Circular No. 27/2009/TT-NHNN detailing the implementation of interest rate support for organizations and individuals borrowing medium and long-term bank loans in 2010 to invest in production and business development.

 

 

CIRCULAR

Detailed regulations on interest rate support for organizations and individuals borrowing medium and long-term bank loans in 2010 to implement investment in production and business development

______________________

Pursuant to Resolution No. 54/NQ-CP dated November 11, 2009 of the Government regarding the regular meeting of the Government in October 2009;

Pursuant to Decision No. 2072/QĐ-TTg dated December 11, 2009 of the Prime Minister on interest rate support for medium and long-term bank loans denominated in Vietnamese Dong for organizations and individuals;

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 bank loans to implement new investments for production and business development;

The State Bank of Vietnam hereby provides detailed regulations on interest rate support for organizations and individuals borrowing medium and long-term bank loans in 2010 to implement investment in production and business development (hereinafter referred to as interest rate support) as follows:

Article 1. Purpose of interest rate support

In 2010, the State will provide interest rate support for organizations and individuals borrowing medium and long-term bank loans denominated in Vietnamese Dong according to the method prescribed in Decision No. 443/QĐ-TTg dated April 4, 2009 to assist in restoring growth, restructuring the economy, and stabilizing macroeconomic conditions.

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

1. Credit institutions providing loans to organizations and individuals include:

a) State-owned commercial banks, joint-stock commercial banks, joint venture banks, foreign bank branches operating in Vietnam, wholly foreign-owned banks, and Central People's Credit Funds (hereinafter collectively referred to as commercial banks).

b) Financial companies (excluding specialized financial companies operating in consumer credit and card sectors as provided by law) that comply with the State Bank of Vietnam's regulations on safety ratios in the operations of credit institutions, provisions for loan loss reserves in banking activities, and have non-performing loan ratios below 5% of total outstanding loans.

2. Borrowers eligible for interest rate support include: Organizations and individuals borrowing from commercial banks and financial companies to implement domestic investment in production and business development as stipulated in Article 1 of Decision No. 127/2005/QĐ-NHNN dated February 3, 2005 of the Governor of the State Bank of Vietnam amending and supplementing certain provisions of the lending regulations for credit institution customers issued pursuant to Decision No. 1627/2001/QĐ-NHNN dated December 31, 2001.

3. Types of loans eligible for interest rate support are medium and long-term loans denominated in Vietnamese Dong for implementing investment in production and business development under credit contracts signed before and after January 1, 2010, which are disbursed (one or more times) during the period from January 1, 2010 to December 31, 2010, and are reported in accordance with the statistical reporting system applicable to units under the State Bank of Vietnam and credit institutions issued pursuant to Decision No. 477/2004/QĐ-NHNN dated April 28, 2004 of the Governor of the State Bank of Vietnam and Decision No. 143 TCTK/PPCĐ dated December 22, 1993 of the General Director of the General Statistics Office on the issuance of the second, third, and fourth-level economic sector classification systems and the national economic sector directory, including:

a) Agriculture and forestry;

b) Fisheries;

c) Processing industry;

d) Scientific and technological activities;

đ) Purchase and sale of agricultural, forestry, fishery, and salt products.

Article 3. Principles, duration, interest rate levels, and methods of interest rate support

1. The principle of interest rate support is that commercial banks and financial companies lend medium and long-term funds for investment in production and business development according to the normal lending mechanism and implement interest rate support in accordance with the relevant regulations.

2. The maximum loan term eligible for interest rate support is 24 months, calculated from the date of disbursement for loans under credit contracts signed before and after January 1, 2010, which are disbursed during the period from January 1, 2010 to December 31, 2010. Interest rate support will be implemented from January 1, 2010 to December 31, 2012. Loans within the scope of interest rate support that are overdue, extended, or exceed the 24-month term will not be eligible for interest rate support for the overdue, extended, or excess periods.

3. The level of interest rate support for borrowers is 2% per annum, calculated based on the amount borrowed and the actual loan term.

