Circular No. 14/2010/TT-NHNN detailing the implementation of Government Decree No. 41/2010/NĐ-CP dated April 12, 2010 on credit policies to serve the development of agriculture and rural areas.

CIRCULAR

Detailed guidance on implementing Decree No. 41/2010/NĐ-CP dated April 12, 2010 of the Government on credit policies to serve agricultural and rural development.

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Based on the Law on the State Bank of Vietnam dated December 12, 1997 and the Law Amending and Supplementing Certain Articles of the Law on the State Bank of Vietnam dated June 17, 2003;

Based on the Law on Credit Organizations dated December 12, 1997 and the Law Amending and Supplementing Certain Articles of the Law on Credit Organizations dated June 15, 2004;

Pursuant to Decree No. 96/2008/NĐ-CP dated August 26, 2008 of the Government stipulating the functions, tasks, powers, and organizational structure of the State Bank of Vietnam;

Based on Decree No. 41/2010/NĐ-CP dated April 12, 2010 of the Government on credit policies to serve agricultural and rural development;

The State Bank of Vietnam provides detailed guidance on implementing Decree No. 41/2010/NĐ-CP dated April 12, 2010 of the Government on credit policies to serve agricultural and rural development (hereinafter referred to as Decree No. 41/2010/NĐ-CP) as follows:

Article 1. Scope and Applicability  

1. The organizations that are allowed to provide loans to serve agricultural and rural development include:

a) Credit institutions operating in accordance with the Law on Credit Organizations shall provide loans to serve agricultural and rural development in accordance with this Circular and relevant laws;

b) Small financial organizations and banks, financial organizations established by the Government to implement loans according to state policy, shall provide loans in accordance with specific regulations of the Government and this Circular.

2. The scope of organizations and individuals borrowing funds to serve agricultural and rural development is stipulated in Clause 2, Article 2 of Decree No. 41/2010/NĐ-CP as follows:

a) Customers specified in Points b, c, and đ must reside and have production bases or projects in rural areas;

b) Customers specified in Point e must have production and business bases in rural areas and the purpose of borrowing must be for the operation of these production and business bases.

Article 2. Sources of Loan Funds

1. The sources of loan funds for credit institutions and financial organizations for the agricultural and rural sector include:

a) Capital raised by credit institutions and financial organizations for lending;

b) Borrowed capital and sponsored capital entrusted by domestic and foreign financial and credit organizations;

c) Entrusted capital from the Government for lending to the agricultural and rural sectors: Credit institutions must implement lending using the Government's entrusted capital in accordance with the contents entrusted by the Government;

d) Loans from the State Bank: The State Bank of Vietnam (State Bank) will lend capital to credit institutions to implement lending in the fields prescribed in Article 4 of Decree No. 41/2010/NĐ-CP in the form of refinancing in accordance with current laws. Credit institutions must use the borrowed capital for the purposes specified in this Circular and fulfill their commitments to the State Bank.

2. Banks and financial organizations providing loans to target groups and government economic programs in rural areas shall be guaranteed funding for lending transferred from the state budget or subsidized interest rate difference between deposit and lending rates of credit institutions by the Government.

2. Banks and financial organizations lending to policy-targeted subjects and government economic programs in rural areas shall be guaranteed funding for loans transferred from the state budget or compensated for the difference between deposit interest rates and lending interest rates by the Government.

Article 3. Guarantee Mechanism for Loan Repayment

1. Credit institutions and financial organizations providing loans to support agricultural and rural development as stipulated in Decree No. 41/2010/NĐ-CP shall consider and decide on granting loans with collateral or without collateral according to the current laws on secured transactions and banking operations. In cases where loans are granted without collateral, credit institutions shall base their specific conditions for unsecured loans and the maximum amount of such loans on the characteristics and operational conditions of their own organization, suitable for each borrowing customer.

2. Individual customers, households, cooperatives, business households, cooperatives, and farm owners in rural areas may be granted unsecured loans to implement production or business plans/projects within the fields specified in Decree No. 41/2010/NĐ-CP, subject to the following limits:

a) Up to VND 50 million for individuals, households, cooperatives, and agricultural, forestry, fishery, and salt industry producers;

b) Up to VND 200 million for business households and producers engaged in trades or services supporting agriculture and rural areas;

c) Up to VND 500 million for cooperatives and farm owners in the agricultural and rural sectors.

