Circular No. 25/2015/TT-NHNN guiding preferential loans for implementing social housing policies

CIRCULAR

Guidelines for preferential loans to implement social housing policyi

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Pursuant to the Law on the State Bank of Vietnam No. 46/2010/QH12 dated June 16, 2010;

Based on the Law on Credit Institutions No.No. 47/2010/QH12 dated June 16, 2010;

Pursuant to the Law on HousingNo. 65/2014/QH13 dated November 25, 2014;

Pursuant to DecreeNo. 156/2013/NĐ-CP dated November 11, 2013 on the functions, tasks, powers, and organizational structure of the State Bank of Vietnam;on5/2015/NĐ-CP dated October 20, 2015 of the Government on the development and management of social housing;

Pursuant to Government Decree No. 100/1The Governor of the State Bank of Vietnam issues this Circular guiding the implementation of the social housing policy through preferential loans as stipulated in Decree No. 100/2015/NĐ-CP dated October 20, 2015.

At the proposal of the Director of the Department of Credit for Economic Sectors;

Article 1. This Circular guides the provision of preferential loans to implement the social housing policy for credit institutions designated according to the provisions of Decree No. 100/2015/NĐ-CP dated October 20, 2015 of the Government on the development and management of social housing (hereinafter referred to as Decree No. 100/2015/NĐ-CP).

Article 1. Scope of Regulation

2. The lending activities of the Social Policy Bank and the borrowing of preferential loans by the subjects specified in Clauses 1, 2, and 3 of Article 49 of the Housing Law for building new or renovating and repairing houses as specifically provided in each program decided by the Government or the Prime Minister do not fall within the scope of this Circular.

3. Borrowing under the Government's regulations on certain measures to address difficulties in production and business, support the market, and resolve bad debts and the implementing guidelines issued by competent authorities do not fall within the scope of this Circular.

Article 2. Borrowers for investment in social housing construction as stipulated in Clause 1 of Article 15 of Decree No. 100/2015/NĐ-CP.

Article 2. Applicability

2. Borrowers for purchasing, renting, or leasing social housing; constructing new or renovating and repairing houses for residence as stipulated in Clause 1 of Article 16 of Decree No. 100/2015/NĐ-CP.

3. Credit institutions designated to implement preferential lending for the social housing policy (hereinafter referred to as designated credit institutions) are credit institutions examined and decided upon by the State Bank of Vietnam (hereinafter referred to as the State Bank) during each period.

4. Organizations and individuals related to borrowing from designated credit institutions to implement the social housing policy as stipulated in Decree No. 100/2015/NĐ-CP.

Article 3. Principles of Lending

1. Preferential lending must be accurately targeted and meet the conditions as prescribed.

2. In cases where a subject benefits from multiple preferential lending policies supporting housing, only the highest level of support will be applied.

3. In cases where a household has multiple subjects benefiting from multiple preferential lending policies, only one lending policy will be applied for the entire household.

4. Designated credit institutions shall ensure that preferential lending for social housing complies with laws on housing, credit, and relevant laws.

5. Designated credit institutions have the responsibility to examine, appraise, and decide on lending to customers in accordance with current laws on lending and bear full responsibility for their lending decisions.

Article 4. Borrower Eligibility

Borrowers are customers as stipulated in Clauses 1 and 2 of Article 2 of this Circular.

The borrowing object is the customer as defined in Clause 1 and Clause 2 of Article 2 of this Circular.

Article 5. Lending Conditions

In addition to the lending conditions stipulated by current laws regarding lending by credit institutions to customers, customers must also meet the following additional conditions:

1. For customers who are enterprises and cooperatives as specified in Points a and b Clause 1 Article 15 Decree 100/2015/NĐ-CP borrowing funds to invest in building social housing must comply with the conditions set out in Clause 2 Article 15 Decree 100/2015/NĐ-CP.

2. For customers who are households and individuals borrowing funds to invest in building social housing for lease, lease-purchase, or sale must comply with the conditions set out in Clause 3 Article 15 Decree 100/2015/NĐ-CP.

