Decree No. 32/2017/ND-CP on State Investment Credit

DECREE

On State Investment Credit

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Pursuant to the Law on Government Organization dated June 19, 2015;

Pursuant to the State Budget Law on May 26, 2015;

Pursuant to the Investment Law dated November 26, 2014;

Pursuant to the Law on Public Investment dated June 18, 2014;

Pursuant to the Law on Public Debt Management dated June 17, 2009;

Pursuant to the Law on Credit Institutions dated June 16, 2010;

At the proposal of the Minister of Finance;

The Government promulgates the Decree on State Investment Credit.

PART I
GENERAL PROVISIONS

Article 1. Scope of regulation and applicable subjects

Article 1. This Decree stipulates the policy on State investment credit implemented by the Vietnam Development Bank.

2. This Decree applies to:

a) Enterprises, self-financing public service units, and other economic organizations that are project sponsors under the List of Projects Eligible for State Investment Credit;

b) The Vietnam Development Bank;

c) Agencies, organizations, and individuals related to the implementation of State investment credit.

Article 2. Principles for granting State investment credit

1. Granting loans in accordance with the objects of State investment credit as prescribed in this Decree.

2. Projects borrowing State investment credit must be those appraised and evaluated by the Vietnam Development Bank as being effective and capable of fully repaying both principal and interest.

3. Loan disbursement must comply with procedures consistent with the provisions of the law.

4. Borrowers must use the loan proceeds for their intended purpose; repay the principal and interest in full and on time as stipulated in the signed credit agreement; fulfill all commitments in the agreement and the provisions of this Decree.

5. Interest rates for State investment credit should gradually cover the cost of capital, operational costs, and credit risk reserves in the operations of the Vietnam Development Bank.

Article 3. Explanation of Terms

In this Decree, the following terms are understood as follows:

1. "Borrower" means enterprises, self-financing public service units, and other economic organizations borrowing State investment credit from the Vietnam Development Bank.

2. "Related party" means organizations and individuals as defined in Clause 28, Article 4 of the Law on Credit Institutions.

3. "Loan term" is the period calculated from when the Vietnam Development Bank disburses the loan until the borrower must repay the entire principal and interest as agreed in the credit agreement between the Vietnam Development Bank and the borrower.

4. "Grace period" is the period from when the Vietnam Development Bank disburses the loan until the borrower begins repaying the principal as agreed in the credit agreement. During the grace period, the borrower does not have to repay the principal but must pay interest according to the signed credit agreement, except where otherwise provided by the Prime Minister.

5. "Repayment period" is the period from when the borrower first repays the loan until it is fully repaid according to the credit agreement.

6. "Repayment schedule" is the periods within the repayment period agreed upon between the Vietnam Development Bank and the borrower during which the borrower must repay part or all of the loan to the Vietnam Development Bank at the end of each period.

8. "Extending the loan repayment" means the Vietnam Development Bank agrees to extend the repayment period for the principal and/or interest beyond the original loan term recorded in the credit agreement.

1. The annual and medium-term State Investment Credit Plan assigned to the Vietnam Development Bank includes the following indicators:

a) Total growth rate of State investment credit;

b) Sources of funds for implementing State investment credit;

c) State budget subsidies for interest rate differences, post-investment support, and management fees.

2. The Vietnam Development Bank establishes and reports the annual and medium-term State Investment Credit Plan to the Ministry of Finance and the Ministry of Planning and Investment in accordance with the Law on Public Investment and relevant regulatory documents.

3. The Ministry of Planning and Investment, in coordination with the Ministry of Finance, reviews the State Investment Credit Plan established by the Vietnam Development Bank. The Ministry of Planning and Investment compiles and reports to the Prime Minister for consideration and decision-making in the socio-economic development plan.

Chapter II
STATE INVESTMENT CREDIT

Article 5. Borrowing Objectives

1. The borrowing objectives of State investment credit are borrowers with projects under the List of Projects Eligible for State Investment Credit issued together with this Decree.

2. In cases where the projects mentioned in Clause 1 of this Article have already benefited from preferential credit from other state financial institutions, they shall not borrow State investment credit as prescribed in this Decree.

Article 6. Conditions for lending

The customer must meet all of the following conditions:

1. Belonging to the target group specified in Article 5 of this Decree.

2. Having full legal capacity and completing investment procedures as prescribed.

3. The investment project seeking loan capital must be appraised and evaluated by the Vietnam Development Bank as a viable project with the ability to repay the loan.