3. Borrowers receiving unsecured loans as stipulated in Clause 2 of this Article must comply with the current lending principles and conditions and submit the original Certificate of Land Use Rights; if they have not been issued a Certificate of Land Use Rights, the borrower must obtain from the People's Committee of the commune one original (unique) certificate confirming that they have not been issued a Certificate of Land Use Rights and that there is no dispute over the land.

4. Borrowers can only obtain unsecured loans from one credit institution and are responsible under the law for the loans granted according to Clauses 2 and 3 of this Article.

5. Credit institutions may grant loans secured by personal guarantees from political and social organizations for individuals and households to implement production, business, and service plans according to the Civil Code and current regulations on lending and loan guarantees.

Article 4. Loan Term and Interest Rate

1. Based on the growth period of livestock and crops, capital turnover time, and the ability of borrowers to repay debts, credit institutions and borrowers shall agree on a suitable loan term.

2. Credit institutions and financial organizations providing loans for the agricultural and rural sectors shall apply the interest rates prescribed in Article 11 of Decree No. 41/2010/NĐ-CP.

Article 5. Classification of Debts, Provisioning, and Utilization of Provisions for Handling Credit Risks

1. Credit institutions providing loans for the agricultural and rural sectors shall classify debts, provision, and utilize provisions for handling credit risks according to the State Bank's regulations on debt classification, provisioning, and utilization of provisions for handling credit risks in lending activities to support agricultural and rural development.

2. Loan files for agricultural and rural development purposes shall be separately monitored as a basis for managing, inspecting, and supervising the process of debt classification and the establishment and utilization of risk provisions.

Article 6. Restructuring Debt Terms and New Lending

1. In cases where customers face financial difficulties due to objective reasons and are unable to repay their debts on time to credit institutions, the credit institution shall consider restructuring the debt terms for the customer in accordance with the regulations.

2. In cases where customers have restructured debts at credit institutions but have a need for new loans for production, business operations, or to address the aftermath of natural disasters or epidemics, the credit institution shall base its decision to grant new loans on the feasibility and effectiveness of the project and the customer's business plan, without being dependent on overdue balances from previous loans.

Article 7. Risk Management of Credit Institutions towards Customers

1. In cases where risks arise under normal business conditions, the credit institution shall handle the risk from its own risk reserve fund according to the regulations.

2. In cases of widespread natural disasters or epidemics (based on announcements by competent authorities), the credit institution shall base its decision to suspend interest calculation on the extent of damage and the customer's ability to repay. For customers suffering severe losses and facing significant difficulties in repaying bank loans on time, the suspension period without interest calculation shall not exceed two years for outstanding balances at the time of the disaster or epidemic occurrence. The amount of interest suspended by the credit institution for the customer shall be deducted from the taxable income (taxable profit) of the credit institution.

3. Suspended debt files shall be managed and monitored separately by the credit institution to facilitate the supervision process of the suspended debt.

4. The Chairman of the Board of Directors and the General Director (Director) of the credit institution shall bear legal responsibility for suspending debt for customers in accordance with Clause 2 and Clause 3 of this Article.

Article 8. Process for Handling Widespread Debts Arising from Objective Reasons

1. In cases where widespread risks arise due to objective reasons, exceeding the capacity of credit institutions, branches of credit institutions, people's credit funds, and small-scale financial organizations in the locality, they shall report to the State Bank branch of the province or centrally-administered city (State Bank branch of the province or centrally-administered city). The State Bank branch of the province or centrally-administered city shall compile and report to the State Bank and the People's Committee of the province or centrally-administered city on the situation of losses affecting loan balances of credit institutions in the locality to serve as the basis for submitting to the Prime Minister for consideration and handling.

2. Credit institutions shall compile the situation of losses affecting credit balances throughout the system to report to the State Bank, and send copies to the Ministry of Finance and the Ministry of Planning and Investment.

3. The State Bank shall coordinate with the Ministry of Finance and relevant units to consider presenting mechanisms for handling risks in specific cases to the Prime Minister.

Article 9. Insurance in Agriculture

Credit institutions shall establish policies for waiving or reducing interest rates for customers borrowing capital in the agricultural and rural sectors who participate in purchasing insurance, aiming to apply lower interest rates than those applicable to loans from customers who do not purchase insurance.