3. For customers as specified in Clause 2 Article 2 Circular this borrowing preferential funds to purchase, lease, or lease-purchase social housing must comply with the conditions set out in Clause 2 Article 16 Decree 100/2015/NĐ-CP.

4. For customers as specified in Clause 2 Article 2 Circular this borrowing preferential funds to build new or renovate, repair their own housing must comply with the conditions set out in Clause 3 Article 16 Decree 100/2015/NĐ-CP.

Article 6. Loan Amounts

Credit institutions designated shall base on the loan demand, the customer's ability to repay debt, and their own capital capacity to determine the loan amount for customers, specifically:

1. For building social housing solely for lease: The maximum loan amount equals 80% of the total project investment cost, loan plan, and does not exceed 80% of the value of the collateral securing the loan.

2. For building social housing for lease-purchase or sale: The maximum loan amount equals 70% of the total project investment cost, loan plan, and does not exceed 70% of the value of the collateral securing the loan.

3. For customers borrowing preferential funds to purchase, lease, or lease-purchase social housing: The maximum loan amount equals 80% of the value of the purchase, lease, or lease-purchase contract.

4. For customers borrowing preferential funds to build new or renovate, repair their own housing: The maximum loan amount equals 70% of the estimated value or loan plan and does not exceed 70% of the value of the collateral securing the loan.

Article 7. Loan Period

1. For customers as specified in Clause 1 Article 2 Circular this investing in building social housing solely for lease: The minimum loan period is 15 years and the maximum does not exceed 20 years from the date of the first loan disbursement.

2. For customers as specified in Clause 1 Article 2 Circular this investing in building social housing for lease-purchase: The minimum loan period is 10 years and the maximum does not exceed 15 years from the date of the first loan disbursement.

3. For customers as specified in Clause 1 Article 2 Circular this investing in building social housing for sale: The minimum loan period is 05 years and the maximum does not exceed 10 years from the date of the first loan disbursement.

4. For customers as specified in Clause 2 Article 2 Circular this purchasing, leasing, or lease-purchasing social housing; building new or renovating, repairing housing for residence: The minimum loan period is 15 years from the date of the first loan disbursement.

5. In cases where customers have a need to borrow with a shorter term than the minimum loan period stipulated in Clauses 1, 2, 3, and 4 of this Article, they may negotiate with the lending credit institution about the specific loan period.

Article 8. Currency for Loan

The currency for loan shall be the Vietnamese Dong.

Article 9. Disbursement, Inspection, and Supervision of Loan Capital

1. Financial institutions designated to implement disbursement of committed loan capital for borrowers specified in Clause 1, Article 2 of this Circular shall do so according to the project implementation schedule, plan, and signed credit contract. The amount of each disbursement shall be based on the completed volume of work according to the technical stop point.

2. Financial institutions designated to disburse loan capital for borrowers as stipulated in Clause 2, Article 2 of this Circular shall do so according to the agreement in the credit contract signed between the borrower and the lending financial institution.

3. Financial institutions designated to implement disbursement, inspection, and supervision of loan capital shall comply with current laws governing loans and the regulations of the State Bank regarding the use of payment instruments to disburse loan capital from financial institutions to customers.

Article 10. Interest Rates for Loans

1. Preferential interest rates for customers borrowing capital to construct social housing shall be determined and announced by the State Bank during each period.

2. Preferential interest rates for customers to purchase, lease, or lease-purchase social housing; to construct new or renovate and repair houses for residence shall be

3. The preferential interest rates prescribed in Clauses 1 and 2 of this Article must adhere to the following principles:

a) Not exceeding 50% of the average interest rate of banks in the market during the same period.

b) The preferential interest rate for constructing social housing for rental purposes shall be lower than that for constructing social housing for sale.

Article 11. Procedures and Formalities for Loan Capital

Financial institutions designated shall provide detailed guidance and publicly post procedures for loan capital applications ensuring the following contents:

1. When there is a need for loan capital, the customer prepares and submits to the designated financial institution where they wish to borrow the loan application documents according to the guidance of the designated financial institution.

2. Based on the loan application documents provided by the customer, the financial institution conducts an assessment and decides to grant the loan according to the provisions of this Circular and current laws governing loans by financial institutions to customers.

