Decision No. 329/1997/QĐ-NH21 On the issuance of regulations on disbursement to credit institutions participating in the Rural Development Fund

Pursuant to …;

Regarding the issuance of regulations on disbursement to credit organizations participating in the rural development fund

Participating in the Rural Finance Project

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GOVERNOR OF THE STATE BANK OF VIETNAM

Pursuant to the Credit Agreement No. 2855-VN between the Socialist Republic of Vietnam and the International Development Association's Rural Finance Project dated July 19, 1996;

Pursuant to the World Bank's Disbursement Letter for the Rural Finance Project dated July 24, 1996;

Pursuant to Circular No. 09/TC-NH issued on May 30, 1994 by the State Bank of Vietnam and Ministry of Finance on the management and utilization of loans from International Credit Organizations;

Pursuant to current foreign exchange management regulations;

Pursuant to the World Bank's Disbursement Manual (1992);

Pursuant to the World Bank's Accounting, Auditing, and Financial Reporting Manual (WB);

Pursuant to Decision No. 269/QĐ-NH9 dated September 23, 1995 of the Governor of the State Bank of Vietnam on the establishment of the Project Management Board;

Pursuant to the Management and Utilization Regulations of the Rural Development Fund issued pursuant to Decision No. 47/QĐ-NH21 dated February 28, 1997 of the Governor of the State Bank of Vietnam;

At the proposal of the Head of the Project Management Board,

Pursuant to …;

Article 1: This Decision hereby promulgates regulations on disbursement to credit organizations participating in the Rural Development Fund - Rural Finance Project.

Article 2: THIS DECISION SHALL TAKE EFFECT 15 DAYS FROM THE DATE OF SIGNATURE.

Article 3: The Heads of the Governor's Office, the Project Management Board, the heads of relevant units at the State Bank of Vietnam, the Governors of the State Bank of Vietnam branches in provinces and cities, and the General Directors (Directors) of credit organizations participating in the Rural Development Fund - Rural Finance Project are responsible for implementing this Decision.

REGULATIONS

On disbursement to credit organizations participating

in the rural development fund

(Issued together with Decision No. 329/QĐ-NH21 dated October 7, 1997)

__________________________

Chapter 1:

GENERAL PRINCIPLES OF MANAGEMENT

Article 1. Credit organizations meeting the criteria and selected to participate in the Rural Development Fund (hereinafter referred to as RDF) have the right to borrow funds from Loan No. 2855-VN within the allocated credit limit to lend to eligible sub-projects and production-business plans;

Article 2. Within the framework of this Project, the Project Management Board will conduct disbursements to participating credit organizations through a special account;

Article 3. Participating credit organizations shall submit a sample registration form of seals and signatures of authorized leaders and transaction officers who sign loan application documents and receive loan proceeds (submit one set when applying for the first loan);

Article 4. To be eligible for borrowing, participating credit organizations must base their borrowing plan for short-, medium-, and long-term loans for the next fiscal year on the allocated credit limit and submit it to the Project Management Board before September 15 of the current fiscal year. This plan will be reviewed and consolidated into a general plan for capital coordination by the Project Management Board, sent to the World Bank (hereinafter referred to as WB) and the Ministry of Finance.

Chapter 2:

BASIS FOR DISBURSEMENT TO CREDIT ORGANIZATIONS

Article 5. The basis for the Project Management Board to disburse to a credit organization is as follows:

5.1. The requested disbursed amount must be within the approved plan or loan request accepted by the Project Management Board;

5.2. The loan agreement shall include the following basic contents: loan conditions, purpose, form, amount, interest rate, term, guarantee form, value of collateral (if any), repayment method, drawdown schedule, credit account of the credit organization, and other commitments agreed upon by both parties;

5.3. Promissory note.

5.4. Supporting documents: depending on the loan amount of each rescheduled loan, the Project Management Board has specific provisions as stated in Article 6 Clause 6.3.

