Decision No. 423/2000/QĐ-NHNN on Credit Policy of the Bank for Agricultural Economy

Pursuant to …;

Issued by the Governor of the State Bank of Vietnam No. 423/2000/QĐ-NHNN1

dated September 22, 2000 on Credit Policy

for Agricultural Farms

______________________________

GOVERNOR OF THE STATE BANK OF VIETNAM

Pursuant to the Law on the State Bank of Vietnam No. 01/1997/QH10 and the Law on Credit Organizations No. 02/1997/QH10 dated December 12, 1997;

Pursuant to Decree No. 15/CP dated March 2, 1993 of the Government on the tasks, powers, and responsibilities for state management of Ministries and agencies at ministerial level;

Pursuant to Resolution No. 03/2000/NQ-CP dated February 2, 2000 of the Government on agricultural farms;

At the proposal of the Head of the Monetary Policy Department,

Pursuant to …;

Article 1. Objectives of credit relations with credit organizations

The objectives of credit relations with credit organizations are households of farmers, households of state employees and members of the armed forces who have retired, various types of urban households and individuals specializing in agricultural, forestry, aquaculture production or primarily agricultural production while concurrently engaging in non-agricultural service activities in rural areas, as defined in Circular Joint No. 69/2000/LTLT/BNN-TCTK dated June 23, 2000 of the Ministry of Agriculture and Rural Development and the General Statistics Office guiding criteria for determining agricultural farms.

Article 2. Credit mechanism applicable to farm owners

1. State commercial banks and other credit organizations shall provide commercial credit loans to the credit relationship objects according to the current national credit policy and mechanism as stipulated in the following documents: Decision No. 67/1999/QĐ-TTg dated March 30, 1999 of the Prime Minister on certain credit policies of the banking sector to serve the development of agriculture and rural areas; Decision No. 148/1999/QĐ-TTg dated July 7, 1999 of the Prime Minister amending and supplementing Point b, Clause 3, Section II of Decision No. 67/1999/QĐ-TTg dated March 30, 1999 and the guidance documents for these decisions issued by the State Bank of Vietnam, the lending regulations of credit organizations for customers promulgated under Decision No. 284/2000/QĐ-NHNN1 dated August 25, 2000 of the Governor of the State Bank of Vietnam, Decree No. 17/1999/NĐ-CP dated December 29, 1999 of the Government on collateral for loans of credit organizations and Circular No. 06/2000/TT-NHNN1 dated April 4, 2000 of the Governor of the State Bank of Vietnam guiding this Decree, other relevant legal documents and provisions of this Decision.

2. In addition to providing loans as prescribed in this Decision, credit organizations may provide credit to farm owners in the form of guarantees, financial leasing, short-term discounting of negotiable instruments, and other forms as prescribed by the State Bank of Vietnam.

Article 3. Sources of lending funds

Based on the loan demand of farm owners, credit organizations implement measures to mobilize domestic capital and seek foreign financial assistance to meet the loan needs of farm owners. In cases where credit organizations temporarily face difficulties in capital availability, the State Bank of Vietnam will consider providing refinancing loans.

Article 4. Borrowing Objectives

Loan targets for investment projects, production, business, service, and living needs of farm owners shall be implemented according to the current lending mechanism, but with emphasis on the following categories:

1. Investment, production, and business costs for agricultural, forestry, and aquaculture farms with high rates of commoditization, crop and livestock farms combining cultivation and breeding with processing, having the ability to sell products in both domestic markets and export markets;

2. Infrastructure construction costs (electricity, transportation roads, clean water supply, environmental sanitation) for farms and infrastructure within regions planned for agricultural farms, if deemed effective and capable of repaying the loan.

Article 5. Interest Rate for Loans

1. Interest rates for loans to farm owners shall be implemented according to the regulations of the State Bank of Vietnam during each period.

2. State commercial banks shall offer preferential interest rates for the following cases:

- Farms located in Region III mountainous areas, islands, and concentrated Khmer communities shall have their interest rates reduced by 30% compared to the usual interest rates of credit organizations;

- Farms located in Region II mountainous areas shall have their interest rates reduced by 15% compared to the usual interest rates of credit organizations.

