Circular No. 65/2002/TT-BTC guides the provision of interest rate differential subsidies to state-owned commercial banks when performing tasks of lending to traders for essential goods reserves, retail sales, and purchasing agricultural and forestry products in mountainous, island, and ethnic minority regions.

CIRCULAR

Guidelines for compensating interest rate differences for State-owned commercial banks when performing tasks of lending to traders for essential goods reserves, retail sales, and purchasing agricultural and forestry products in mountainous areas II and III, islands, and ethnic minority regions

Pursuant to Clause 2 of Article 1 of Decree No. 02/2002/NĐ-CP dated January 3, 2002, issued by the Government amending and supplementing certain provisions of Decree No. 20/1998/NĐ-CP dated March 31, 1998, issued by the Government on developing trade in mountainous areas, islands, and ethnic minority regions, the Ministry of Finance guides the compensation of interest rate differences for State-owned commercial banks when performing tasks of mobilizing capital and lending to traders for essential goods reserves, retail sales, and purchasing agricultural and forestry products in mountainous areas II and III, islands, and ethnic minority regions as follows:

a) Cadres, civil servants, public officials, and workers as stipulated in Article 2 of Decree No. 178/2024/NĐ-CP dated December 31, 2024 (amended and supplemented by Decree No. 67/2025/NĐ-CP dated March 15, 2025) of the Government on policies and treatment for cadres, civil servants, public officials, workers, and armed forces personnel in the process of organizational restructuring of the political system, having a total mandatory social insurance contribution period of at least 15 years when working in heavy, hazardous, or dangerous jobs or extremely heavy, hazardous, or dangerous jobs listed by the agency under the Government responsible for labor administration, or working in areas with particularly difficult socio-economic conditions including time worked in places with regional allowances of coefficient 0.7 or higher before January 1, 2021, and reaching the retirement age as specified in Appendix II issued together with Decree No. 135/2020/NĐ-CP, ceasing work immediately due to direct impact from organizational restructuring and implementation of the two-level local government model;

The subjects eligible for interest rate difference compensation under this Circular are State-owned commercial banks that perform the task of lending to traders for essential goods reserves, retail sales, and purchasing agricultural and forestry products in mountainous areas II and III, islands, and ethnic minority regions according to the provisions of Decree No. 02/2002/NĐ-CP dated January 3, 2002, issued by the Government and the guidelines of the State Bank.

2. Scope and principles of compensation

- The scope of interest rate difference compensation is the compensation of a 20% reduction in the usual loan interest rate for traders who have borrowed from State-owned commercial banks. The total amount of interest rate difference compensation annually shall be implemented within the annual state budget estimate approved by the National Assembly.

- The amount of interest rate difference compensation is calculated based on the outstanding principal of loans to traders corresponding to the period of essential goods reserves, retail sales, and purchasing agricultural and forestry products in mountainous areas II and III, islands, and ethnic minority regions at 20% of the actual usual loan interest rate.

- State-owned commercial banks must monitor and record separately the amounts lent, collected, and outstanding to ensure accurate calculation and verification of the interest rate difference compensation.

3. Conditions for compensation

The state budget will only compensate State-owned commercial banks for lending to traders with a 20% reduction in interest rates if they meet the following conditions:

+ Traders borrowing from State-owned commercial banks have their headquarters or registered branches operating in mountainous provinces or areas designated as mountainous according to the law.

+ Traders are assigned tasks and confirmed quantities, values, and periods for essential goods reserves, retail sales, and purchasing agricultural and forestry products in mountainous areas II and III, islands, and ethnic minority regions by competent authorities.

+ Credit contracts between traders and State-owned commercial banks must be signed from the date Decree No. 02/2002/NĐ-CP took effect (from January 18, 2002). The credit contract must clearly specify the usual loan interest rate of the State-owned commercial bank at the time of signing the contract and the actual loan interest rate (reduced by 20%) for the trader. The usual commercial loan interest rate of the State-owned commercial bank at the time of signing the credit contract with the trader must be consistent with the prevailing commercial loan interest rate for similar terms and periods for non-reduced interest rate customers and other financial organizations operating in the same area.

+ The loan term for traders to reserve, retail, and purchase agricultural and forestry products in mountainous areas II and III, islands, and ethnic minority regions for which interest rate difference compensation is provided corresponds to the period of essential goods reserves, retail sales, and purchasing agricultural and forestry products in these regions.