4. Having at least 20% of the total investment capital of the project as equity participation during the implementation process, with the specific level determined by the Vietnam Development Bank based on the financial capability of the investor and the repayment plan of the project, except for special projects decided by the Prime Minister.

5. Implementing guarantees for loan capital according to the provisions of this Decree and relevant laws.

6. The customer must not have bad debts at credit institutions at the time when the Vietnam Development Bank considers granting loans and disbursing loan funds.

7. Purchasing property insurance from a legally operating insurance company in Vietnam for collateral assets.

8. The customer must comply with accounting records, financial reporting, and annual auditing of financial reports as prescribed by law.

Article 7. Loan Capital Amount and Lending Limits

1. The maximum loan capital amount for state investment credit for each project shall be 70% of the total investment capital of the project (excluding working capital).

2. The total outstanding credit balance of the Vietnam Development Bank (including state investment credit) relative to its own capital shall not exceed 15% for a single customer, and not exceed 25% for a single customer and related parties, except for special projects decided by the Prime Minister.

3. The Vietnam Development Bank will determine the loan capital amount for each investment project based on the results of the project appraisal and ensuring the credit limits stipulated in Clauses 1 and 2 of this Article.

The loan term shall be agreed upon between the Social Policy Bank and the customer but shall not exceed five years (60 months).

1. The loan term is determined based on the project's capital recovery capability and the customer's debt repayment capability, consistent with the production and business characteristics of the project, but not exceeding 12 years. For projects in Group A, the maximum loan term is 15 years.

2. The Vietnam Development Bank will determine the loan term for each project based on the results of the project appraisal and in accordance with Clause 1 of this Article.

3. For special projects requiring a loan term exceeding the maximum loan term stipulated in Clause 1 of this Article, the Vietnam Development Bank will appraise and submit to the Prime Minister for consideration and decision.

Article 9. Interest Rate for Loans

1. The interest rate for state investment credit is equal to the weighted average interest rate of winning bids for five-year government-guaranteed Vietnam Development Bank bonds in the year preceding the interest rate announcement period under this Decree, plus the ratio of management costs and risk reserves of the Vietnam Development Bank.

The Ministry of Finance will propose to the Prime Minister to decide on a stable management cost ratio for a three-year period, ensuring that the Vietnam Development Bank has sufficient operational funds and can establish risk reserves as required. In cases of significant changes, the Vietnam Development Bank will report to the Ministry of Finance to propose to the Prime Minister for consideration and decision on the appropriate management cost ratio.

2. On the last day of each quarter, based on the principle of determining the interest rate stipulated in Clause 1 of this Article, the Vietnam Development Bank will determine and announce the interest rate for state investment credit.

3. The interest rate for state investment credit for each project as stipulated in Clause 2 of this Article will apply to the entire outstanding balance of the project from the adjustment date.

4. The overdue interest rate for each project shall be determined by the Vietnam Development Bank, with a maximum of 150% of the in-term interest rate.

Article 10. Loan Currency

1. The loan currency and debt recovery shall be in Vietnamese Dong.

2. For ODA projects and projects funded by foreign loans, the Vietnam Development Bank may lend and recover debts in foreign currencies in accordance with the laws on the mechanism for re-lending foreign loans by the Government and guidelines issued by the State Bank of Vietnam.

Article 11. Grace Period

The grace period shall be determined by the Vietnam Development Bank in accordance with the investment time, project implementation period, and the borrower's repayment sources.

Article 12. Implementation of Disbursement and Debt Recovery

The Vietnam Development Bank shall directly disburse funds and recover debts, or entrust domestic credit institutions to carry out disbursement, debt recovery, and manage collateral assets in compliance with the laws on entrusting, accepting entrustment, and joint lending by credit institutions.

Article 13. Guarantee for Loans

1. When borrowing state investment credit to invest in projects, the borrower must implement security measures for the loan at the Vietnam Development Bank in accordance with the laws on secured transactions. For each project, the Vietnam Development Bank will consider and decide on specific security measures for the loan in accordance with the law. In special cases decided by the Prime Minister.

2. The Vietnam Development Bank and the borrower shall follow the procedures for securing the loan as stipulated by the laws on secured transactions.

3. The Vietnam Development Bank may dispose of the collateral to recover debts in accordance with the laws on secured transactions.