The financial institution specifies and publicly posts the maximum time limit for notifying the decision to grant or not grant the loan to the customer. In case of a decision not to grant the loan, the financial institution shall notify the customer in writing the reasons for rejecting the loan when requested by the customer.

3. The loan agreement between the designated financial institution and the customer must be established in writing. The loan agreement must include the contents as prescribed by current laws governing loans by financial institutions to customers.

Article 12. Classification of Debts, Provisioning, and Risk Management

1. The classification of debts, extension of debt terms, conversion of overdue debt, provisioning, and utilization of reserves to manage risks by designated financial institutions for loans implementing social housing policies shall be carried out in accordance with the current regulations of the State Bank.

2. The management of risky debts shall be implemented in accordance with the regulations of the Prime Minister.

Article 13. Refinancing

The refinancing for credit institutions designated to implement social housing policies shall be carried out in accordance with the current regulations of the State Bank.

Article 14. Customer Responsibilities

1. Provide complete and truthful information and documents related to borrowing and bear responsibility for the accuracy of the provided information and documents to the designated credit institution.

2. Use borrowed funds for the intended purpose and fulfill all agreed contents in the loan contract and other commitments.

3. Fully repay the principal and interest on time to the bank according to the signed loan contract.

4. Borrowers have the responsibility to use borrowed funds for the intended purpose and fully repay the principal and interest on time according to the signed loan contract; fulfill all commitments in the loan contract and relevant laws.

Article 15. Responsibilities of Designated Credit Institutions

1. Designated credit institutions issue guidelines on housing loans within their system in compliance with this Circular and relevant laws.

2. Monitor, account for, and manage separately the lending activities implementing social housing policies.

3. Conduct inspections and supervision to ensure that borrowers use the borrowed funds for the intended purpose and comply with the commitments made in the loan contract.

4. Regularly, no later than the 15th day of each month, submit reports on the results of housing support loans to the State Bank (Department of Credit for Economic Sectors) according to Form 01 and Form 02 attached to this Circular and bear responsibility for the accuracy of the reported information and data.

Article 16. Responsibilities of units under the State Bank

1. Department of Credit for Economic Sectors:

a) Serve as the focal point for monitoring and summarizing the implementation of lending activities by designated credit institutions for social housing policies;

b) Serve as the focal point for advising the Governor of the State Bank to designate credit institutions to implement housing support lending policies;

c) Take the lead and coordinate with relevant units to handle any issues arising during the implementation of this Circular.

2. Department of Monetary Policy

a) Serve as the focal point for advising the Governor of the State Bank to determine and announce preferential loan interest rates for designated credit institutions for customers specified in Clause 1, Article 2 of this Circular to invest in building social housing;

b) Serve as the focal point for advising the Governor of the State Bank to report to the Prime Minister to decide preferential loan interest rates for customers specified in Clause 2, Article 2 of this Circular to purchase, lease, or lease-purchase social housing; construct new or renovate and repair houses for living.

3. Banking Inspection and Supervision Authority:

a) Carry out inspections and supervision of lending by designated credit institutions to customers in accordance with the law;

b) Coordinate with the Department of Credit Policies for Economic Sectors and other relevant units to address issues arising during implementation.

4. State Bank branch in provinces and centrally-administered cities:

a) Monitor and summarize the lending situation of designated credit institutions implementing social housing policies at the local level;

b) Advise and coordinate with provincial People's Committees to handle any issues arising during the implementation of lending to implement social housing policies at the local level. In cases exceeding authority, promptly report to the State Bank (Department of Credit for Economic Sectors) for consideration and resolution.

Article 17. Effective Date

This Circular takes effect from December 10, 2015.

Article 18. Implementation Organization

The Director of the Office, Heads of the Department of Credit for Economic Sectors, Heads of Units under the State Bank; Governors of State Bank Branches in provinces and centrally-administered cities; Chairmen of the Board of Members, Chairmen of the Board of Directors, and General Managers (Directors) of designated credit institutions; individuals eligible for social housing support loans are responsible for organizing the implementation of this Circular./.