4. Method of compensation

The interest rate difference amount is temporarily compensated semi-annually during the year, and the final interest rate difference compensation for the entire year will be determined after the end of the fiscal year.

4.1. Preparation of plans for interest rate difference compensation

- Based on the actual situation of interest rate reductions for traders in the current year and the planned borrowing of traders in the planning year, State-owned commercial banks prepare plans for lending to traders and determine the expected interest rate difference compensation amount using the formula:

Where:

+ The average monthly outstanding loan balance eligible for compensation is the projected outstanding loan balance for traders calculated using the arithmetic mean method for all months with outstanding balances in the planning year.

+ The usual loan interest rate for planning purposes is the average monthly usual loan interest rate currently being applied by the State-owned commercial bank at the location of the loan at the time of planning.

- State-owned commercial banks prepare plans for interest rate difference compensation for the year and submit them to the Ministry of Finance for inclusion in the annual state budget estimate.

4.2. Method of interest rate difference compensation

a) Formula for calculating interest rate difference compensation

Wherein:

+ n is the number of months of lending activities corresponding to the period of essential goods reserves, retail sales, and purchasing agricultural and forestry products in mountainous areas II and III, islands, and ethnic minority regions.

+ The usual loan interest rate is the usual monthly loan interest rate according to the term specified in the credit contract at the location of the loan, ensuring compliance with the provisions stated above.

b) Method of interest rate difference compensation:

- Semi-annually, based on the plans and progress of implementation by units, the Ministry of Finance will temporarily compensate up to 80% of the actual achievement in six months for State-owned commercial banks.

- At the end of the fiscal year, State-owned commercial banks that have performed lending to traders must calculate and determine the actual interest rate difference compensation amount according to the formula and report it to the Ministry of Finance.

On the basis of reports from State-owned Commercial Banks, the Ministry of Finance will conduct inspections to verify the conditions for interest rate subsidy eligibility, officially determine the amount of interest rate subsidy for State-owned Commercial Banks, and handle as follows:

+ If the officially determined subsidy amount exceeds the temporary subsidy granted during the year, the Ministry of Finance will provide the remaining amount.

+ If the officially determined subsidy amount is lower than the temporary subsidy granted during the year, the excess subsidy amount will be retained for temporary allocation in the following year (in cases where State-owned Commercial Banks continue to be assigned the task of lending to traders at reduced interest rates) or must be returned to the State budget (in cases where State-owned Commercial Banks are not continuing to perform the task of lending to traders at reduced interest rates).

5. Reporting system and settlement documentation for interest rate subsidy

5.1. State-owned Commercial Banks are responsible for preparing and submitting to the Ministry of Finance the following reports:

- A report on the planned interest rate subsidy forecast for the year, to be submitted before July 31 of the preceding year.

- A report on the implementation of lending and the amount of interest rate subsidy requested for six months, to be submitted no later than twenty days after the end of the six-month period.

- A report on the implementation of lending and the amount of interest rate subsidy requested for the year, to be submitted no later than forty-five days after the end of the fiscal year.

5.2. State-owned Commercial Banks shall prepare settlement documentation for interest rate subsidy before February 28 of the following year at their headquarters for the Ministry of Finance to conduct settlement verification. The settlement documentation for interest rate subsidy includes:

- Documents proving compliance with the conditions for interest rate subsidy as specified in point 3 above.

- The actual amount of interest rate differential arising throughout the year that is proposed to be subsidized (according to attached form number 01).

- Details of lending to traders by each branch (according to attached form number 02).

- An aggregated list of interest rate differential subsidy amounts for each trader (according to attached form number 03), accompanied by promissory notes and related documents to compile the list.

6. Implementation organization

This Circular takes effect from the date of signature. For credit contracts signed from January 18, 2002 to the date this Circular comes into force, State-owned Commercial Banks and traders eligible for interest rate subsidy must agree to amend the credit contract in accordance with Circular No. 04/2002/TT-NHNN dated July 3, 2002 of the State Bank of Vietnam guiding the implementation of reduced lending interest rates by State-owned Commercial Banks to traders and this Circular.

State-owned Commercial Banks lending to traders are responsible for preparing plans, accurately determining the amount of interest rate differential proposed for subsidy, and submitting reports to the Ministry of Finance in accordance with the content and deadlines stipulated in this Circular.

Any difficulties encountered during implementation should be promptly reported to the Ministry of Finance for consideration and resolution./.