Decree No. 41/2010/ND-CP on credit policies to serve the development of agriculture and rural areas

DECREE

On credit policies serving the development of agriculture and rural areas

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THE GOVERNMENT

Pursuant to the Law on Organization of the Government dated December 25, 2001;

Pursuant to the Law on the State Bank of Vietnam dated December 12, 1997, and the Law Amending and Supplementing Certain Provisions of the Law on the State Bank of Vietnam dated June 17, 2003;

Pursuant to the Law on Credit Organizations dated December 12, 1997, and the Law Amending and Supplementing Certain Provisions of the Law on Credit Organizations dated June 15, 2004;

Pursuant to Resolution No. 24/2008/NQ-CP dated October 28, 2008 of the Government on the issuance of the Program of Action of the Government to implement the Resolution of the 7th Plenary Session of the Central Committee of the Communist Party of Vietnam, Tenth Tenure, on agriculture, farmers, and rural areas;

Considering the proposal of the Governor of the State Bank of Vietnam,

DECREE:

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

1. This Decree stipulates credit policies serving the development of agriculture and rural areas and improving the living standards of farmers and residents in rural areas.

2. Credit policies serving the development of agriculture and rural areas are a system of measures and policies of the State aimed at encouraging credit organizations to lend and invest in the agricultural and rural sectors to transform the economic structure in agriculture and rural areas, build infrastructure, alleviate poverty, and gradually improve the living standards of the people.

Article 2. Applicability

1. The organizations implementing loans to serve the development of agriculture and rural areas include:

a) Credit organizations established and operating in accordance with the Law on Credit Organizations;

b) Small financial organizations providing small loans to poor individuals and other groups in the agricultural and rural sectors in accordance with the law;

c) Banks and financial organizations established by the Government to provide loans in accordance with State policy.

2. Individuals and organizations eligible to borrow funds under this Decree to serve production, business, and consumption in the agricultural and rural sectors include:

a) Households and businesses operating in rural areas;

b) Individuals;

c) Farm owners;

d) Cooperatives and cooperative groups operating in rural areas;

e) Organizations and individuals providing services for crop cultivation, animal husbandry, product sales, and export in the fields of agriculture, forestry, salt industry, and fisheries;

f) Enterprises processing agricultural products or operating in industrial, commercial, and non-agricultural service sectors with production and business bases in rural areas.

Article 3. Explanation of Terms

In this Decree, the following terms shall be understood as follows:

1. “Rural areas"rural area": refers to the territory outside the inner city or town of cities, towns, and wards, managed by the grassroots administrative level of the People's Committee of communes.

2. “XXI"agricultural sector": refers to a sub-sector within the national economy, including the fields of agriculture, forestry, salt industry, and fisheries.

3. “Farm owner": refers to an individual or household engaged in large-scale agricultural business in compliance with legal provisions.

4. “Widespread natural disasters and epidemics": refers to the negative impact on agricultural production by farmers due to epidemics, typhoons, floods, droughts, and other widespread phenomena in one or more provinces or cities, confirmed and announced by the competent authority as a state of natural disaster or epidemic.

5. “Rural infrastructure": includes technical infrastructure (transportation systems, telecommunications, energy supply, public lighting, clean water, rural environmental sanitation, and other facilities) and social infrastructure (healthcare, cultural, educational, sports, trade, public service facilities, green spaces, parks, and other facilities).

Article 4. Fields for lending to serve agricultural and rural development

1. Lending for production costs in the fields of agriculture, forestry, fishery, and salt industry;

2. Lending for the development of trades in rural areas;

3. Lending for investment in infrastructure construction in rural areas;

4. Lending for processing and marketing agricultural, forestry, aquatic products, and salt;

5. Lending for business activities providing products and services serving agriculture, forestry, salt industry, and aquaculture;

6. Lending for industrial production, commerce, and non-agricultural service supply in rural areas;

7. Lending for consumption purposes to improve the living standards of people in rural areas;

8. Lending under government economic programs.

Article 5. Principles of lending

1. Credit organizations and small-scale financial institutions investing credit to serve agricultural and rural development and improve the living standards of the people operate on the principle of self-management and responsibility for the effectiveness of their investments.

