Decision No. 18/2000/QĐ-BNNPTNT/CS on issuing supplementary provisions to the regulations issued pursuant to Decision No. 13/1998/BNN-QĐ/CS dated January 16, 1998 regarding credit and savings for Group 2 Credit-Savings Program under the Vietnam-Sweden Rural Development Program in Mountainous Areas.

 

Pursuant to …;

Regarding the issuance of Supplementary Provisions to the Regulations issued pursuant to

Decision No. 13/1998/BNN-QĐ/CS dated January 16, 1998 on credit and savings for Group 2 Credit-Savings, the Vietnam-Sweden Rural Development Program

And development of mountainous rural areas in Vietnam

Based on Decree No. 73/CP dated November 1, 1995 of the Government on the functions, tasks, powers, and organizational structure of the Ministry of Agriculture and Rural Development;

THE MINISTER OF AGRICULTURE AND RURAL DEVELOPMENT

Based on the decision establishing the Steering Committee for the Rural Development Program in Mountainous Areas of Vietnam-Sweden, dated February 12, 1996;

Considering the proposal of the Director of the Policy Department under the Ministry of Agriculture and Rural Development, the Director of the Project to Strengthen Institutional Advisory Capacity at the Ministry Level, and the Director of the Steering Committee Office.

Now, we hereby issue the Supplementary Provisions to the Regulations issued pursuant to Decision No. 13/1999/BNN-QĐ/CS dated January 16, 1999 on credit and savings for Group 2 Credit-Savings, the Vietnam-Sweden Rural Development Program 1996-2000.

Pursuant to …;

Article 1. This Decision shall take effect fifteen days from the date of signature, all previous project documents that conflict with these provisions shall be nullified.

Article 2. The Chief of the Ministry's Office, the Director of the Policy Department, the Directors of the Rural Development Projects in Lao Cai, Yen Bai, Ha Giang, Tuyen Quang, Phu Tho Provinces; the Project to Strengthen Institutional Advisory Capacity at the Ministry Level, and the Director of the Steering Committee are responsible for implementing this Decision.

Article 3. - To be filed with the Office, CS, PC.

 

 

REGULATIONS

dated January 16, 1998 on credit and savings for

Group 2 Credit-Savings,

the Vietnam-Sweden Rural Development Program

(Issued together with Decision No.: 18/2000/QĐ-BNN-CS
dated March 3, 2000 of the Minister of Agriculture and Rural Development)

Article 1. Conditions for Recognizing Group Type 2

PART I

ORGANIZATION AND MANAGEMENT

1. The Group Type 2 referred to in these Provisions must meet the classification criteria for Credit-Savings Groups as stipulated in Decision No. 13/1999/BNN-QĐ/CS.

2. The dossier for the Group applying for recognition as a Group Type 2 includes:

a. Application form for recognition and conversion to Group Type 2 operation mechanism.

b. Minutes of the Group meeting with confirmation from the People's Committee of the commune regarding the Group's application for recognition and conversion to Group Type 2 operation mechanism.

c. Revised Group agreement consistent with the organizational and operational content of Group Type 2 Credit-Savings, confirmed by the People's Committee of the commune; (Model No. 01/TD-N2)

d. List of members and Group management board confirmed by the People's Committee of the commune;

e. Certificates recognizing the Group Leader, Accountant, and Cashier who have completed training courses on managing Group Type 2 provided by the Program;

f. Evaluation report on the Group's credit and savings activities by the Project Management Board at the district level, confirmed by the credit officer of the provincial project (Model No. 02/TD-N2).

3. The Group shall submit the above documents through the Head of the District Project Management Board for review. Afterward, the Head of the District Project Management Board shall submit the documents along with the recommendation to the Provincial Project Director.

The Provincial Project Director, based on the recommendation of the Head of the District Project Management Board and the accompanying documents, if satisfied that the Group meets the Program's standards, shall issue a decision recognizing the Group as meeting the Group Type 2 standards of the Program.

4. From the date of recognition, the Group shall enjoy benefits and operate according to the Group Type 2 mechanism of the Program.

4/ Group shall enjoy the incentives and operate under the second type group mechanism of the Program from the date of recognition.

Article 2. Group Organization

In addition to general issues as prescribed in Decision No. 13/1999/BNN-QĐ/CS, the Group's Agreement shall include provisions on the following matters:

1. The Group may be divided into TD-TK Teams based on village areas. Each team elects one team leader to represent the team’s relations with the Group and other relations. The functions of the TD-TK Team are as stipulated in the Program.

2. Establish a Loan Committee for the Group consisting of the Group Leader and the TD-TK Team Leaders. The Group Accountant cannot concurrently serve as a TD-TK Team Leader and therefore cannot be a member of the Loan Committee. The Head of the Loan Committee is also the Group Leader. The main function of the Loan Committee is to review loan application files submitted by the TD-TK Teams to issue a Loan Committee Review Report. The Loan Committee has other functions as specified in the Group's Agreement.