3. For farm owners producing export goods, who have good credit standing with credit organizations regarding the use of borrowed funds and timely repayment of principal and interest, credit organizations shall implement preferential interest rates according to their customer policies.

Article 6. Loan term

Credit organizations shall determine and agree upon short-term loan periods (up to 12 months), medium-term loan periods (from over 12 months to 60 months), and long-term loan periods (over 60 months) based on the growth cycle, harvest time, product consumption period of crops and livestock, depreciation period of fixed assets, lease term, and debt repayment capacity of farm owners; for medium-term and long-term loans, grace periods must be agreed upon based on the construction and basic project implementation periods.

Article 7. Guarantee for loans

1. Farm owners borrowing up to VND 20 million or less than VND 50 million for seed production as stipulated in Point b, Clause 2, Article 4 of Decision No. 103/2000/QĐ-TTg dated August 25, 2000 of the Prime Minister on certain policies to encourage the development of aquatic seed production shall not need to mortgage assets, only submitting a loan application form and a land use right certificate (original) or a confirmation from the People's Committee of the commune, ward, or town regarding the area of land used without disputes, based on the farm owner having an effective production plan and the ability to repay the bank.

2. Farm owners can obtain loans from credit organizations through guarantees provided by other organizations for investment projects eligible for guarantee as prescribed by the Government.

Article 8. Loan amount

Credit organizations shall base their determination and agreement on the loan amount for each borrower based on the loan demand according to the investment project or production and business plan, financial capability, and value of collateral for loans of farm owners.

Article 9. Methods of lending

Credit institutions shall base their decisions on the borrowing needs, the level of credit relationship with farmstead owners, and the management capacity of the farmstead owners to negotiate with the farmstead owners to apply appropriate lending methods such as: lending within credit limits, project investment lending, joint lending among credit institutions, single-instance lending, or other lending methods as prescribed by law.

Article 10. Risk Management for Loan Capital

1. In cases where farmstead owners are unable to repay principal and interest on time due to objective and force majeure reasons, depending on specific circumstances and based on the farmstead owners' proposals, credit institutions shall consider applying the following loan capital risk management measures:

a) Adjusting the repayment period (principal and interest) within the loan term;

b) Extending the loan term according to Article 23 of the Lending Regulations for Customers issued pursuant to Decision No. 284/2000/QĐ-NHNN dated August 25, 2000 by the Governor of the State Bank of Vietnam;

c) Writing off, exempting, freezing, or deferring debt according to Decision No. 67/1999/QĐ-TTg dated March 30, 1999 of the Prime Minister on certain banking credit policies to support rural and agricultural development, and other regulations of the Government and the Prime Minister. The Prime Minister on certain banking credit policies to serve the development of agriculture and rural areas, other regulations of the Government and the Prime Minister.

2. In cases where farmstead owners suffer asset losses related to loan capital due to objective reasons, leading to financial difficulties, credit institutions shall consider waiving or reducing interest on loans according to Article 24 of the Lending Regulations for Customers issued pursuant to Decision No. 284/2000/QĐ-NHNN dated August 25, 2000 by the Governor of the State Bank of Vietnam.

3. In cases where farmstead owners fail to repay principal and interest on loans on time due to subjective reasons, the outstanding debt will be transferred to overdue debt and subject to the late payment interest rate as prescribed by the State Bank of Vietnam.

Article 11. Responsibilities of Credit Institutions in Organizing Loans

1. Credit institutions operating in the network of communes, districts, and towns within provinces and cities have the responsibility to accept loan application files and consider granting loans to all farmstead owners residing in the local commune or ward and those residing elsewhere but leased land for farmsteads by the local People's Committee.

2. Credit institutions shall closely cooperate with the National Development Support Fund operating in localities and other organizations in implementing investment projects, credit programs, loan guarantees, and post-investment incentives for investment projects of farmstead owners eligible for investment incentives under the Law on Encouraging Domestic Investment and other relevant regulatory legal documents.

Article 12. Implementation Provisions

1. This Decision shall take effect fifteen days from the date of signature.

2. The Chairman of the Board of Directors and General Director (Director) of credit institutions are responsible for implementing this Decision.

3. Heads of units related to the State Bank of Vietnam and Directors of provincial branches of the State Bank of Vietnam directly under the Central Government are responsible for urging and inspecting the implementation of this Decision./.