2. Credit organizations implement mechanisms to guarantee loans according to current regulations and determine the amount of unsecured lending for specific borrowers based on the characteristics of their businesses and the credit organization's risk management capabilities. Credit organizations publicly announce the amount of unsecured lending, conditions, and procedures for specific borrowers based on compliance with current regulations governing lending by credit organizations to customers.

3. Banks and financial organizations provide loans to policy targets and economic programs designated by the Government, which are guaranteed by the Government through policies for agriculture, rural areas, and farmers during each period.

4. Small-scale financial institutions providing loans to borrowers in the agricultural and rural sectors must comply with the provisions of the law.

Article 6. State Support Policies

The Government has policies to encourage and support lending in the agricultural and rural sectors through monetary policy tools, measures to handle risks arising broadly in the agricultural and rural sectors, and other specific policies during each period.

Chapter II

SPECIFIC PROVISIONS

Article 7. Sources of Loan Capital

1. The sources of loan capital for credit organizations in the agricultural and rural sectors include:

a) Capital raised by credit organizations and other lenders;

b) Borrowed capital, sponsored capital, and entrusted capital from domestic and foreign financial and credit organizations;

c) Entrusted capital from the Government for lending in the agricultural and rural sectors;

d) Borrowed capital from the State Bank: based on the objectives of monetary policy management and the requirements for economic development during each period, the State Bank supports the capital sources for credit organizations through the use of monetary policy instruments.

2. Banks and financial organizations providing loans to policy targets and government economic programs in rural areas are guaranteed by the Government for loan capital transferred from the budget or compensated for the difference between deposit interest rates and lending interest rates of credit organizations.

Article 8. Mechanisms for Guaranteeing Loans

1. Credit organizations consider lending to customers based on secured or unsecured guarantees according to current regulations.

2. Credit organizations clearly define the amount of unsecured lending, conditions, and procedures for unsecured lending for each customer, in accordance with current regulations governing lending by credit organizations to customers.

Specifically, for individual and household customers, rural households engaged in production and business, cooperatives, and farm owners, credit organizations may consider unsecured lending up to the following amounts:

a) Up to 50 million VND for individuals and households engaged in agricultural, forestry, fishery, and salt industries;

b) Up to 200 million VND for households engaged in trade, production of trades, or services serving agriculture and rural areas;

c) Up to 500 million VND for cooperatives and farm owners.

3. Credit organizations consider granting unsecured loans to individual and household customers based on guarantees provided by rural political-social organizations according to current regulations. Political-social organizations cooperate and can undertake all or part of the credit operations after agreeing with the lending credit organization.

4. Based on the special nature of lending in the agricultural and rural sectors, credit organizations guide specific procedures for implementing loan guarantees for borrowing customers in a simple and convenient manner.

5. Customers who borrow without collateral as stipulated in Clause 2 of this Article must submit land use right certificates (for those who have been issued land use right certificates) or be confirmed by the People's Committee of the commune that they have not been issued land use right certificates and there is no dispute over the land. Customers can only use the confirmation of not having been issued land use right certificates and no disputes over the land to borrow from one credit organization and bear legal responsibility for using such confirmation to borrow without collateral as prescribed in this Decree.

6. Individuals and households registering security transactions to borrow from credit organizations for production and business purposes are exempt from paying registration fees for security transactions to the competent registration authority.

Article 9. Loan Period

Based on the capital turnover time, the project's ability to repay, and the customer's business plan, the credit institution and the customer shall agree on a suitable loan period.

Article 10. Restructuring of Debt Terms and New Loans

1. In cases where customers are unable to repay loans on schedule due to objective reasons (natural disasters, epidemics...), the credit institution may consider restructuring the debt terms for the customer according to current regulations, while also considering new loans based on the effectiveness and ability of the customer to repay debts from their projects and business plans, without being dependent on the outstanding balance of overdue debts.

2. In cases of widespread natural disasters or epidemics, upon notification from the competent authority (such as the Provincial People's Committee, Ministry of Health, or Ministry of Agriculture and Rural Development), in addition to considering debt restructuring for customers as stipulated in Clause 1 of this Article, the Government will have specific support policies for organizations and individuals with loans who suffer significant losses and are unable to repay debts. Credit institutions providing loans shall implement interest-free moratoriums on outstanding balances at the time of the announced disaster or epidemic. The maximum moratorium period is two years, and the interest that the credit institution has waived for the customer can be deducted from the pre-tax profit of the credit institution.

