JOINT CIRCULAR No. 51-LB of the Joint Ministries on temporary measures for lending water pumps to agricultural production cooperatives

JOINT CIRCULAR

CONDITIONS FOR LOANS

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Currently, the number of our pumps is very limited compared to the total area requiring irrigation, the technical proficiency of workers operating the pumps is still low, and there is a lack of experience. Therefore, the main form of pump management is state-owned teams. Selling pumps to agricultural production cooperatives cannot be widely expanded at present. Thus, the loaning of irrigation pumps to agricultural production cooperatives will be prioritized according to the following conditions:

I. - The area of fields requiring irrigation is relatively concentrated and frequently suffers from drought, lacking manpower for manual water extraction or using manpower would result in significant labor loss;

- There is sufficient water available even during the most severe drought periods. At the same time, the pumps must be carefully protected and their full capacity utilized, at least two-thirds of the pump's annual capacity;

- There are workers with relatively experienced pump operation skills;

- Agricultural production cooperatives must request and voluntarily apply for loans, ensuring that the provided pumps will increase productivity and income for the cooperative and its members, and guarantee repayment of the national debt within the specified period;

- Approval from the County Administrative Committee and confirmation from the Water Resources Department regarding the above conditions, while also receiving technical guidance and assurance from the Water Resources Department. Additionally, protective measures and usage agreements must be established.

II. OBJECTS, AMOUNT, TERM, AND INTEREST RATE OF LOANS

The borrowing entity must be relatively large-scale agricultural production cooperatives or those that have merged or are preparing to merge. These cooperatives have relatively good management and business capabilities, ensuring proper use of the pumps.

2. Loan amount:

1. Borrowing ObjectivesAfter fully mobilizing the self-reliance capabilities of agricultural production cooperatives, the remaining shortfall will be loaned by the Bank. In cases where cooperatives face many difficulties and cannot rely solely on themselves, the Bank may also provide loans up to 100% of the required capital for purchasing equipment.

: The maximum loan term for pumps is five years, with repayments made annually to alleviate future burdens. If the pump purchase price is high and the agricultural production cooperative encounters many difficulties, unable to repay the debt within five years, the Bank may extend the term, but not exceeding the machine's service life. Irrigation pumps are expensive materials. To support and encourage agricultural production cooperatives to use pumps to increase yields, expand acreage, improve productivity, and increase income, the interest rate for pump loans is particularly favorable. Pending the issuance of a comprehensive interest rate policy,

3. Loan termIII. IMPLEMENTATION MEASURES

4. Interest Rates on Loans: Current pumps have been distributed to provinces and are managed, distributed, and sold to agricultural production cooperatives by the Water Resources Departments. To ensure timely and rapid distribution and lending, close cooperation between the Water Resources Departments and Branches, Sub-branches of the State Bank is necessary. Below are several key measures and responsibilities of each sector in this matter:

1. Based on the number of pumps distributed by the Ministry of Water Resources and Electric Power to provinces and the requirements of localities within the province, the Provincial Administrative Committee will assign the Water Resources Department, together with the Rural Work Committee of the Province and the County Administrative Committee, to exchange opinions and establish a list of pump distribution according to the aforementioned priority order among drought-stricken regions in the province, and submit it for approval by the Provincial Administrative Committee.

Branches and sub-branches of the State Bank will base their review and approval of loans to cooperatives on this list after obtaining the County Administrative Committee's agreement. The price of pumps is generally based on the state-set price. However, for old pumps previously sold on credit or rented before 1959, if they are now to be sold, each province will establish a pricing committee to reassess the price before selling them to agricultural production cooperatives. The Bank will only lend according to the value determined by the pricing committee, and any difference will be resolved by the Water Resources Department in consultation with the previous user unit, based on the principle that the cooperative must pay the value of the machine on the day it was received.

In areas where sales and loans are needed, the Water Resources Department must dispatch staff to assist agricultural production cooperatives:

- Accurately calculate and determine the prescribed conditions.

- Guide cooperatives on technical aspects and management to ensure effective results.

- Help cooperatives calculate necessary expenses for pump operation under the spirit of "economy and construction."

- Assist cooperatives in establishing a pump control team and water distribution plan.

When cooperatives come to purchase pumps, the Water Resources Department is responsible for timely distribution and ensuring the pumps function properly before delivery.

2. Agricultural production cooperatives wishing to borrow for pump purchases need to calculate the area of land they intend to irrigate, agree on contribution levels and debt-bearing capacities, then submit a loan application to the County Administrative Committee for approval (the application should clearly state the conditions and be confirmed and guaranteed by the Water Resources Department regarding technical aspects).

When cooperatives purchase pumps, the Water Resources Department shall be responsible for timely distribution and ensuring that the machines operate well before delivery.

2. Agricultural production cooperatives wishing to borrow money to purchase machines must calculate the amount of land they intend to irrigate, agree on the contribution and debt levels among themselves, and then submit a loan application to the district administrative committee for approval (the loan application must clearly state the conditions and be confirmed and guaranteed by the Water Resources Department from a technical standpoint).

3. The branch bank is responsible for distributing the long-term loan capital within the first quarter of 1961 index sent by the Central Office to the branches in a timely manner. If there is a shortage of capital, the branch must prepare a plan and send it urgently to the Central Office so that the Central Office can provide additional loan capital.

The branches must dispatch staff to the local areas together with staff from the Water Resources Department and the Water Resources Management Board to recheck the conditions, calculate economic efficiency, calculate repayment time... Based on the loan application, the branch is responsible for resolving it promptly.

When granting loans, record the debt of the borrowing units, credit the account number 15.44 sub-account "Water Resources Department".

Monthly, the Water Resources Department prepares a list of the number of machines and amounts sold and sends them to the Ministry of Water Resources and Electricity; the Ministry of Water Resources and Electricity will settle accounts with the Ministry of Finance.

After granting loans, bank staff and Water Resources Department staff need to strengthen inspections to help agricultural production cooperatives fully utilize and maximize the capacity of pumps and assist them in solving difficulties.

When collecting debts, bank staff must base on the accumulated fund and depreciation fund to collect gradually according to the ability of each cooperative. Cooperatives need to accurately calculate pump depreciation to have sufficient funds to repay debts on time and have enough money for repairs and replacement when old machines break down.

4. Granting loans for purchasing pumps is a relatively complex business operation, requiring staff to have technical knowledge, therefore, this type of loan must be directly granted by bank staff, not through cooperatives borrowing. The above are the main measures guiding localities to implement, supplementing and further specifying Circular Jointly Issued by the State Bank of Vietnam and the Ministry of Water Resources and Electricity No. 315-LB dated June 13, 1958. Any previous regulations contrary to those mentioned above are hereby abolished.