4. In cases where borrowers of medium and long-term loans denominated in Vietnamese Dong and foreign currencies (collectively referred to as deposit balances) or loans collateralized or guaranteed by securities, savings certificates, and other forms of money in Vietnamese Dong and foreign currencies (collectively referred to as securities) are eligible for interest rate support, the following measures shall be taken:

a) For cases where borrowers have deposit balances at commercial banks, financial companies, and other credit institutions, when signing credit contracts, commercial banks and financial companies shall consider the entire deposit balance as the borrower's own capital, and the loan amount must exclude this deposit balance. Borrowers are responsible for reporting their deposit balances and the value of securities in Vietnamese Dong and foreign currencies at other credit institutions and bear responsibility for the legality and accuracy of these reports. Borrowers' deposit balances in Vietnamese Dong and foreign currencies include: Demand deposits, time deposits, fixed-term savings deposits, demand savings deposits, and other types of savings deposits; excluding dedicated fund deposit balances, pledged funds, and frozen deposits as prescribed by law.

b) In the case where the loan is collateralized with negotiable securities, when signing the credit contract, commercial banks and financial companies shall consider the entire value of the negotiable securities as the borrower's own capital, and the amount of the loan must exclude (-) the value of these negotiable securities.

c) In the case where the loan is guaranteed by negotiable securities, commercial banks and financial companies shall support interest rates for the outstanding loan balance by the difference between the outstanding loan balance minus (-) the value of the guaranteed negotiable securities at the time of signing the credit contract.

d) The balance of deposit accounts and negotiable securities denominated in foreign currency shall be converted into Vietnamese Dong based on the foreign currency buying rate of commercial banks and financial companies at the time of determining the deposit account balance and the value of negotiable securities.

5. The method of implementing interest rate support is that when collecting loan interest, commercial banks reduce the amount of interest payable by the borrower by the amount of interest supported according to the law. The State Bank of Vietnam transfers the supported loan interest based on the report of the interest support amount from commercial banks and financial companies.

Article 4. Procedures and responsibilities of the borrower, commercial banks, and financial companies in implementing interest rate support

1. For borrowers whose loans fall under the category eligible for interest rate support:

a) From January 1, 2010 to December 31, 2010, when the first loan occurs at the lending commercial bank or financial company, the borrower submits a request for interest rate support according to Model 01 Appendix of this Circular.

b) Utilize the loan funds for the purpose specified in the credit contract which falls under the category eligible for interest rate support. If the loan funds are not utilized for the intended purpose, then interest rate support will not be provided, and the borrower must return the previously supported interest to the commercial bank or financial company and be subject to legal penalties.

c) Comply with the procedures for borrowing and interest rate support, as well as reporting requirements set forth by the commercial bank or financial company.

d) Record the payment of loan interest according to the actual amount of interest payable to the commercial bank or financial company after receiving interest rate support as stipulated by law.

đ) Request the lending commercial bank or financial company to implement interest rate support in accordance with the provisions of

e) Provide complete and truthful information and documents to prove the purpose of the loan eligible for interest rate support and bear legal responsibility for the accuracy of the information and documents provided to the commercial bank or financial company.

2. For commercial banks and financial companies:

a) Implement interest rate support for borrowers in accordance with the provisions of

b) Based on the purpose of using the loan funds falling under the category eligible for interest rate support, record the contents related to interest rate support in the credit contract in accordance with the law; refuse requests for interest rate support that do not comply with the law.

c) The Chairman of the Board of Directors and General Director (Director) of commercial banks and financial companies are responsible and subject to legal penalties for cases of non-compliance with the law in providing interest rate support. For commercial banks and financial companies, if they violate, they will be considered in annual classification, additional paid-in capital, and issuance of permits for the establishment of banking networks.

d) Apply normal lending mechanisms and interest rates for loan demands falling under the category eligible for interest rate support in accordance with the regulations on lending by credit institutions to customers issued together with Decision No. 1627/2001/QĐ-NHNN and other relevant legal documents.