Article 10. Responsibilities of Credit Institutions

1. Provide clear guidance on agricultural and rural lending with simple procedures suitable for rural customers and ensure safety and effectiveness.

2. Develop policies to waive or reduce interest rates for customers who purchase risk insurance in agriculture within the scope of borrowing from credit institutions.

3. Formulate plans to expand their network operations in remote, mountainous, and rural areas, diversify loan forms and service provision for rural residents in accordance with current laws.

4. Proactively coordinate with local authorities and social-political organizations in disseminating information and promoting lending policies, implementing loans, recovering debts, and supervising the use of borrowed funds to ensure safety and effectiveness.

5. Closely cooperate with social-political organizations in implementing unsecured lending to individual and household customers as stipulated in Clause 5, Article 3 of this Circular; agree to delegate authority to social-political organizations to handle all or part of the credit business based on ensuring the efficiency of investment credit.

6. Report monthly (no later than the 10th day of the following month) to the State Bank of Vietnam (Credit Department) on the results of agricultural and rural lending according to the corresponding forms (Form 02 and Form 03) attached to this Circular.

Article 11. Responsibilities of Borrowers

1. Provide complete and truthful information and documents related to borrowing and be responsible for the accuracy of the provided information and documents.

2. Use borrowed funds for the intended purpose and repay principal and interest in accordance with agreements with credit institutions.

3. Comply with relevant laws when borrowing from credit institutions.

Article 12. Responsibilities of Units under the State Bank

1. Monetary Policy Department

a) Based on the total amount of annual funds approved, submit to the Governor of the State Bank of Vietnam (Governor) for allocation a certain amount of funds to implement refinancing for the agricultural and rural sectors;

b) Submit to the Governor to utilize mandatory reserve tools to facilitate support for capital sources for credit institutions lending for agricultural and rural development; coordinate with the Credit Department and Trading Division to organize refinancing and rediscounting in accordance with regulations.

2. International Cooperation Department

a) Lead and coordinate with relevant ministries and sectors to mobilize financial resources from international financial organizations for lending to develop the agricultural and rural sectors;

b) Actively and coordinate with relevant ministries and sectors to accelerate disbursement progress, propose measures to resolve issues and obstacles in implementing investment projects for the agricultural and rural sectors.

3. Credit Department

a) Establish discount and rediscount limits of the State Bank of Vietnam for banks lending in the agricultural and rural sectors; advise the Governor on refinancing credit institutions to invest in the agricultural and rural sectors;

b) Coordinate with relevant units to implement economic programs and credit programs of the Government for the agricultural and rural sectors;

c) Lead and coordinate with the Ministry of Finance in reviewing and re-examining the files submitted by credit institutions for handling losses due to natural disasters and epidemics affecting wide areas; advise the Governor to propose measures to handle debts resulting from losses suffered by credit institutions;

d) Report monthly to the Governor on the results of lending to the agricultural and rural sectors.

4. Banking Inspection and Supervision Authority

a) Develop policies to encourage credit institutions to open branches and transaction offices in rural areas (especially remote and mountainous regions) in a more favorable manner compared to urban areas;

b) Conduct inspections and supervision of agricultural and rural lending in accordance with the law.

5. Trading Division

Directly carry out specific operations regarding discounting, rediscounting, and refinancing for credit institutions in agricultural and rural lending in accordance with regulations.

6. State Bank Branches in Provinces and Cities

a) Summarize and report to the State Bank on widespread risks arising from objective factors in their jurisdiction and advise provincial and city People's Committees to submit to competent authorities for resolution;

b) Implement tasks related to agricultural and rural credit policies in accordance with their functions and responsibilities or as assigned by the Governor;

c) Summarize monthly (no later than the 10th day of the following month) the results of agricultural and rural lending in their jurisdiction to report to the State Bank (Credit Department) using Form 01 attached.

Article 13. Implementation Provisions

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

2. The Director of the General Office, Heads of the Credit Department, Heads of relevant units under the State Bank, Governors of State Bank Branches in Provinces and Cities, Chairmen of the Boards of Directors, and General Managers (Directors) of credit institutions and related financial organizations are responsible for implementing this Circular./.