Article 11. Interest Rates for Loans

1. Banks and financial organizations lending to policy targets and rural economic programs as directed by the Government shall lend at interest rates set by the Government.

2. Interest rates for loans supporting agricultural and rural development by credit institutions shall be implemented according to the current commercial credit mechanism.

3. For loans to agriculture and rural areas by credit institutions entrusted by the Government or other organizations and individuals, the interest rate shall be implemented according to the Government's regulations or agreed upon with the entrusting party.

4. Small-scale financial institutions shall lend at interest rates agreed upon with customers, in accordance with the provisions of the law.

Article 12. Provisioning for Risk

1. Credit institutions lending to agriculture and rural areas shall establish risk provisions based on actual occurrences. During the year, credit institutions shall establish risk provisions based on risks arising in the previous year, adjusting at year-end based on actual risks arising during the year, regardless of whether the loan is secured by collateral or not.

2. The State Bank shall coordinate with the Ministry of Finance to provide detailed guidance on establishing and using risk provisions for loans in the agricultural and rural sectors.

Article 13. Risk Management

1. Credit institutions shall manage risks from agricultural and rural loans from their own risk provisions.

2. In cases of widespread risks arising from objective reasons beyond the capacity of the credit institution, the State shall consider specific policies for each case.

Article 14. Insurance in Agriculture

Credit institutions shall have policies to waive or reduce interest for customers participating in agricultural insurance according to their customer policies to encourage loan customers to participate in agricultural insurance to mitigate risks for the credit institution.

Chapter III

RESPONSIBILITIES OF AUTHORITIES, ORGANIZATIONS, AND INDIVIDUALS

Article 15. The State Bank of Vietnam

1. Guide credit institutions to provide loans for agriculture and rural areas in accordance with the provisions of this Decree.

2. Implement support policies for credit institutions providing loans for agriculture and rural areas through the use of national monetary policy tools.

3. Develop support policies through training and retraining of credit officers for grassroots credit funds and small-scale financial organizations.

4. Take the lead and coordinate with the Ministry of Finance in inspecting, supervising, proposing measures to handle debts, and resolving difficulties and obstacles arising during debt resolution as stipulated in Article 13 of this Decree.

5. Develop policies to encourage credit institutions to expand their network (branches, transaction offices) to rural areas, especially remote and extremely difficult regions.

Article 16. Ministry of Agriculture and Rural Development

1. Coordinate with provincial and municipal People's Committees to complete the overall planning for agricultural and rural development, including detailed planning on crop cultivation, animal husbandry, and industries within the agricultural and rural sector.

2. Direct localities to effectively carry out agricultural promotion, forestry promotion, fishery promotion, and salt production; guide households, cooperatives, farm owners, and other entities to develop effective agricultural production projects and plans, serving as a basis for credit institutions to provide loans.

3. Support farmers in science and technology, seeds, post-harvest preservation to facilitate the marketing of farmers' products.

4. Coordinate with relevant units to perfect legal regulations and guidelines for issuing certificates to farm owners and other entities, providing a legal basis for these entities to borrow from credit institutions.

5. Announce specific times and scope of natural disasters and epidemics causing widespread damage to livestock and crops on mass media so that related units can implement support measures.

Article 17. Ministry of Finance

1. Coordinate with the State Bank of Vietnam in inspecting, supervising, proposing measures to handle debts, and resolving difficulties and obstacles arising during debt resolution as stipulated in Article 13 of this Decree.

2. Coordinate with the Ministry of Justice and the Ministry of Natural Resources and Environment to guide the exemption of registration fees for collateral transactions as stipulated in Article 8 of this Decree.

3. Coordinate with the State Bank of Vietnam in guiding the establishment of risk reserves for loans in the agricultural sector.

Article 18. The Ministry of Planning and Investment

1. Serve as the focal point for negotiating and exploiting domestic and foreign support capital to be entrusted to credit institutions for loans to agriculture and rural areas.

