Circular No. 14/2009/TT-NHNN detailing the implementation of interest rate support for loans to poor people and other policy beneficiaries at the Vietnam Bank for Social Policies

CIRCULAR

Detailed regulations on interest rate support for loans

 of poor people and other policy beneficiaries at the Social Policy Bank

 _______________________________

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

Pursuant to Decision No. 579/QD-TTg dated May 6, 2009 of the Prime Minister on interest rate support for loans at the Social Policy Bank;

Pursuant to Decision No. 622/QD-TTg dated May 17, 2009 of the Prime Minister on amending and supplementing Decision No. 579/QD-TTg dated May 6, 2009 of the Prime Minister on interest rate support for loans at the Social Policy Bank;

The State Bank of Vietnam hereby provides detailed regulations on interest rate support for loans of poor people and other policy beneficiaries at the Social Policy Bank (hereinafter referred to as interest rate support) as follows:

Article 1. Object and scope of application of interest rate support regulations

1. All borrowers from the Social Policy Bank under the current lending mechanism shall be eligible for interest rate support as prescribed by

2. Types of loans eligible for interest rate support include short-term, medium-term, and long-term loans of borrowers from the Social Policy Bank disbursed during the period from May 1, 2009 to December 31, 2009.

Article 2. Duration, interest rate level, and method of interest rate support

1. The maximum duration for interest rate support for each loan is 24 months, calculated from the disbursement date to December 31, 2011. Interest rate support will not be provided for periods during which the loan is overdue, extended, or exceeds 24 months.

2. Level of interest rate support for borrowers:

a) For loans with an interest rate higher than 4%/year: The level of interest rate support for borrowers is 4%/year, calculated based on the outstanding principal balance and actual loan term.

b) For loans with an interest rate equal to or lower than 4%/year: The level of interest rate support is the full interest rate on the loan amount calculated based on the outstanding principal balance and actual loan term (interest rate on the loan is 0%/year).

3. Method of implementing interest rate support: When collecting loan interest, the Social Policy Bank will deduct the supported interest amount from the borrower's payment. For loans that qualify for grace periods (such as student credit programs), the Social Policy Bank may implement reduced interest rates corresponding to the support levels and durations specified in Clause 1 and 2 of this Article at the time of interest collection.

Article 3. Procedures and responsibilities of borrowers and the Social Policy Bank

1. For borrowers with loans eligible for interest rate support:

a) Use the borrowed funds for purposes listed in the Loan Application Form and Production Plan Agreement (or equivalent document). If the funds are not used for the intended purpose, interest rate support will not be provided, and the borrower must repay the previously supported interest to the Social Policy Bank and be subject to legal penalties.

b) Comply with the Social Policy Bank's procedures for borrowing and interest rate support.

c) For corporate and cooperative borrowers, record the interest expense paid to the Social Policy Bank according to the actual amount due, after receiving interest rate support as prescribed by law.

d) Request the Social Policy Bank to provide interest rate support in accordance with the provisions of

2. For the Social Policy Bank:

a) Provide specific guidance to borrowers on procedures for obtaining interest rate support as prescribed by law.

b) Implement interest rate support for borrowers in accordance with the provisions of

c) Refuse requests for interest rate support from borrowers that do not comply with the law. Legal action will be taken against cases where interest rate support is provided contrary to the law.

d) When collecting loan interest, the Social Policy Bank will deduct the interest amount payable by the borrower equal to the supported interest amount as prescribed by law. By December 31, 2011, for medium and long-term loans that have not reached their interest payment due date, the Social Policy Bank must calculate the interest payable by the borrower and deduct the supported interest amount. The calculation and accounting of supported interest payments shall be conducted in accordance with the law.

e) Issue a certificate of interest rate support signed and stamped by both the borrower and the Social Policy Bank (signature and stamp) as evidence for verification and monitoring:

- The certificate of interest rate support shall be issued in two copies, one copy retained in the loan file, and one copy sent to the borrower. 

- The certificate of interest rate support shall contain the following information: Loan Application Form number and signing date (or equivalent document), name and address of the borrower and the lending Social Policy Bank, borrower's account number, purpose of the loan, interest collection period (time frame for interest collection), loan term and interest support term, loan interest rate, outstanding principal balance eligible for interest support, interest payable based on the loan interest rate in the Loan Application Form (or equivalent document), interest already supported for the borrower (in figures and words), signature and stamp of the borrower and the Social Policy Bank (signature for individual and household borrowers). 

- The Social Policy Bank shall specify the timing and periodic issuance of the certificate of interest rate support suitable for different types of borrowers under various programs to ensure compliance with legal requirements for interest rate support.

e) Conduct pre-loan, during-loan, and post-loan inspections to ensure that interest rate support complies with legal regulations. If it is discovered that the borrowing customer misuses the loaned funds for purposes not eligible for interest rate support, then recover the previously supported interest on the loan; if recovery is not possible, report to the competent state authority for handling or initiate legal proceedings against the borrower's breach of loan commitment.

- Quarterly interest rate support plan registration form model 01 attached in this Circular, to be submitted no later than the 15th day of the first month of each quarter; the third quarter 2009 interest rate support plan registration form must be submitted no later than July 25, 2009.

- Quarterly report on the implementation of interest rate support according to models 02 and 03 attached in this Circular, to be submitted no later than the 15th day of the first month following the reported quarter, ensuring accuracy and timely submission. Reports on the implementation of interest rate support for May and June 2009 must be submitted no later than July 30, 2009.

i) Retain loan files receiving interest rate support in accordance with legal regulations.

Article 4. Responsibilities of the State Bank of Vietnam

2. Coordinate with the Ministry of Finance and other relevant ministries and sectors to conduct inspections and oversight of the implementation of interest rate support in compliance with current legal provisions governing the operations of the Social Policy Bank and the interest rate support mechanism.

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

c) Banking Supervision Authority: Conduct supervision, inspection, auditing, and handling within its authority or recommend authorities with jurisdiction to handle when violations of legal regulations on interest rate support by the Social Policy Bank or borrowers are detected.

d) Branches of the State Bank in provinces and centrally-administered cities: Conduct inspections, supervision, and audits within their authority regarding the implementation of legal regulations on interest rate support and report and propose solutions to the Governor of the State Bank of Vietnam and the Chairman of the People's Committee of the province or centrally-administered city for handling arising issues.

State-owned enterprises that have been assigned by the Ministry of Agriculture and Rural Development to conduct offshore wind power project surveys before the effective date of this Circular shall continue to implement according to the assigned documents; any new matters arising after the effective date of this Circular shall be implemented in accordance with the provisions of this Circular.

1. This Circular takes effect from May 6, 2009.

2. The Director of the Office, Heads of the Department of Monetary Policy and Units under the State Bank, Governors of State Bank branches in provinces and centrally-administered cities, Chairmen of the Board of Directors and General Directors of the Social Policy Bank, and borrowers at the Social Policy Bank are responsible for implementing this Circular.