Circular No. 24/2009/TT-NHNN detailing the implementation of interest rate support for organizations and individuals borrowing medium and long-term loans from the Vietnam Development Bank and the Local Investment Fund to implement new investment projects for production and business development.

CIRCULAR

Detailed regulations on interest rate support for organizations and individuals borrowing medium and long-term loans from the Vietnam Development Bank and local investment development funds

to implement new investment projects to develop production and business activities

To implement new investment projects to develop production and business activities

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

Pursuant to Decision No. 443/QĐ-TTg dated April 4, 2009 of the Prime Minister on interest rate support for organizations and individuals borrowing medium and long-term loans from banks to implement new investment projects to develop production and business activities; the guidance of the Prime Minister in Document No. 670/TTg-KTTH dated May 5, 2009 regarding the implementation of Decisions No. 131/QĐ-TTg dated January 23, 2009 and Decision No. 443/QĐ-TTg dated April 4, 2009;

The State Bank of Vietnam hereby provides detailed regulations on interest rate support for organizations and individuals borrowing medium and long-term loans in Vietnamese dong from the Vietnam Development Bank and local investment development funds to implement new investment projects to develop production and business activities as follows:

Article 1. Purpose of interest rate support

The State supports interest rates for medium and long-term loans in Vietnamese dong made by organizations and individuals at the Vietnam Development Bank and local investment development funds to implement new investment projects to develop production and business activities, infrastructure, and capital requirements to fulfill export contracts in order to reduce investment costs, enhance production and business capacity, product competitiveness, and create employment opportunities.

Article 2. Objectives and scope of application of interest rate support regulations

1. The Vietnam Development Bank and local investment development funds provide interest rate support for medium and long-term loans in Vietnamese dong made by organizations and individuals to implement new investment projects to develop production and business activities, infrastructure, and capital requirements to fulfill export contracts (hereinafter referred to as interest rate support), including:

a) The Vietnam Development Bank provides interest rate support for preferential loan recipients and other borrowers as stipulated in Decree No. 106/2008/NĐ-CP dated September 19, 2008 of the Government amending and supplementing certain provisions of Decree No. 151/2006/NĐ-CP dated December 20, 2006 on state investment credit and export credit, and related documents.

b) Local investment development funds are organized and operate according to the provisions of Decree No. 138/2007/NĐ-CP dated August 28, 2007 of the Government on the organization and operation of local investment development funds.

2. Borrowers eligible for interest rate support include:

a) Project sponsors borrowing from the Vietnam Development Bank in accordance with government regulations and

b) Project sponsors borrowing from local investment development funds in accordance with Article 12 of Decree No. 138/2007/NĐ-CP.

3. Types of loans eligible for interest rate support are medium and long-term loans in Vietnamese dong under credit agreements signed before and after April 1, 2009, which are disbursed (one or more times) during the period from April 1 to December 31, 2009;

a) Loans from the Vietnam Development Bank in accordance with government and prime ministerial regulations, including:

- Loans under government regulations on state investment credit issued prior to the effective date of Decree No. 106/2008/NĐ-CP;

- Loans under the list of state investment credit loans specified in Decree No. 106/2008/NĐ-CP;

- Loans under government and prime ministerial regulations: Hanoi-Hai Phong Expressway project; compensation and resettlement costs for the Son La Hydropower Project; revolving fund entrusted loan project; export credit with a loan term exceeding 12 months; other projects.

b) Investment loans from local investment development funds for infrastructure projects with direct revenue recovery plans included in programs and targets according to economic and social development strategies and plans approved by the People's Councils of provinces/cities in accordance with Article 11 of Decree No. 138/2007/NĐ-CP.

Article 3. Principles, duration, level of interest rate support, and method of interest rate support

1. The principle of interest rate support is that the Vietnam Development Bank and local investment development funds shall provide medium and long-term loans in Vietnamese dong to borrowers according to the current lending mechanism and implement interest rate support in accordance with the provisions stipulated.

2. The maximum loan period eligible for interest rate support is 24 months, starting from the date of disbursement for loans under credit contracts signed before and after April 1, 2009, which were disbursed during the period from April 1 to December 31, 2009. Interest rate support will be implemented from April 1, 2009 to December 31, 2011. Loans within the scope of interest rate support that are overdue, extended, or have an actual loan term exceeding 24 months will not be eligible for interest rate support for the overdue period, extension period, and period exceeding 24 months.

