amount and actual needs, enterprises shall supplement the cash budget for the current quarter to withdraw additional cash for wage payments. If expenditures exceeded the plan, enterprises shall find sources to cover the excess according to the current financial regime.

4. Regarding working capital credit (Article 37):

Bank credit aims to supplement the necessary working capital exceeding the enterprise's own capital to meet production and business requirements.

- For newly operational enterprises receiving state-provided working capital corresponding to their design tasks, the bank shall only provide loans up to the working capital quota of the enterprise.

- For operating enterprises, after reassessing working capital based on new price levels, if there is a shortage, it must be supplemented by the state. While the state cannot immediately provide the full working capital quota, the bank temporarily maintains the existing level of working capital credit within the previously agreed limit as stated in Point 4, Subsection d below. If there is a need for additional capital beyond the enterprise's own resources and the existing loan quota, the enterprise may apply for a loan up to the working capital quota.

The source of funds for lending is reflected in the annual plan submitted by the State Bank to the Council of Ministers for approval and investment in various sectors of the economy. The State Bank informs the relevant ministries, general departments, provincial people's committees, centrally-administered cities, and special economic zones of the anticipated lending amounts to coordinate implementation.

a) Lending within the working capital quota:

- Enterprises wishing to borrow from the bank within the working capital quota must meet the following conditions:

Have their own capital as prescribed;

Be assigned legal indicators or state orders or contracts from other economic entities and develop a production-technical-financial plan consistent with the enterprise's capacity;

Accept the bank's credit terms;

Enterprises shall prepare a borrowing plan and submit it to the primary bank at least 15 days before the start of the planned quarter, clearly stating the borrowing needs, repayment period, and other documents required for lending under the credit regime.

- The bank shall agree on the borrowing quota within the working capital quota for each quarter and notify the enterprise at the beginning of the quarter for joint implementation.

- Upon receipt of usage documentation from the enterprise, the primary bank shall immediately review it. If it finds the request reasonable, consistent with the allocated loan funds as previously notified to the enterprise and still within the available lending capacity (planned loan minus actual loans equals remaining loanable amount), the bank shall approve the loan on the same day.

- Loan recovery and repayment periods shall be determined in accordance with the plan to reduce inventory levels of borrowing entities, but generally not exceeding six months.

- During the lending process, if the bank discovers misuse of borrowed funds or lack of collateral, it shall handle the situation according to the credit regulations.

- Upon maturity for repayment, the enterprise shall proactively seek sources of capital to repay the debt. If there is no source of repayment and there are valid reasons, the enterprise may request an extension of the debt. If the enterprise does not provide comments or does not receive an extension, the Bank will transfer the amount of debt to overdue status and work with the enterprise to find measures to recover it.

- If due to the borrowing needs of the enterprise being inconsistent with the borrowing target, or if the enterprise has already utilized its borrowing quota, within the maximum limit of two working days from the date of receiving the loan application, the basic bank must notify the enterprise in writing to seek other sources of capital to meet the enterprise's requirements.

- Enterprises that have excess loans beyond the credit limit for economic benefit shall be transferred to this type of loan.

- Enterprises that operate well, effectively utilize borrowed funds, are not subject to overdue debt processing, properly implement cash management as registered, and do not generate delayed payment debts in settlement shall be eligible to enjoy preferential loan interest rates (a reduction of 10% on the usual interest rate for each loan or a specific period).

b) Loans for temporary financial difficulties of enterprises.

If an enterprise encounters financial difficulties due to unexpected supply of materials, production, or product sales, which were not anticipated in the plan, and has exhausted its own capital and borrowed funds above the working capital quota, and must mobilize other sources of funds to meet the needs but has not yet succeeded in doing so, and the expenditure requirements cannot be reduced, then the enterprise may borrow from the Bank to address temporary financial difficulties.

- The source of funds for the Bank to lend is savings deposits exceeding the plan,

organizing short-term fundraising campaigns among the public at high interest rates and other sources of fundraising through various forms to resolve temporary financial difficulties for enterprises.

- The maximum loan term is up to 30 days, exceptionally extendable to 45 days, decided by the Director of the basic bank. If the loan is sourced from short-term fundraising campaigns at high interest rates, the loan term and interest rate shall correspond to the fundraising term and interest rate.

- Enterprises shall repay the debt using the raised funds, or by utilizing the funds obtained from resolving the causes of temporary financial difficulties.

- Enterprises that have excess loans outside the plan due to management deficiencies shall be transferred to this type of loan.

- The loan interest rate shall be applied according to the deposit savings interest rate and high-interest fundraising rate plus additional banking operation fees.

c) Working capital loans for economic organizations engaged in construction installation activities.