Chapter 3:

DISBURSEMENT PROCEDURE

Article 6. Disbursement application documents:

When there is a need for borrowing, credit organizations selected to participate in this project must prepare a "loan application file" including:

6.1. Loan agreement: Credit organizations fill out the "Loan Agreements" according to the State Bank of Vietnam's model and submit them to the Project Management Board. When filling out the Loan Agreement, credit organizations should pay attention to the following points:

a) Drawdown schedule: clearly state the number of drawdowns, time, and specific amount of each drawdown.

b) Repayment plan: in this plan, the repayment period for the loan must be clearly stated.

- Interest payment: unless otherwise agreed between the two parties, credit organizations must proactively pay interest to the Project Management Board on February 1, May 2, August 1, and November 1 annually according to the following method: on the interest payment date, the borrower (credit organization) must proactively pay interest to the Project Management Board. In case the interest payment date coincides with public holidays or Sundays, the interest payment date will be postponed to the next working day. If more than five days have passed since the specified interest payment date without the Project Management Board receiving payment or any evidence showing that the payment has been made but not received by the Project Management Board, the Project Management Board has the right to issue a mandate to deduct the interest from the borrower's deposit account at the State Bank of Vietnam branch or provincial/city branch where the borrower maintains an account, in accordance with the Loan Agreement signed between the credit organization and the Project Management Board, and notify the borrower accordingly;

- For overdue interest rates: they will be calculated and collected according to the current regulations issued by the Governor of the State Bank of Vietnam regarding the calculation and collection methods for overdue interest on loans of credit organizations.

- Principal repayment: the borrower must clearly specify the number of installments, specific time and specific amount for each principal repayment installment to the Project Management Board of the Bank. The borrower shall repay the principal according to the credit agreement with the Project Management Board of the Bank as follows: When the contract maturity date arrives, the borrower shall proactively repay the debt to the Lender. If more than five days have passed since the payment deadline specified in the Credit Agreement and the Project Management Board of the Bank has not received the money or any evidence indicating that the funds have been transferred but the Project Management Board has not received them, the Project Management Board of the Bank may apply the measures as stated in the interest repayment section. In case there is insufficient funds in the account to repay the principal on the due date or extended due date, the unpaid amount will be considered overdue from the due date or extended due date.

6.2. Financial Institutions shall issue a "Debt Acknowledgment Agreement" for the amount requested to be withdrawn in each installment (1) (see Model 1 attached) corresponding to each withdrawal mentioned in the disbursement schedule.

a) In the "Debt Acknowledgment Agreement," the amount requested to be withdrawn in one installment, the currency, and the payment instructions (account number... at bank...) must be clearly stated.

b) The "Debt Acknowledgment Agreement" shall be prepared and numbered by participating financial institutions according to the following principles:

- The "Debt Acknowledgment Agreement" must be numbered sequentially starting from number 1;

- Followed by a slash and the number of the Credit Agreement;

- Followed by a hyphen and the name of the Borrowing Financial Institution.

Example: For the Credit Agreement between the Vietnam Development Bank (BIDV) and the Project Management Board of the Bank numbered 23/BQLDANN-HD, the Debt Acknowledgment Agreement for the third withdrawal installment of this agreement would be numbered 3/23-BIDV.

6.3. Supporting documents:

a) For sub-projects and business plans with a value under US$20,000: The Project Management Board of the Bank will disburse funds based on the self-assessment by the Financial Institution. If the Financial Institution has already disbursed funds to these sub-projects before, the Project Management Board of the Bank will disburse funds based on the statement of expenditures (see Model II attached) provided that the sub-projects were funded by the Financial Institution's own capital within three months prior to the submission of the loan application to the Project Management Board of the Bank.

b) For sub-projects and business plans with a value from US$20,000 to US$150,000: The Project Management Board of the Bank will only approve disbursement after reviewing and approving the project assessment report conducted by the Financial Institution. However, exceptions may be made if the Financial Institution is assessed by the Project Management Board of the Bank as strictly adhering to the project assessment process and achieving high results in banking activities. In such cases, the Project Management Board of the Bank may request the World Bank (WB) to waive the requirement for re-assessing the sub-projects. If approved by the WB, the disbursement for these loans will be processed as for amounts below US$20,000, meaning disbursement based on expenditure statements.