For Groups with fewer members that do not divide into TD-TK Teams, the Group Management Board assumes the functions of the Loan Committee.

3. Each Group elects one member to serve as the Group Monitor. The main tasks of the Group Monitor include:

- Checking and supervising the implementation of the Group's Agreement, decisions, resolutions of the Group and the Loan Committee, and Program regulations;

- Reviewing the Group's financial reports.

The Group Monitor has other functions as specified in the Group's Agreement. The Group sets aside a portion of the Management Fund to pay remuneration to the Group Monitor.

4. Group Members

The Group prepares a list and obtains signatures from individuals who are Group Members on the day the Group applies to be recognized as a Type 2 Group. This list is included in the Group's application file for recognition as a Type 2 Group.

5. Admitting New Members

Individuals wishing to join the Group after it has been converted to a Type 2 Group must submit an application for the Group to consider and pay the full amount of 30,000 VND for membership shares.

6. The Group's Agreement should clearly specify procedures for convening Group meetings to make resolutions on interest rates, loan terms and amounts, savings mobilization, debt collection methods, interest collection, debt extension, early debt recovery, overdue debt transfer, and other important matters. Specifically regarding overdue debts, the Group's Agreement may provide for deduction from the member household's share capital to recover the debt.

Article 3. Financial Affairs of the Group

1/ Group Fund

The Group Fund belongs to the Group and is formed from the following sources:

a/ Member Share Capital;

b/ Amounts set aside annually from profits to supplement the Group Fund;

c/ Amounts awarded by the Program to the Group;

d/ Other revenues allocated to the Group Fund.

2/ Interest Retained in the Group Fund from July 1, 1996 to the date the Group is recognized as a Type 2 Group is common property of the Group and transferred to the Group Fund.

3/ After being recognized as a Type 2 Group, the decision on awarding retained Program interest to the Group at the end of each year is made by the Provincial Project Director after evaluating the Group's activities. If the Group operates poorly and/or violates Program regulations, this award will be temporarily withheld until the Project determines that the Group has fully addressed all deficiencies.

4/ Compulsory Savings

Depending on specific circumstances, the Group's Agreement may stipulate that Group Members must contribute compulsory savings, including the form and level of such contributions.

5/ Member Share Capital

Each Group Member must have at least one share of 30,000 VND. All compulsory savings are converted into member shares, each share valued at 30,000 VND and registered under the name of the household representative. No household member can hold more than 20% of the total value of the Group's shares. The number of shares held by each Group Member is recorded in the Member Share Register (Form 10/TD-N2). The Group tracks member shares in a separate accounting book (Form 11/TD-N2).

6/ Handling Shares When a Member Leaves the Group

A member leaving the Group is entitled to receive their share capital back after deducting any outstanding debts and related joint liability obligations towards the Group.

7/ Transfer of Shares

Depending on specific circumstances, the Group's Agreement may allow or prohibit the transfer of shares. If the Group's Agreement allows the transfer of shares, such transfers must be conducted internally among Group Members and reported to the Group Management Board.

Chapter II

LOANS

Section 1

GROUP LOAN PROJECT

Article 4. Loan Amount

The Project bases its loan amount for each Group on its credit funding capacity, borrowing needs, and management capabilities of the Groups. For Type 2 Groups, the Project applies Model 04/TD-N2.

Article 5. Loan Term and Debt Recovery

The maximum loan term provided by the Project to the Groups is 24 months. The Project recovers the loaned capital from the Groups in two installments: the first installment being 40% of the loaned capital, collected midway through the loan term, and the second installment being the remaining capital, collected at the end of the loan term. If necessary, the Group may request the Project to extend the debt repayment period. The Group submits a request for debt extension according to Model 09/TD-N2.

Article 6. Interest and Allocation of Interest Rates

1/ The interest rate for Type 2 Groups borrowing from the Project and the allocation of interest rates for loans from Program funds shall be regulated as stipulated for Type 1 Groups.

The Group must submit all interest earned from Program funds to the Project. Quarterly, the Project will aggregate the submitted interest to allocate it according to the prescribed ratios. Based on the annual assessment results, the Project will decide to reward the Group with a portion of the interest paid into the Program for that year.

2/ Allocation of interest from savings funds and other income allocations

Annually, on December 31, the Group consolidates various income sources:

a/ Income from lending by the Group Fund;

b/ Interest income from savings lending;

c/ Interest differential income from lending above the prescribed rate of 1% from Program funds lent to the Group;

d/ Bank deposit interest income and other income.

The Group's agreement specifies the priority order and allocation ratio of Group income for various expenditures within the Group.

The Group cannot set a share interest rate lower than the savings deposit interest rate for a 12-month term and higher than the lending interest rate applied to loans over 12 months for the Group.