đ) Conduct pre-loan, during-loan, and post-loan inspections, and coordinate among commercial banks and financial companies in loan inspection and evaluation to ensure compliance with legal provisions for interest rate support. If it is found that the borrower has misused the loan funds for purposes not falling under the category eligible for interest rate support, recover the previously supported loan interest; if recovery is not possible, report to the competent state authority for handling or initiate legal action against the borrower's breach of the credit contract.

e) Guide borrowers to ensure convenient, safe, and compliant borrowing.

g) When collecting loan interest from borrowers, commercial banks and financial companies shall reduce the amount of interest payable by the borrower by the amount of supported loan interest as stipulated by law. If the interest collection period has not arrived by December 31, 2012, commercial banks and financial companies must calculate the interest payable by the borrower and reduce the interest payable by the amount of supported loan interest. Interest calculation and collection shall be carried out in accordance with the law; accounting and tracking of supported loan interest shall be conducted as follows:

- Record all interest income in accordance with current financial regulations; the supported loan interest transferred by the State Bank of Vietnam shall be recorded in a separate account in accordance with the State Bank of Vietnam's guidance on recording the supported loan interest for 2010.

- Maintain a detailed ledger (or database) tracking each loan supported by interest rate (borrower, loan amount, term and interest rate of the loan, amount of supported interest...) to be provided 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 a certificate of interest rate support with the customer's and commercial bank’s or financial company’s confirmation (signatures and seals) to serve as a verification document for monitoring and supervision. The certificate of interest rate support shall be prepared in two copies, one copy retained in the credit file and one copy sent to the borrowing customer. The certificate of interest rate support shall be prepared each time interest on the loan is collected and the supported interest amount is deducted, or it may be prepared periodically monthly in accordance with the reporting period for interest rate support to the State Bank of Vietnam. For farmer households borrowing funds, the certificate of interest rate support shall be prepared in the last month of each quarter during the interest rate support period.

i) Submit the registration form for the plan and report on the amount of interest rate support to the State Bank of Vietnam according to the forms attached in this Circular:

- Quarterly registration form for interest rate support plan according to Form 02 of the attached Circular and submit no later than the 10th day of the first month of each quarter.

- Monthly report on the implementation of interest rate support according to Forms 03 and 04 of the attached Circular and submit no later than the 10th day of the month immediately following the reporting month, ensuring accuracy and timely submission.

k) Timely and accurately monitor and record all loans that receive interest rate support to serve internal audit, report to the State Bank of Vietnam, and for supervisory checks by competent state agencies; open accounts or apply appropriate management systems to account for and separately record loans that receive interest rate support.

l) Manage and retain files of loans that receive interest rate support in accordance with Article 55 of the Law on Credit Institutions and related laws.

Article 5. Responsibilities of the State Bank of Vietnam

1. Monthly, transfer up to 90% of the interest on loans that have received interest rate support based on reports from commercial banks and financial companies. The transfer of the remaining interest on loans that have received interest rate support annually will be carried out after receiving the final report on interest rate support from commercial banks and financial companies.

2. Take the lead and coordinate with the Ministry of Finance and other relevant ministries and sectors to conduct inspections and supervision of the implementation of laws on interest rate support when necessary.

3. Responsibilities of units under the State Bank of Vietnam to assist the Governor of the State Bank in implementing matters related to the organization of the interest rate support mechanism:

a) Department of Monetary Policy: Coordinate with units under the State Bank of Vietnam to handle 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 commercial banks and financial companies; notify the amount of interest rate support transferred to commercial banks and financial companies; guide the settlement of interest rate support amounts; prepare reports for submission.

b) Department of Finance and Accounting: Handle accounting issues related to the interest rate support mechanism (original vouchers for accounting entries, transferring interest rate support amounts...).

c) Trading Department: Carry out accounting entries and transfer interest rate support amounts to commercial banks and financial companies according to notifications from the Department of Monetary Policy and decisions of the Governor of the State Bank.

d) Banking Inspection and Supervision Authority: Conduct inspections, supervision, and handling of commercial banks, financial companies, and borrowers who violate laws on interest rate support.

đ) Branches of the State Bank in provinces and centrally-administered cities: Implement inspection, supervision, and auditing within their authority regarding the implementation of laws on interest rate support, report, and propose to the Governor of the State Bank and the Chairman of the People's Committee of provinces and centrally-administered cities to address arising issues.

Article 6. Implementation

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

2. The Director of the Office, Heads of the Department of Monetary Policy, and Heads of units under the State Bank, Governors of State Bank branches in provinces and centrally-administered cities, Chairmen of the Board of Directors, and General Managers (Directors) of commercial banks and financial companies, borrowers are responsible for implementing this Circular./.