Article 14. Repayment of Loans

1. Borrowers have the obligation and responsibility to fully repay the loan to the Vietnam Development Bank according to the terms of the signed credit agreement.

2. During the grace period, borrowers are not required to repay the principal but must pay interest as stipulated in the signed credit agreement.

3. From the due date of repayment, if the borrower cannot repay the loan for that period and does not receive an extension of the repayment term from the Vietnam Development Bank, the overdue principal will accrue interest at the rate specified for overdue payments.

Article 15. Adjustment of Repayment Terms and Extension of Loans

1. The Vietnam Development Bank decides on the adjustment of repayment terms, the amount of repayment for each term, and the extension of loans based on the bank's financial capacity and the borrower's ability to repay.

2. The total extension period for state investment credit projects shall not exceed one-third of the maximum loan term as stipulated in Clause 1, Article 8 of this Decree.

3. The Vietnam Development Bank guides borrowers on the documentation and procedures for adjusting repayment terms, the amount of repayment for each term, and extending loans.

1. The classification of debts by the Vietnam Development Bank shall be carried out in accordance with regulations issued by the State Bank of Vietnam.

2. The Vietnam Development Bank may establish a Risk Reserve Fund for credit risks caused by borrowers' inability to repay debts, which can be included in the operating costs of the Vietnam Development Bank, specifically as follows:

a) For general reserves, the amount set aside shall be 0.75% of the total outstanding debt;

b) For specific risk reserves, the amount set aside shall be determined by the Vietnam Development Bank, not exceeding the level prescribed for each group of debts by the State Bank of Vietnam for commercial banks, based on the results of debt classification and financial income and expenditure situation.

Article 17. Risk Management and Authority to Manage Risks

1. The risk management of the Vietnam Development Bank must ensure compliance with legal regulations, minimize losses for the State to the greatest extent possible, and hold the Vietnam Development Bank, borrowers, and related agencies accountable for lending, recovery, and debt resolution activities.

2. Measures to manage state investment credit risks include restructuring repayment terms, adjusting repayment periods, extending debts, disposing of collateral assets, setting aside non-performing loans, transferring them off-balance sheet for resolution, writing off principal and interest, and selling debts.

3. The use of the Risk Reserve Fund to manage risks and the authority to manage risks shall be carried out in accordance with the Risk Management Regulations at the Vietnam Development Bank as prescribed by the Prime Minister.

Article 18. Sources of Funds for Implementing State Investment Credit Policies

The Vietnam Development Bank may utilize legitimate sources of funds including: capital stock, domestic and foreign fundraising, state budget funds, and other legitimate sources to implement state investment credit policies in accordance with legal provisions.

Chapter III
RESPONSIBILITIES OF THE AGENCIES AND BORROWERS AT THE VIETNAM DEVELOPMENT BANK

AT THE VIETNAM DEVELOPMENT BANK

Article 19. Ministry of Finance

1. To perform the role of state financial management over the investment credit activities of the Vietnam Development Bank; to take the lead and coordinate with relevant ministries and agencies to submit mechanisms and policies related to state investment credit to the Government and the Prime Minister for issuance.

2. To guide or issue according to its authority mechanisms and policies related to state investment credit within the purview of the Ministry of Finance.

3. To participate with the Ministry of Planning and Investment in reviewing the annual and medium-term state investment credit plans prepared by the Vietnam Development Bank.

4. Annually, based on reports from the Vietnam Development Bank, to take the lead and coordinate with the Ministry of Planning and Investment, the Ministry of Industry and Trade, the Ministry of Agriculture and Rural Development, the Ministry of Transport, the State Bank of Vietnam, and other relevant ministries and sectors to assess the implementation of state investment credit policies and the operational results of the Vietnam Development Bank, and report to the Prime Minister.

Article 20. Ministry of Planning and Investment

1. To perform the function of state management over planning and development investment concerning the investment credit activities of the Vietnam Development Bank; to take the lead in reviewing the annual and medium-term state investment credit plans prepared by the Vietnam Development Bank.

2. To consolidate the capital base funding, interest rate subsidy funding, and management fee funding in the state budget's investment development expenditure budget.

3. To take the lead and coordinate with the Ministry of Finance to determine the total investment capital from the state budget and state investment credit capital in the annual and medium-term public investment plan.