Section 2

GROUP LOANS TO MEMBERS

Article 7. Regulations on Loan Approval

1. Principles for Issuing the Loan Assessment Minutes by the Loan Committee

The Loan Committee issues the Loan Assessment Minutes (Model 05/TD-N2) based on voting principles. The Loan Committee’s assessment opinion becomes effective when all participating members are present and at least two-thirds of the members approve it.

In cases where loan approval requires a Group Resolution, such decisions must be made through a Group meeting. The Group Leader bases the loan approval resolution of the Group (Model 06/TD-N2) to proceed with the loan issuance.

2. The Group Leader bases the Loan Committee’s assessment minutes of the Group regarding the review of loan applications to sign the loan application files. The Group Leader may not unilaterally issue loans without the Loan Committee’s assessment.

The Group Agreement specifies specific situations requiring a Group meeting to approve the Loan Committee’s assessment minutes before the Group Leader signs the loan application files.

3/ The Loan Committee bases its loan assessment on the Group Agreement and Program regulations. The Group Leader bases the Loan Committee’s assessment minutes to sign off on specific loan cases. In all cases, the Group Leader and the Loan Committee may not lend to non-members. Any loans resulting in unrecoverable losses due to the Group Leader or the Loan Committee intentionally lending to non-members or other cases violating Program and Group Agreement regulations, if caused by the Group Leader, the Group Leader must bear full responsibility to repay the Group, if caused by the Loan Committee, the Loan Committee must bear full responsibility.

4/ Cases involving debt extension, overdue debt transfer, handling of unrecoverable debts, and risk management are decided by the Group Management Board according to the Group Agreement regulations.

Article 8. Conditions for Loans

1. The group's agreement must specify specific conditions for members to borrow funds from the Group.

2. Depending on specific circumstances, the group's agreement may stipulate collateral conditions for certain types of loans; however, the group should not impose collateral conditions for small loans to extremely poor households, especially those headed by women.

Article 9. Loan Application Documents of Members to the Group

The loan application documents of members to the Group include:

1. A loan application form (Form No. 03/TD-N2), with one copy submitted to the Head of the TD-TK Team.

2. Minutes of the TD-TK Team's assessment for granting loans, with two copies made, one retained by the Team and one submitted to the Group Leader.

3. Credit Contract (Form No. 08/TD-N2): prepared in two copies, one kept by the Group and one by the member.

Article 10. Loan Amounts, Terms, and Interest Rates

1. Loan Amounts

Each member can be granted a maximum loan amount of up to five million dong from the Program's capital. The loan amount from the Group's capital is determined by the Group itself.

2. Loan and Repayment Periods

The Group must establish appropriate periods for members to borrow and repay loans to ensure timely repayment of Program loans and meet production and business needs. The maximum loan period granted by the Group to members shall not exceed twenty-four months.

3. Interest Rates

The Group must agree on a uniform interest rate for members regardless of whether the loan is from savings capital, Program capital, or the Group Fund. The maximum interest rate is 1.5%, and the minimum is 1%. The group's agreement may provide for the Drafting Committee to propose interest rates for different terms and specific loan amounts for discussion and decision at group meetings. The group's agreement may also specify specific preferential loan terms for extremely poor households, particularly those headed by women.

Chapter III

INSPECTION AND REPORTING REGIME

Article 11. Financial Reporting and Transparency of the Group

All income of the Group is the common property of the Group. Quarterly, the Group Management Board must publicly report the Group's financial situation to its members. The content of financial transparency includes: consolidated reports on income and expenses; reports on sources and use of capital; lists of borrowing members and overdue debt situations.

Article 12. Inspection, Supervision, and Reporting

1. Inspection, Supervision, and Reporting by Provincial Project Credit Officers

Quarterly, provincial credit officers must inspect, review, and prepare reports evaluating the credit and savings activities of each district.

Annually, the provincial project coordinates with the district project management board to assess organizational management and operations of groups at year-end and prepare minutes assessing the performance of each Type 2 TD-TK Group in the province as a basis for considering rewards from the Program's retained interest for that year.

2. Inspection, Supervision, and Reporting by District Project Credit Officers

a. Within ten days after each disbursement by the project to the TD-TK Group, the district project management board must submit a report on the disbursement situation to the provincial project.

b. Quarterly, the district project management board must inspect, supervise, and prepare reports on the credit and savings activities of each TD-TK Group in the district and send them to the provincial project via the MILS system.

3. Reports by the Group

a. Within one week after each disbursement, the Group must report the disbursement situation to the district project management board and commune.

b. Quarterly, the Group must report to the district project management board and commune through the MILS reporting system.

Chapter IV

IMPLEMENTATION PROVISIONS

Article 13. Type 2 TD-TK Groups, in addition to complying with this Regulation, must also adhere to the general provisions issued together with Decision No. 13/1999/BNN-QĐ/CS dated January 13, 1998./.