 

ANNEX

REGARDING THE FORMS TO BE APPLIED FOR BORROWERS AND COMMERCIAL BANKS, FINANCIAL COMPANIES
(Issued together with Circular No. 27/2009/TT-NHNN dated December 31, 2009 of the Governor of the State Bank of Vietnam)

1. Form 01: Application for Interest Rate Support for Medium and Long-term Loans in 2010.

2. Form 02: Registration Form for Interest Rate Support Plan for Medium and Long-term Loans in 2010.

3. Form 03: Report on Implementation of Interest Rate Support for Medium and Long-term Loans in 2010 pursuant to Decision No. 2072/QĐ-TTg and Circular No. 27/2009/TT-NHNN classified by economic sector and borrower type.

4. Form 04: Report on Implementation of Interest Rate Support for Medium and Long-term Loans in 2010 pursuant to Decision No. 2072/QĐ-TTg and Circular No. 27/2009/TT-NHNN classified by 63 provinces and centrally-administered cities.

..., day... month... year...

SOCIALIST REPUBLIC OF VIET NAM
Independence – Freedom – Happiness
-------------------

APPLICATION FOR INTEREST RATE SUPPORT FOR MEDIUM AND LONG-TERM LOANS IN 2010

Respectfully submitted to: ...
(Name of commercial bank, financial company lending)

Borrower's name: …

Address: …

...........................................................................................................................................

Telephone: … Fax: … Email:…

Name of representative organization (for organizational borrowers): .......................................................

Position: ...

Based on the provisions of Decision No. 2072/QĐ-TTg dated December 11, 2009 of the Prime Minister on interest rate support for organizations and individuals borrowing medium and long-term bank loans to implement investment and business development activities, and the guidance of the State Bank of Vietnam in Circular No. 27/2009/TT-NHNN dated December 31, 2009, we request the commercial bank/financial company to provide interest rate support for medium and long-term loans to implement investment and business development activities according to credit contracts disbursed during the period from January 1 to December 31, 2010.

We commit to complying with the provisions of the law on lending, interest rate support, and the commitments in the credit contract; using borrowed funds for the intended purpose and for the interest rate support recipients as specified; immediately returning the amount of interest support received if the borrowed funds are not used for the intended purpose of the interest rate support recipient as stated in the credit contract; bearing legal responsibility if we breach the credit contract.

Instructions:

- The loan customer shall only submit the Interest Rate Support Request for Borrowed Funds once when the first loan is issued by the commercial bank or finance company within the period from January 1 to December 31, 2010.

- If the loan customer is an organization, then the representative of the organization signs and stamps; if the loan customer is an individual or a household, then they sign and clearly write their full name.

Form 02

NAME OF COMMERCIAL BANK/FINANCE COMPANY

SOCIALIST REPUBLIC OF VIET NAM
Independence – Freedom – Happiness
-------------------

APPLICATION FOR INTEREST RATE SUPPORT PLAN FOR MEDIUM AND LONG-TERM LOANS IN 2010 PURSUANT TO DECISION NO. 2072/QĐ-TTG AND CIRCULAR NO. 27/2009/TT-NHNN
QUARTER .... YEAR.....

Respected: State Bank of Vietnam
(Monetary Policy Department)

Bank: ...

Legal Representative: ...Position:...

Address: …

Phone:...Fax: ...

VND Deposit Account Number: ...at: ...

Application for interest rate support plan for loan customers in quarter.... year.... pursuant to Decision No. 2072/QĐ-TTg and Circular No. 27/2009/TT-NHNN as follows:

Unit: billion VND

Form 03

NAME OF COMMERCIAL BANK/FINANCE COMPANY

REPORT ON THE IMPLEMENTATION OF INTEREST RATE SUPPORT FOR MEDIUM AND LONG-TERM LOANS IN 2010 PURSUANT TO DECISION NO. 2072/QĐ-TTG AND CIRCULAR NO. 27/2009/TT-NHNN BY ECONOMIC SECTOR AND LOAN CUSTOMER TYPE
MONTH .... YEAR.....