2. Take the lead and coordinate with relevant ministries and sectors in developing mechanisms and determining annual budget sources for entrusted loans to agriculture and rural areas through credit institutions to be submitted to the Prime Minister for consideration and decision.

3. Consolidate programs and projects for rural infrastructure development according to approved development plans, along with proposed investment funding allocations, to serve as a basis for credit institutions to provide loans.

4. Coordinate with the State Bank of Vietnam and the Ministry of Finance in inspecting, supervising, and proposing solutions to address risks associated with widespread losses in agricultural and rural loans.

Article 19. The Ministry of Industry and Trade, the Ministry of Justice, the Ministry of Health, and the Ministry of Natural Resources and Environment

1. The Ministry of Industry and Trade shall take the lead and coordinate with the Ministry of Agriculture and Rural Development and relevant ministries and sectors to develop policies supporting farmers regarding market information and trade promotion for agricultural products.

2. The Ministry of Justice shall take the lead and coordinate with the Ministry of Finance and the Ministry of Natural Resources and Environment to guide the non-collection of registration fees for secured transactions as prescribed in this Decree.

3. The Ministry of Health shall provide specific information on the time frame and scope of epidemics affecting humans or diseases spreading between humans and livestock to serve as a basis for determining the losses that residents in affected areas must bear, including losses from bank loans.

4. The Ministry of Natural Resources and Environment shall direct, urge, and guide provincial People's Committees and centrally-administered city People's Committees to implement the issuance of certificates of land use rights, ownership of houses, and other assets attached to the land.

Article 20. Provincial People's Committee, centrally-administered city People's Committee

1. Implement planning for the development of agricultural products and rural infrastructure within their respective provinces or cities; develop policies to support farmers in science and technology, agricultural extension, forestry extension, fishery extension, market information, and product marketing.

2. Direct departments, branches, and lower-level People's Committees in assisting credit organizations in assessing, lending, and recovering loans according to the law.

3. Direct People's Committees at the commune, ward, and town level to examine and confirm loan application forms for certain customer groups as stipulated in Clause 5, Article 8 of this Decree.

4. Take the lead in examining and submitting to the Prime Minister (through the Ministry of Finance, the Ministry of Planning and Investment, and the State Bank) mechanisms for handling risks related to loans for customers who have suffered losses due to natural disasters or widespread epidemics.

Article 21. Political-Social Organizations

1. Provide surety guarantees to ensure that certain customer groups in rural areas can obtain loans from credit organizations as prescribed.

2. Coordinate with credit organizations to perform all or part of the credit operations after reaching an agreement with the lending organization.

3. Monitor, supervise, and assist organizations and individuals under guarantee in production, product sales, and timely repayment of credit organizations' loans.

Article 22. Credit Organizations

1. Based on this Decree and guidance documents from regulatory agencies, implement guidance for lending in the agricultural and rural sectors throughout the credit organization system in a clear, transparent, and simplified manner to facilitate easy access to credit for customers.

2. Issue regulations and procedures for unsecured loans to be uniformly implemented across the system in a convenient, simple manner suitable for the borrower, the amount of unsecured loans for borrowers in the agricultural and rural sectors.

3. Guide the implementation of interest rate reductions for customers purchasing insurance in agriculture when borrowing from credit organizations, consistent with their own customer policies.

4. Expand their operational network in remote, mountainous, and rural areas in accordance with their financial capacity and operational capabilities; closely cooperate with local political-social organizations to implement lending, loan recovery, and supervision of the loan usage process by customers.

Article 23. Borrowers

1. Provide complete and truthful information and documents related to borrowing and be responsible for the accuracy of the provided information and documents.

2. Use borrowed funds for the intended purpose and repay the principal and interest on borrowed funds according to the agreement with credit institutions.

3. Comply with all relevant legal provisions when borrowing from credit institutions.

Chapter IV

IMPLEMENTING PROVISIONS

Article 24. Effective Date

This Decree takes effect from June 1, 2010.

Article 25. Responsibilities for Implementation

The Ministers, Heads of ministerial-level agencies, Heads of government-affiliated agencies, Chairpersons of provincial and municipal People's Committees under central government jurisdiction, and related organizations and individuals are responsible for implementing this Decree./.