3. Level of support for borrowing customers:

a) The level of interest rate support for borrowing customers is 4% per annum, calculated on the amount borrowed and the actual loan period within the time frame from April 1, 2009 to December 31, 2011.

b) In cases where borrowing customers have a need for medium and long-term loans in Vietnamese dong at the Vietnam Development Bank and local investment development funds, secured or guaranteed by negotiable instruments, savings books, and other monetary forms (collectively referred to as negotiable instruments), or customers have deposits at the Vietnam Development Bank and local investment development funds, and such loans fall within the scope of interest rate support, interest rate support shall be implemented as follows:

- For negotiable instruments purchased or already existing (generated) before February 1, 2009, the Vietnam Development Bank and local investment development funds shall provide interest rate support for the entire outstanding debt; for negotiable instruments purchased or already existing (generated) from February 1, 2009 onwards, the Vietnam Development Bank and local investment development funds shall only provide interest rate support for the portion of the outstanding debt that exceeds the value of the negotiable instruments pledged or guaranteed by the customer.

- For customers who have deposits at the Vietnam Development Bank and local investment development funds that were already existing (generated) from February 1, 2009 onwards: the Vietnam Development Bank and local investment development funds shall only provide interest rate support for the portion of the outstanding debt that exceeds the value of the deposit account of the customer.

4. The method of implementing interest rate support is that when collecting loan interest, the Vietnam Development Bank and local investment development funds reduce the amount of interest payable to the borrowing customer by the amount of interest supported. The State Bank of Vietnam transfers the supported loan interest according to Clause 1, Article 5 of this Circular.

Article 4. Procedures and responsibilities of borrowing customers, the Vietnam Development Bank, and local investment development funds in implementing interest rate support

1. For borrowing customers with loans falling within the scope of interest rate support:

a) During the period from April 1 to December 31, 2009, when the first loan occurs at the Vietnam Development Bank and local investment development funds providing the loan, the borrowing customer shall submit a request for interest rate support to the Vietnam Development Bank and local investment development funds according to Model 01 attached to this Circular, including loans generated from April 1, 2009 to the date this Circular takes effect.

b) Utilize the borrowed capital for the purpose specified in the credit agreement that falls within the scope of interest rate support. If the borrowed capital is not used for the intended purpose, interest rate support will not be provided, and the borrowing customer must return the previously supported loan interest to the Vietnam Development Bank and local investment development funds and be subject to legal penalties.

c) Provide complete and truthful information and documents to prove the purpose of the borrowed capital eligible for interest rate support and bear legal responsibility for the accuracy of the information and documents provided to the Vietnam Development Bank and local investment development funds.

d) Comply with the procedures for borrowing, interest rate support, and reporting systems established by the Vietnam Development Bank and local investment development funds.

đ) Record the payment of loan interest according to the actual amount of interest payable to the Vietnam Development Bank and local investment development funds after receiving interest rate support as stipulated by law.

e) Request the Vietnam Development Bank and local investment development funds providing the loan to implement interest rate support in accordance with the provisions stipulated.

2. For the Vietnam Development Bank and local investment development funds:

a) Implement interest rate support for borrowing customers in accordance with the provisions stipulated.

b) Based on the purpose of using the borrowed capital within the scope of interest rate support, record the contents related to interest rate support in the credit agreement in accordance with the law; refuse requests for interest rate support that do not comply with the law.

c) The Chairman of the Management Board and General Director of the Vietnam Development Bank, and the Chairman of the Management Board and Director of the local investment development fund shall be responsible and subject to legal penalties for cases of non-compliance with the law in providing interest rate support.

d) Apply lending mechanisms and interest rates:

- For the Vietnam Development Bank: Apply lending mechanisms and interest rates as prescribed by the Government and the Prime Minister.

- For local investment development funds: Apply lending mechanisms and interest rates as prescribed by Decree No. 138/2007/ND-CP and guidelines issued by the Ministry of Finance.

d) Carry out 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; if recovery is not possible, report to the competent state authority for handling or initiate legal proceedings against the customer's breach of the credit contract.

e) Guide borrowers to ensure that loans are convenient, safe, and provided to eligible recipients.

g) When collecting interest from borrowers, the Vietnam Development Bank and the local investment development fund shall reduce the amount of interest payable by the borrower by the amount of interest supported according to legal provisions. In cases where the interest collection period has not been reached by December 31, 2011, the Vietnam Development Bank and the local investment development fund shall calculate the interest payable by the borrower and implement the reduction of interest payable by the amount of interest supported. The calculation and collection of interest shall be carried out in accordance with legal provisions; record and monitor the interest payable on loans eligible for interest support as follows:

- Record all interest income in accordance with the current financial system; the interest supported by the State Bank of Vietnam shall be recorded in a separate account for interest support in 2009-2011.

