Circular No. 2-NH/TT guiding the implementation of Decree No. 178-HĐBT dated December 25, 1984 of the Council of Ministers on amending certain interest rates for deposits and loans of the State Bank and credit cooperatives

CIRCULAR

STATE BANK OF VIETNAM

Guidelines for Implementing Decree No. 178-HĐBT
dated December 25, 1984 of the Council of Ministers on Amending Certain Interest Rates for Deposits and Loans of the State Bank and Credit Cooperatives

The Central State Bank guides specific issues to implement Decree No. 178-HĐBT of the Council of Ministers as follows:

1. The basic spirit of the Decree is to vigorously mobilize monetary capital from the people to both increase the loan fund and gradually achieve balance between money and goods in the initial stage of the transitional period.

The State increases interest rates on socialist social savings deposits, people's deposits, and credit cooperative loans to create better conditions for capital mobilization. Basic banks need to consistently strengthen capital sourcing work, widely disseminate the State's policies on capital sources and interest rates among the people, take advantage of leadership from local party committees and governments, and closely cooperate with various sectors and mass organizations during the process of mobilizing the people to deposit money in banks and credit cooperatives.

2. Properly implement the interest rates and social savings deposits according to the forms of socialist savings, people's deposits in credit cooperatives, and credit cooperative loan interest rates, specifically as follows:

a) Unfixed-term savings with interest (no bonus): the interest rate paid to depositors is 24% per year, or 2% per month.

b) Fixed-term savings

- From three to five years: the interest rate paid to depositors is 30% per year, or 2.5% per month;

- Fixed-term savings of five years or more: the interest rate paid to depositors is 36% per year, or 3% per month.

c) Savings with interest and lottery (200 dong, 500 dong, and 1000 dong); the interest rate is 24% per year, or 2% per month, with 50% used to pay interest and the remaining 50% used for monthly lottery draws (specific guidelines will be provided).

d) Short-term loan interest rates of the bank for individual producers and private businesses.

Decree No. 178-HĐBT dated December 25, 1984 of the Council of Ministers stipulates the framework for loan interest rates for individual workers borrowing for production at 24% to 54% per year, or 2% to 4.5% per month; for members of cooperatives and state employees (including armed forces personnel) engaged in family economic activities at 24% to 48% per year, or 2% to 4% per month; and for other types of individual producers and private businesses at 36% to 60% per year, or 3% to 5% per month.

Within this interest rate range, the State Bank specifies the minimum rates as follows:

- Loan interest rates for individual workers borrowing for agricultural, forestry, fishery, salt-making production, and cooperative members engaged in family economic activities is 30% per year, or 2.5% per month; for small-scale industrial and transport producers is 36% per year, or 3% per month; and for small traders is 48% per year, or 4% per month.

- Loan interest rates for family economic activities and consumer loans for state employees is 24% per year, or 2% per month.

- Loan interest rates for other types of individual producers and private businesses: for small business owners is 54% per year, or 4.5% per month; and for industrial private entrepreneurs is 60% per year, or 5% per month.

e) Long-term loan interest rates of the bank for individual producers and private businesses.

- Long-term loan interest rates for individual agricultural, forestry, fishery, and salt-making producers is 24% per year, or 2% per month;

- Long-term loan interest rates for small-scale industrial and transport producers is 30% per year, or 2.5% per month.

f) Deposit and loan interest rates of credit cooperatives:

- For credit cooperatives, the State encourages and creates conditions for credit cooperatives to vigorously mobilize capital while expanding lending and business operations based on the principle of self-financing, covering all expenses, and generating profit. In guiding implementation, the activities of credit cooperatives must be closely linked to the development and consolidation of collective organizations in production, circulation, and living conditions in communes, promoting the positive role of credit cooperatives in combating usurious lending, helping the working people to have additional capital for family economic development, and alleviating some difficulties in their lives.

Based on that spirit, the Council of Ministers has set the maximum interest rate for people's deposits mobilized by credit cooperatives at 60% per year, or 5% per month; and for credit cooperative loans at 72% per year, or 6% per month.

- Based on the maximum interest rates set by the Council of Ministers, the Governor of the State Bank guides the differentiation of credit cooperative interest rates as follows:

For deposits, shares at 18% per year, or 1.5% per month; social group deposits and other deposits at 24% per year, or 2% per month; people's deposits from 36% to 60% per year, or from 3% to 5% per month.