4. To coordinate with the Ministry of Finance to develop policies, monitor, and evaluate the implementation of state investment credit policies and the operational results of the Vietnam Development Bank.

Article 21. State Bank of Vietnam

To perform the function of state management over monetary policy and banking activities concerning state investment credit activities, including:

1. To guide the Vietnam Development Bank in implementing loan classification as stipulated in Clause 1, Article 16 of this Decree.

2. To issue regulations on capital safety and operational safety for the Vietnam Development Bank.

3. To guide the Vietnam Development Bank in conducting banking operations and foreign exchange services, agency and trustee activities.

4. To inspect and supervise the Vietnam Development Bank in complying with legal regulations on monetary policy and banking activities under the jurisdiction of the State Bank of Vietnam. 5. To coordinate with the Ministry of Finance to develop policies, monitor, and evaluate the implementation of state investment credit policies and the operational results of the Vietnam Development Bank.

1. To guide regulations on high-tech fields as a basis for considering state investment credit lending.

Article 22. Ministry of Science and Technology

2. To coordinate with the Ministry of Finance to develop state investment credit policies according to the functions and sectors assigned by the Government for management.

2. COOPERATE WITH THE MINISTRY OF FINANCE TO DEVELOP STATE INVESTMENT CREDIT POLICIES ACCORDING TO THE FUNCTIONS AND SECTORS ASSIGNED BY THE GOVERNMENT FOR MANAGEMENT.

Article 23. Vietnam Development Bank

1. Develop annual and medium-term state investment credit plans to report to the Ministry of Finance and the Ministry of Planning and Investment for submission to the competent authority for examination and decision.

2. Organize the implementation of state investment credit policies in accordance with this Decree and relevant laws.

3. Regularly determine and publish the interest rate for state investment credit in accordance with this Decree on a quarterly basis.

4. Issue lending regulations and related provisions to implement state investment credit activities.

5. Review and be responsible for loan decisions, principal and interest recovery of projects borrowing state investment credit funds.

6. Inspect and supervise borrowers in the use of borrowed capital to ensure it is used for the intended purpose, effectively, and fully repaid both principal and interest to the Vietnam Development Bank on time.

7. Collect principal and interest from state investment credit funds.

8. Handle risks within its authority and be responsible for the accuracy, honesty, and transparency in risk handling proposals submitted to the competent authorities for examination and decision.

9. Report to the competent authorities on matters related to the implementation of state investment credit policies.

Article 24. Ministries, ministerial-level agencies, government agencies, provincial People's Committees, centrally governed city People's Committees

Ministries, ministerial-level agencies, government agencies, provincial People's Committees, centrally governed city People's Committees shall perform their functions and powers as follows:

1. Coordinate with the Ministry of Finance to develop policies, monitor, and evaluate the implementation of state investment credit policies.

2. Announce planning, programs, development orientations, and procedures, norms, standards, economic and technical quotas of sectors, fields, products, and regions as the basis for implementing state investment credit policies.

3. Direct, inspect, and supervise investors to implement investments in accordance with national regulations on investment; resolve issues related to the implementation of state investment credit policies within their assigned functions, tasks, and administrative management scope.

4. Participate in opinions with the Vietnam Development Bank during the process of developing and allocating annual targets for state investment credit growth, supervise the use of borrowed funds, support debt collection, and handle bad debts of state investment credit at the local level.

Article 25. Responsibilities of Borrowers

1. Provide accurate, complete, truthful, timely information and documents related to borrowing, the situation of using borrowed capital, and ensure borrowed funds to the Vietnam Development Bank, and bear responsibility under the law.

2. Use borrowed capital for the intended purpose, repay the full amount of debt on time, and fulfill all commitments stipulated in credit contracts.

3. Borrowers must notify the Vietnam Development Bank in writing before carrying out ownership transfer to resolve state investment credit loans in accordance with the law.

4. After the project is completed and put into use, the borrower must complete the final settlement of the project in accordance with the law, complete the procedures to establish rights to use and ownership of collateral assets formed from borrowed capital in accordance with the law and agreements with the Vietnam Development Bank. In case of non-compliance with the provisions of this Article, the borrower will be subject to sanctions prescribed by the State and the Vietnam Development Bank.

Chapter IV
INSPECTION, AUDIT, REPORTING AND HANDLING OF VIOLATIONS

Article 26. Inspection, Examination, Reporting

1. All state investment credit activities as prescribed in this Decree must be subject to inspection and examination by competent state agencies in accordance with the law. Such inspections and examinations may be carried out at each stage or throughout all stages of the investment construction, production, business operation, and loan repayment process.