The Bank shall provide working capital loans to construction organizations for material reserves, including complete equipment materials (recorded under the income-expense method to track project funds) received, stored, and expended according to the plan consistent with the approved investment capital for projects contracted by the organization. When disbursing the loan, it must be based on the available capital resources of Party A for payment during the period.

d) Handling excess credit limits up to December 31, 1987.

For operating enterprises that have not been fully allocated working capital according to the new quota and still have excess credit limits for working capital loans up to December 31, 1987, the following handling procedures apply:

- If the excess debt equals (or is lower than) the percentage "participation ratio" of the working capital quota before October 1, 1987, that excess debt shall be transferred to a separate sub-item classification in the loan account for management. The basic bank shall collect interest monthly at the current interest rate table for loans within the credit limit.

- Any excess debt above the aforementioned level (if any) shall be transferred to loans above the working capital quota.

e) Temporary handling of insufficient working capital quotas.

After addressing the shortfall in the working capital quota allocation to enterprises according to Circular No. 57-LB/TC/NH of the Ministry of Finance and the State Bank and transferring the entire price difference of inventory materials to the enterprise's own capital according to Circular No. 46-LB/TC/NH of the Ministry of Finance and the State Bank, if there is still a shortfall compared to the working capital quota adjusted to the new price level, the following handling procedures apply:

- Supplement from the 1987-1988 production development fund.

- Mobilize other sources of capital of the enterprise.

- The state budget supplements.

If there is still a shortfall and the enterprise requests, the Bank shall provide a temporary loan for the "Insufficient working capital quota." The loan limit shall not exceed the percentage stipulated in Circular No. 46-TC/NH dated December 6, 1980, minus the debt already borrowed within the limit mentioned in Point 4, Subsection d.

The maximum loan term generally does not exceed June 1988, and this debt will gradually decrease when the state fully allocates the working capital quota to the enterprise.

The loan interest rate shall be applied according to the current interest rate table for loans within the credit limit.

5. Regarding the allocation and credit for basic construction investment (Article 38):

a) Allocation of basic construction investment by budget funds.

- The Bank shall allocate basic construction investment funds to project owners for projects within the scope of centralized national basic construction investment plans as recorded.

- Within the scope of budget funds transferred, the Bank shall allocate basic construction investment funds for each project according to the progress, completed construction volume, actual investment costs, and approved budget prices by the competent authority.

b) Allocation of basic construction investment by self-owned funds.

For basic construction projects funded by enterprise self-owned funds, the Bank shall allocate funds for payment within the scope of the unit's self-owned funds deposited with the Bank.

c) Regarding concentrated basic construction investment credit according to the state plan. - The Bank shall provide loans for basic construction investment to project owners for projects within the scope of state-defined credit, recorded in the centralized national basic construction investment plan, if the project ensures profitability and the ability to repay on time. The Bank has the right to refuse loans if it determines that the project lacks profitability and the ability to repay on schedule. The Bank provides loans based on balanced funding sources (from the budget, recovered debts, and fundraising).

- The project owner or the General Director of the enterprise (if it is an expansion investment) must submit a loan application and prepare the documentation according to the lending regulations of the Bank. After signing the loan agreement, the project owner has the right and initiative to use the borrowed funds for their intended purpose to complete and put the project into operation as planned.

- When putting the project or its components into use, the enterprise and the Bank shall determine the monthly (or quarterly) repayment amount and the final repayment period.

- Within the loan term, the enterprise shall proactively allocate the basic depreciation fund and other combined sources of the enterprise to repay the Bank on time or ahead of schedule.

- For investment loans for basic construction, the enterprise shall bear interest at the current interest rate from the date of receipt of the loan until the full repayment of the debt.

- During the period when the debt has not been fully repaid, if the enterprise wishes to liquidate, sell, lease, or lend out assets, the enterprise must immediately notify the lending Bank in writing and must fully repay the debt after liquidation or sale. The proceeds from leasing or selling the assets shall be primarily used to repay the Bank's debt.

d) Regarding technical improvement loans and production expansion (Article 39)

- To help enterprises quickly incorporate technological advancements into production,

exploit existing potential, produce additional products, improve product quality, reduce costs, and increase enterprise profits, the Bank provides technical improvement and production expansion loans to enterprises according to the following provisions:

The enterprise is an independent economic accounting unit that has stabilized production.

The technical improvement project has been tested and is certain to be productive and ensure timely repayment of the loan.

The enterprise must have its own capital as stipulated by the credit regulations to be used for purchasing and constructing; the enterprise needs to submit a loan plan to the Bank at the beginning of the planning quarter so that the Bank can proactively review and allocate funds.

The local bank must balance within the scope of planned loan funds or raise additional funds due to over-plan debt recovery for this type of loan.