c) For sub-projects and business plans with a value over US$150,000: The Project Management Board of the Bank will only disburse funds upon approval by the World Bank (WB).

d) For all three cases mentioned above (a), (b), and (c), the Project Management Board of the Bank will allow up to sixty days from the approval of the loan for the Financial Institutions to prepare the loan documentation, procurement documents, and payment vouchers to be submitted to the Project Management Board of the Bank or kept at the Financial Institution according to the requirements for each type of document distinguished by the three levels of sub-project values mentioned above. If a Financial Institution fails to submit or obtain the loan documentation from the Rural Development Fund (RDF) within the specified period, the loan from the RDF will be rejected and additionally penalized according to the regulations set by the State Bank.

Article 7. Processing "Loan Application Files" for disbursement.

7.1. In cases where the sub-projects and business plans requesting loans are valid, evidenced by the attached documents and if the balance in the special account of the project is sufficient to cover the requested withdrawal amount, the Project Management Board of the Bank will disburse funds to the sub-projects and business plans based on the first "Debt Acknowledgment Agreement."

7.2. Upon receiving subsequent "Debt Acknowledgment Agreements" for withdrawals of approved loans, the Project Management Board of the Bank will check the remaining balance according to the "Credit Agreement" (in the "Loan Application File"), compliance with the provisions of Chapter III, Article 6, Clause 6.3, Point (d) of previous withdrawal installments, and if there are no violations, the Project Management Board of the Bank will disburse funds to the sub-projects and business plans.

If multiple members submit "Loan Application Files" (for new loans) or "Debt Acknowledgment Agreements" (for partially disbursed loans) simultaneously and the total amount requested for withdrawal exceeds the current balance in the special account, the Project Management Board of the Bank will prioritize disbursement for the files submitted earlier. At the same time, the Project Management Board of the Bank will issue a "Withdrawal Request Form" to the World Bank (WB) to withdraw funds to the special account. In such cases, the Project Management Board of the Bank will notify the participating units that these "Debt Acknowledgment Agreements" must wait for funds to be withdrawn from the WB before disbursement can occur. The waiting period may take up to three weeks from the date of submitting the "Debt Acknowledgment Agreement."

Article 8. Handling "Invalid Withdrawal Application Files":

In cases where the entire or part of the amount in the "Loan Application File" is invalid for any reason, the Project Management Board of the Bank will immediately notify the Financial Institutions requesting the loan and specify each invalid point so that the Financial Institutions can adjust accordingly.

Chapter 4:

ACCOUNTING AND MANAGEMENT OF LOANS FROM THE RURAL DEVELOPMENT FUND BY FINANCIAL INSTITUTIONS

Article 9. Credit Organizations receiving loans from the RDF Fund must maintain separate ledgers for the use of this capital, and must use a set of consistent sub-account symbols in the accounting accounts currently in use to separately track activities such as: receiving loans from the RDF Fund, relending to final borrowers using funds borrowed from the RDF Fund, recovering loans from the RDF Fund, transferring overdue loans from the RDF Fund that have become due but not yet recovered, repaying the State Bank the loan from the RDF Fund...

Article 10. Credit Organizations retain original documents and organize accounting records for the use of borrowed funds from the RDF Fund. At any time, the State Bank and the World Bank have the right to inspect files and accounting vouchers related to the Credit Organization's loan. If violations of the completeness and legality of the documents and vouchers related to participation capital from this fund are discovered, the State Bank may temporarily or permanently suspend lending to that Credit Organization from the RDF Fund.

Article 11. Credit Organizations monitor and prepare regular and ad hoc reports on the use of borrowed funds from the RDF Fund to meet requirements for inspection, analysis, auditing, and evaluation of the use of funds from this Fund.

Chapter 5:

FINAL PROVISIONS

Article 12. Any amendments or supplements to the provisions of this Regulation shall be decided by the Governor of the State Bank.