2. The heads of ministries, ministerial-level agencies, government-affiliated agencies, Chairpersons of provincial People's Committees under central city administrations shall inspect and supervise the implementation of state investment credit policies within their respective jurisdictions.

3. Quarterly or at any time deemed necessary, the Vietnam Development Bank shall compile and report to the Prime Minister on the implementation of state investment credit, simultaneously sending reports to the Ministry of Finance, the Ministry of Planning and Investment, and the State Bank of Vietnam.

During the implementation process, in case of emergency, the Vietnam Development Bank shall report on the implementation of state investment credit according to the requirements of the Prime Minister, the Ministry of Finance, the Ministry of Planning and Investment, and the State Bank of Vietnam.

Article 27. Handling Violations

1. Organizations and individuals borrowing funds who violate the provisions of this Decree causing damage to assets or capital shall be liable for compensation and dealt with in accordance with the law.

2. The Vietnam Development Bank shall be responsible under the law for implementing state investment credit policies. Any violation of the provisions of this Decree shall be dealt with in accordance with the law.

Chapter V
IMPLEMENTING PROVISIONS

Article 28. Effective Date

This Decree takes effect from May 15, 2017, and replaces Government Decree No. 75/2011/NĐ-CP dated August 30, 2011, regarding state investment credit and export credit, Government Decree No. 54/2013/NĐ-CP dated May 22, 2013, and Government Decree No. 133/2013/NĐ-CP dated October 17, 2013, which supplement Government Decree No. 75/2011/NĐ-CP on state investment credit and export credit.

Article 29. Transitional Provisions

1. For state investment credit loan contracts, state export credit loan contracts, investment credit guarantees, post-investment interest rate support contracts signed before the effective date of this Decree, the Vietnam Development Bank, customers, and related parties shall continue to implement according to the commitments, rights, and responsibilities stipulated in the signed contracts.

2. For projects currently receiving state investment credit loans, if during implementation there is an increase in the total investment amount approved by the competent authority, the Vietnam Development Bank may continue to provide additional loans in accordance with this Decree if the Vietnam Development Bank re-evaluates the project as being effective and capable of repaying the loan. The total loan amount (including the additional loan portion) shall remain within the credit limit specified in Article 7 of this Decree.

3. Adjustments to the interest rates of state investment credit for loans disbursed under credit contracts signed before the effective date of this Decree shall be decided by the Prime Minister based on the proposal of the Vietnam Development Bank, opinions of the Ministry of Finance, and the State Bank of Vietnam.

Article 30. This Decree applies to projects financed under Government Agreements where the Agreement does not specify details related to the loan.

In cases where the Vietnam Development Bank provides loans for projects under Government Agreements that do not specifically define conditions, interest rates, terms, amounts, and other relevant aspects of the loan, the Vietnam Development Bank shall implement lending in accordance with the state investment credit regulations set forth in this Decree.

Article 31. Re-lending of foreign loans guaranteed by the Government to be undertaken by the Vietnam Development Bank with credit risk

1. The Vietnam Development Bank shall implement re-lending for projects/programs, credit limits using foreign loans guaranteed by the Government, which are subject to binding conditions regarding target groups, geographical areas, sectors, re-lending interest rates, and/or other relevant conditions that the Vietnam Development Bank assumes credit risk, in accordance with the loan agreement signed with foreign sponsors and the re-lending mechanism approved by the Prime Minister.

2. The Vietnam Development Bank shall issue regulations specifying the credit conditions, procedures, management mechanisms, risk reserve provisions, risk handling, and related contents concerning the loan.

Article 32. Responsibilities for guiding and organizing the implementation of the Decree

1. The Ministry of Finance, the State Bank of Vietnam, and relevant ministries and sectors shall guide the implementation of this Decree based on their functions and authorities.

2. Ministers, Heads of ministerial-level agencies, Heads of government agencies, Chairpersons of provincial People's Committees under the central government, Chairpersons of the Board of Directors, and General Directors of the Vietnam Development Bank are responsible for implementing this Decree.

Appendix

LIST OF PROJECTS TO BORROW LOANS FOR INVESTMENT
dated October 1, 32/2017/NĐ-CP

dated March 31, 2017 by the Government)