- Upon receiving the loan application, the local bank must immediately examine and calculate to decide whether to grant the loan and inform the enterprise within a maximum of seven working days. If the loan is accepted, the Bank and the enterprise will sign a fixed-term credit contract to implement it together.

- The method of disbursing the loan, collecting debts... shall be handled similarly to investment loans for basic construction.

- Enterprises borrowing for technical improvements and production expansion shall bear interest at the current interest rate.

6. Regarding foreign currency credit and payment (Articles 22, 40).

a) Enterprises with foreign currency must open accounts and deposit all their foreign currency into the Vietnam Foreign Trade Bank, or the foreign exchange department of the State Bank (where there is no branch of the Vietnam Foreign Trade Bank).

- Foreign currency accounts include:

Foreign currency deposit accounts;

Foreign currency usage rights accounts.

- Interest on foreign currency deposits with terms is paid by the Bank according to the interest rate schedule published by the Vietnam Foreign Trade Bank.

b) Enterprises with foreign currency deposited in the Bank may use it to settle payments through the Bank for their customers (domestic and foreign) according to the state regulations.

c) Enterprises without sufficient self-owned foreign currency but with a need for foreign currency to import (with import permit) materials and equipment for production and business operations may be granted foreign currency loans or sold foreign currency by the Vietnam Foreign Trade Bank at the foreign trade exchange rate of the Vietnam Foreign Trade Bank. The Bank prioritizes granting foreign currency loans or sales to enterprises producing export goods, engaging in services generating foreign currency, or producing goods for counter-purchase of export goods or substitution of imported goods.

Enterprises receiving foreign currency loans from the Bank must meet the following conditions:

- The enterprise must have a project using foreign currency loans and the use of foreign currency must be effective to ensure timely repayment of both principal and interest in foreign currency to the Bank.

- The enterprise must not have overdue foreign currency debt (except in special cases decided by the General Director of the Vietnam Foreign Trade Bank).

- Must be guaranteed by the management agency regarding repayment, if required by the Bank.

- The interest rate for foreign currency loans is set by the Vietnam Foreign Trade Bank based on international credit rates plus bank surcharges.

- In case the enterprise uses the loan effectively and repays the loan ahead of schedule, the Bank may consider reducing the surcharge level. If the enterprise fails to repay the loan on time, it must bear penalty interest according to the foreign currency loan interest rate system.

d) Enterprises borrowing foreign funds (directly or through agency), if the lender requires a Bank guarantee, the Vietnam Foreign Trade Bank will consider providing a guarantee under the conditions similar to foreign currency loans (point 6, sub-section c above).

7. Regarding non-cash payments (Article 42):

- Enterprises and economic organizations with accounts at the Bank, in transactions involving the purchase and sale of goods and provision of services to each other, must make payments through bank transfers, except for small amounts that can be paid in cash according to cash management regulations.

- The enterprise has the right to choose convenient payment methods for both buyer and seller, suitable for the delivery method of materials and goods such as:

Various types of checks;

Direct debit;

Acceptance procedures;

etc., and request the Bank to circulate payment documents via the fastest means.

- Timely and accurate collection and payment according to the value of the delivered goods, immediately after the delivery of materials and goods, is the responsibility of both the buyer and seller. Delayed issuance of payment claims causes loss to the seller, while delayed payment causes the buyer to compensate the seller for losses according to the contract signed by both parties.

- The basic bank has the responsibility to disseminate and guide enterprises in selecting appropriate payment methods; accurately and immediately process payments on the same day when customers bring them, without delay if the documents contain all legal elements and are clearly recorded according to the signed purchase and sale contracts (number, date). If the payer does not have the ability to pay due to reasons, the bank must promptly inform the seller and monitor late payment penalties as prescribed. If the bank causes delays, it will also be subject to penalties as prescribed; first, the basic bank must immediately compensate the damaged party, then pursue the responsibility of individuals causing the delay.

- Enterprises that perform well in payment operations shall be granted preferential lending terms by the bank. Conversely, enterprises that consistently leave debts unresolved and lose payment credibility will be subject to mandatory payment procedures.

8. On organization and implementation.

- This Circular takes effect from January 1, 1988, replacing Circular No. 100-NH/TT dated July 28, 1986, issued by the Governor of the State Bank, and other guiding documents implementing Circular No. 100-NH/TT that conflict with the provisions of this Circular.

- Professional banks, Departments, and Committees at the Central Bank need to provide specific guidance for basic banking units to properly implement the contents of this Circular.

- Bank Directors at all levels must organize implementation within their organizations and disseminate to economic entities with which they have relations to coordinate in implementation.

Any difficulties encountered during implementation must be reported immediately in writing to the State Bank's Central Office for review and guidance on resolution.