For loans, production loans at 36% to 48% per year, or from 3% to 4% per month; consumption loans at 48% to 60% per year, or from 4% to 5% per month; other loans at 72%, or 6% per month.

Within the specific interest rate guidance above, the director of the provincial, city, and central special zone branches of the State Bank, based on the actual situation in the locality, studies and proposes the Chairman of the People's Committee of the province, city, and central special zone to specify the interest rates for each region and time period for credit cooperative deposits and various types of loans, ensuring the requirements for promoting production development, improving people's living standards, and enabling credit cooperatives to cover all costs and generate profits. It is necessary to guide, direct, and manage the interest rates for deposits and loans for each credit cooperative, ensuring the vigorous mobilization of capital; at the same time, mobilization must still be closely linked to expanding lending, adjusting interest rates reasonably to avoid idle capital, and ensuring that credit cooperatives operate and conduct business profitably.

- Types of tasks delegated to the State Bank such as collecting and paying out social savings deposits, cash collection and payment, debt collection... shall enjoy commission fees as prescribed by the State Bank.

- Types of agency work entrusted to the State Bank such as collecting and paying out savings deposits, receiving and remitting cash, collecting debts... shall be entitled to commission fees in accordance with the provisions of the State Bank.

- Credit cooperatives need to calculate and utilize the raised capital, intensify lending; besides the main borrowing targets being family economies of cooperative members, they may expand lending for part of the working capital needs of trading cooperatives within the commune and part of the production costs of agricultural production cooperatives within the commune, if these cooperatives require loans from credit cooperatives.

AT Cities and towns need to develop and consolidate grassroots savings funds capable of mobilizing people's savings deposits and lending to family economies; in cases where wards in cities and towns need to establish credit cooperatives, such credit cooperatives shall operate according to the charter of credit cooperatives already issued and comply with deposit and lending interest rates stipulated in this Circular, and may expand lending for part of the production costs of production groups, small and handicraft cooperatives, and part of the working capital needs of trading and consumption cooperatives, if they require loans from ward credit cooperatives.

3. Implementation:

a) The deposit and lending interest rates of the State Bank and credit cooperatives, as newly prescribed by the Council of Ministers and specifically guided in this Circular, shall take effect uniformly nationwide from January 1, 1985.

b) The excess amounts of savings deposits and outstanding debts belonging to the borrowing targets mentioned in points d, đ, e of Clause 2 of this Circular shall be carried over to 1985 and calculated at the new interest rate from January 1, 1985.

c) Current savings forms that change interest rates from January 1, 1985 shall be converted to new applicable forms (without needing to issue new books), as follows:

- Interest-bearing current savings with bonuses shall be converted to interest-bearing current savings, applying an annual interest rate of 24%;

- Savings with terms of 3 to 5 years shall be calculated at an annual interest rate of 30%. Savings with terms of 5 years or more shall be calculated at an annual interest rate of 36%.

- Fixed amount savings with prior bonuses of 200 dong shall be converted to interest-bearing and bonus savings of the new 200 dong type.

d) Chairmen of People's Committees of provinces, cities, and centrally governed special zones shall concretize the deposit and lending interest rates of credit cooperatives within the prescribed interest rate range and strengthen guidance for credit cooperatives to expand capital sources and lending activities to achieve high efficiency, closely linking the activities of credit cooperatives with those of production cooperatives, production groups, and trading cooperatives within the commune, and with the lives of commune residents.

đ) The Director of the Branch of the State Bank of Vietnam under the central government must direct basic banks to organize statements of series of savings cards, certificates, loan contracts, and reconcile them with customers to ensure accuracy, record the new interest rates on related subsidiary ledgers to calculate interest correctly. (These tasks must be completed in the first quarter of 1985).

The method of calculating interest based on old interest rates for balances of various types of savings and loans before December 31, 1984, and the method of calculating interest based on new interest rates from January 1, 1985 onwards shall be implemented strictly according to Circular No. 86-NH/TT dated October 26, 1983, of the General Director of the State Bank.

e) This Circular takes effect from January 1, 1985; previous regulations contrary to the provisions of this Circular cease to be effective.

Under conditions where there is a significant difference in deposit and lending interest rates between banks, socialist social savings systems, and credit cooperatives, it is necessary to strengthen inspection work, particularly internal management, promptly detect and resolutely punish those who abuse and embezzle.

During implementation, if difficulties arise, localities need to promptly reflect them to the Central State Bank for unified consideration and resolution.