- Maintain a detailed ledger (or database) tracking each interest-supported loan (borrower, loan amount, term, interest rate, amount of interest support...) to provide to the borrower for monitoring, statistics, internal audit, reporting to the State Bank of Vietnam, and inspection and supervision by the competent state authority.

h) Prepare an interest support confirmation document signed by both the borrower and the Vietnam Development Bank or the local investment development fund (signatures and seals) as evidence for inspection and supervision. The interest support confirmation document shall be prepared in two copies, one retained in the credit file and one sent to the borrower. Such documents shall be prepared each time interest is collected and interest support is reduced, or monthly in accordance with the reporting period for interest support to the State Bank of Vietnam and the Ministry of Finance.

i) Submit reports on the amount of interest support to the State Bank of Vietnam using the forms attached in this Circular:

- For the Vietnam Development Bank: Submit monthly reports on the implementation of interest support using Forms 02 and 03 of this Circular, no later than the 10th day of the month following the reporting month.

- For local investment development funds: Submit monthly reports on the implementation of interest support using Form 04 of this Circular, no later than the 10th day of the month following the reporting month.

Timely and accurately track and statistically analyze interest-supported loans to serve internal audits, reporting to the State Bank of Vietnam, and inspection and supervision by the competent state authority; open accounts or apply appropriate management systems to record and statistically track interest-supported loans separately.

Manage and retain records of interest-supported loans in accordance with legal regulations.

Article 5. Transfer of interest rate support funds and supervision of interest rate support loans

Clause 1. The State Bank of Vietnam shall transfer the interest rate support funds to the Vietnam Development Bank and local investment development funds based on reports from the Vietnam Development Bank and local investment development funds regarding the interest rate support loans that have been implemented, which have been audited and confirmed by the Banking Supervisory Authority and the Ministry of Finance to comply with the relevant laws.

Clause 2. The State Bank of Vietnam shall cooperate with the Ministry of Finance to conduct regular or spot inspections of the Vietnam Development Bank's and local investment development funds' interest rate support loan activities; upon completion of each inspection, representatives of the State Bank of Vietnam (Banking Supervisory Authority) and the Ministry of Finance shall confirm in the report on the implementation of interest rate support provided by the Vietnam Development Bank and local investment development funds to serve as the basis for the State Bank of Vietnam to transfer interest rate support funds and handle related matters.

Article 6. Responsibilities of units under the State Bank of Vietnam

Clause 1. Department of Monetary Policy: Coordinate with units under the State Bank of Vietnam to address issues related to the interest rate support mechanism; receive registration forms for interest rate support plans and reports on the implementation of interest rate support from the Vietnam Development Bank and local investment development funds; notify the transfer of interest rate support funds to the Vietnam Development Bank and local investment development funds; guide the settlement of interest rate support funds; prepare reports for submission.

Clause 2. Department of Finance and Accounting: Address accounting issues related to the interest rate support mechanism.

Clause 3. Trading Department: Carry out accounting and transfer of interest rate support funds to the Vietnam Development Bank and local investment development funds according to the Governor's Decision of the State Bank of Vietnam and the notification of the Department of Monetary Policy.

Clause 4. Banking Supervisory Authority: Lead and coordinate with functional units of the Ministry of Finance in auditing and confirming the reports of the Vietnam Development Bank and local investment development funds on interest rate support loans at models 02, 03, and 04 of the Circular's Appendix in accordance with the provisions of the law to serve as the basis for the State Bank of Vietnam to transfer interest rate support funds to the Vietnam Development Bank and local investment development funds; recommend to relevant agencies to handle violations of the law discovered during inspections and audits of interest rate support loans at the Vietnam Development Bank and local investment development funds.

Clause 5. Branches of the State Bank of Vietnam in provinces and centrally governed cities: Conduct inspections, supervision, and audits within their authority on the implementation of the law on interest rate support by the Vietnam Development Bank and local investment development funds, and report and propose to the Governor of the State Bank of Vietnam and the Chairman of the People's Committee of provinces and centrally governed cities to handle arising issues.

Article 7. Implementation Organization

Clause 1. This Circular takes effect from the date of signature. Provisions on interest rate support for the Vietnam Development Bank in Circular No. 05/2009/TT-NHNN dated April 7, 2009, detailing the implementation of interest rate support for organizations and individuals borrowing medium and long-term bank loans for new investment and production-business development cease to be effective. Loans generated from April 1, 2009, falling under the interest rate support category as stipulated in this Circular but not yet subject to the interest rate support mechanism, the Vietnam Development Bank and local investment development funds shall implement interest rate support in accordance with the law from the date the loan is generated.

Clause 2. The Director of the Office, Heads of the Department of Monetary Policy and heads of units under the State Bank of Vietnam, Governors of State Bank of Vietnam branches in provinces and centrally governed cities, Chairmen of Management Councils and General Directors of the Vietnam Development Bank, Chairmen of Management Councils and Directors of local investment development funds, and borrowers are responsible for implementing this Circular./.