Unit: dong

Instructions for compiling and submitting the report:

- This report must be submitted by the commercial bank or finance company to the State Bank of Vietnam at the address: Monetary Policy Department - State Bank of Vietnam - 49 Ly Thai To Street - Hanoi (email: [email protected]; fax: 04-38246953/38240132) and branches of commercial banks must submit to the State Bank branch in the province or centrally-administered city.

- Loans eligible for interest rate support should be classified by economic sector as defined in Decision No. 477/2004/QĐ-NHNN dated April 28, 2004 by the Governor of the State Bank of Vietnam and Decision No. 143TCTK/PPCD dated December 22, 1993 by the Director-General of the General Statistics Office.

- State-owned enterprises and non-state enterprises are established and operate under Enterprise Law 2005 and Investment Law.

- Column (1): The number of loan customers receiving interest rate support is the number of new enterprises, cooperatives, business groups, other organizations, households, and individuals receiving interest rate support in the reporting month (excluding duplicate entries based on the number of loans); if one customer has multiple loans in different sectors, list them under the sector with the largest outstanding loan balance.

- Column (3): Interest payable according to the contractual interest rate and the calculation method stipulated in Decision No. 652/2001/QĐ-NHNN dated May 17, 2001 by the Governor of the State Bank of Vietnam.

- Column (4): The total interest paid on loans supported to loan customers is compiled based on the Interest Rate Support Confirmation Certificate; the total interest paid on loans supported must equal the amount of interest rate support actually recorded as a reduction for the loan customer.

- Column (6): The number of loan customers still having a loan balance eligible for interest rate support at the end of the reporting month; excluding duplicate entries based on the number of loans and if one customer has multiple loans in different sectors, list them under the sector with the largest outstanding loan balance.

- Deadline for submission of the report: Monthly, no later than the 10th day of the following month.

- Please clearly state the name and phone number of the person responsible for responding to details in the report when requested by the State Bank.

- During implementation, if there are any issues, the head office of the commercial bank or finance company should promptly reflect them in writing or by phone: 04-38246955/38259158; fax: 04-38246953/38240132; for branches of commercial banks, report to the head office of the commercial bank for unified handling throughout the system.

Form 04

NAME OF COMMERCIAL BANK/FINANCE COMPANY

REPORT ON THE IMPLEMENTATION OF INTEREST RATE SUPPORT FOR MEDIUM AND LONG-TERM LOANS IN 2010 PURSUANT TO DECISION NO. 2072/QĐ-TTG AND CIRCULAR NO. 27/2009/TT-NHNN BY 63 PROVINCES AND CENTRALLY-GOVERNED CITIES
MONTH .... YEAR.....

Unit: dong

Instructions for compiling and submitting the report:

- Loans eligible for interest rate support should be classified by the 63 provinces and centrally-governed cities (in alphabetical order).

- Column (1): The number of loan customers receiving interest rate support is the number of new loan customers receiving interest rate support in the reporting month (excluding duplicate entries based on the number of loans); if one customer has multiple loans in different sectors, list them under the sector with the largest outstanding loan balance.

- Column (3): Interest payable according to the contractual interest rate and the calculation method stipulated in Decision No. 652/2001/QĐ-NHNN dated May 17, 2001 by the Governor of the State Bank of Vietnam.

- Column (4): The total interest paid on loans supported to loan customers is compiled based on the Interest Rate Support Confirmation Certificate; the total interest paid on loans supported must equal the amount of interest rate support actually recorded as a reduction for the loan customer.

- Column (6): The number of borrowing customers with outstanding loan balances eligible for interest rate support as of the end of the reporting month; do not double-count based on the number of loans, and if one customer has multiple loans in different sectors, list them under the sector with the largest outstanding loan balance.

- Reporting unit: Department of Monetary Policy - State Bank of Vietnam (email: [email protected]; fax: 04-38246953/38240132) and State Bank of Vietnam branch in province/city.

- Deadline for submitting the report: Monthly, no later than the 10th day of the month immediately following the reporting month.

- Please clearly state the name and phone number of the person responsible for responding to details in the report when requested by the State Bank.

- During implementation, if there are any issues, the head office of the commercial bank or finance company should promptly reflect them in writing or by phone: 04-38246955/38259158; fax: 04-38246953/38240132; for branches of commercial banks, report to the head office of the commercial bank for unified handling throughout the system.