Circular No. 65/2011/TT-BTC guiding interest rate support for loans and compensation for interest rate differences due to implementation of policies aimed at reducing post-harvest losses for agricultural products and aquatic products.

CIRCULAR

Guidelines for interest rate support on loans and compensation for interest rate differences aimed at reducing post-harvest losses for agricultural and aquatic products.

To reduce post-harvest losses for agricultural and aquatic products.

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Pursuant to the Decree No. 118/2008/NĐ-CP dated November 27, 2008 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

Pursuant to Decision No. 63/2010/QĐ-TTg dated October 15, 2010 of the Government on policies to reduce post-harvest losses for agricultural and aquatic products;

The Ministry of Finance issues guidelines on interest rate support on loans and compensation for interest rate differences for the Vietnam Agricultural and Rural Development Bank when implementing policies to reduce post-harvest losses for agricultural and aquatic products as follows:

Article 1. Scope of Regulation and Applicability:

This Circular provides guidance on conditions, documents, procedures, and processes for interest rate support and compensation for interest rate differences for the Vietnam Agricultural and Rural Development Bank when providing loans according to Articles 1 and 2 of Decision No. 63/2010/QĐ-TTg dated October 15, 2010 of the Government on policies to reduce post-harvest losses for agricultural and aquatic products (hereinafter referred to as Decision No. 63/2010/QĐ-TTg).

Article 2. Conditions for state budget interest rate support on loans or compensation for interest rate differences:

1. The Vietnam Agricultural and Rural Development Bank implements loans in accordance with Article 1 and Article 2 of Decision No. 63/2010/QĐ-TTg and the guidance of the State Bank of Vietnam.

2. Loans eligible for state budget interest rate support or compensation for interest rate differences must meet all of the following conditions:

a) They must be for the correct target and purpose as specified in Article 1 and Article 2 of Decision No. 63/2010/QĐ-TTg.

b) Loans eligible for interest rate support or compensation for interest rate differences are those that are repaid before and within the due date at the time of interest rate support or compensation for interest rate differences; no support will be provided for overdue loans.

Article 3. Levels and sources of funds for interest rate support and compensation for interest rate differences:

1.1 Loans for purchasing machinery and equipment specified in Clause 2, Article 1 of Decision No. 68/2013/QĐ-TTg shall be supported by the state budget at 100% interest rate for the first two years and 50% interest rate for the third year. The timing of interest rate support for each loan shall be calculated from the disbursement date.

a) For loans supporting interest rates to purchase machinery and equipment as stipulated in Clause 2, Article 1 of Decision No. 63/2010/QĐ-TTg, the state budget will support 100% of the interest rate for the first two years, and from the third year onwards, the state budget will support 50% of the interest rate.

b) For loans applying investment credit development interest rates to purchase machinery and equipment and invest in projects as stipulated in Clause 1 and Clause 2, Article 2 of Decision No. 63/2010/QĐ-TTg, the state budget will compensate the difference between the interest rate for loans from the Vietnam Agricultural and Rural Development Bank and the investment credit development interest rate of the state.

c) The interest rate for loans from the Vietnam Agricultural and Rural Development Bank used as the basis for state budget interest rate support or compensation for interest rate differences is the lowest interest rate applied by the Vietnam Agricultural and Rural Development Bank for loans serving agriculture and rural areas during the same period.

The Vietnam Agricultural and Rural Development Bank is responsible for publicly announcing the lowest loan interest rate as stipulated in Point c), Clause 1 of this Article to apply for loans supporting the targets specified in Article 1 of this Circular, serving as the basis for interest rate support or compensation for interest rate differences.

d) The investment credit development interest rate implemented according to Clause 3, Article 2 of Decision No. 63/2010/QĐ-TTg is the investment credit development interest rate of the state announced for each period.

The source of funds for interest rate support and compensation for interest rate differences to implement policies aimed at reducing losses in agriculture shall be allocated from the annual state budget estimate for compensating interest rate differences for preferential credit loans (development capital).

The source of funds for interest rate support and compensation for interest rate differences to implement policies to reduce post-harvest losses for agricultural and aquatic products is allocated in the annual state budget estimate for compensating interest rate differences for preferential credit. The Ministry of Planning and Investment is responsible for coordinating with the Ministry of Finance to allocate the budget estimate for interest rate support and compensation for interest rate differences to reduce post-harvest losses for the Vietnam Agricultural and Rural Development Bank according to Clause 5, Article 6 of Decision No. 63/2010/QĐ-TTg and the provisions of the State Budget Law.

Article 4. Documents and procedures for interest rate support on loans and compensation for interest rate differences:

1. Establishing Plans for Interest Rate Subsidies and Differential Interest Rate Compensation:

Each year, no later than July 31, the Vietnam Agricultural and Rural Development Bank shall base on its assigned tasks to forecast the outstanding loan balance for purchasing machinery and equipment for harvesting agricultural and aquatic products and investing in construction projects of warehouses for the following year, to develop plans for interest rate support and compensation for interest rate differences for the planning year (divided by quarters), and submit them to the Ministry of Finance (one copy) and the Ministry of Planning and Investment (one copy) during the time of compiling the state budget revenue and expenditure estimates for the next year according to the State Budget Law and guiding documents.

The establishment of the annual interest rate subsidy and differential interest rate compensation plan is carried out according to the following formula:

1.1. Regarding the supported interest rate on loans:

a) For existing outstanding balances that have already occurred (including the amount expected to be realized by December 31 of the previous year):

Where:

- The average outstanding loan balance is calculated by the Vietnam Agricultural and Rural Development Bank based on the average of the outstanding balances that have been actually lent out.

- The average interest rate support equals 100% of the average lending interest rate of the Vietnam Agricultural and Rural Development Bank in the first two years, and from the third year onwards, it equals 50% of the average lending interest rate of the Vietnam Agricultural and Rural Development Bank as stipulated in Clause 1, Article 3 of this Circular.

b) For new outstanding balances expected to occur during the planning year:

- The average outstanding loan balance for the year receiving subsidy is calculated as the arithmetic mean between the beginning-of-year and end-of-year outstanding loan balances.

- The average interest rate support equals 100% of the average lending interest rate of the Vietnam Agricultural and Rural Development Bank in the first two years, and from the third year onwards, it equals 50% of the average lending interest rate of the Vietnam Agricultural and Rural Development Bank as stipulated in Clause 1, Article 3 of this Circular.

1.2 For interest rates on loans subject to differential interest rate compensation:

a) For existing outstanding balances that have already occurred (including the amount expected to be realized by December 31 of the previous year):

Where:

- The average outstanding loan balance eligible for differential interest rate compensation is calculated by the Vietnam Agricultural and Rural Development Bank based on the average of the actual outstanding debt balances.

- The average interest rate difference compensation is the difference between the average lending interest rate of the Vietnam Agricultural and Rural Development Bank and the state investment development credit interest rate, calculated using the arithmetic average formula between the interest rate difference compensation at the beginning and end of the year.

b) For new outstanding balances expected to occur during the planning year:

- The average outstanding loan balance for the year receiving differential interest compensation is calculated as the arithmetic mean between the beginning-of-year and end-of-year outstanding loan balances.

2. Quarterly provisional interest rate subsidies and provisional differential interest rate compensation:

Within a maximum of 30 days from the date of receiving the quarterly implementation report of the Vietnam Agricultural and Rural Development Bank, the Ministry of Finance will temporarily allocate 80% of the interest support amount of the bank's previous quarter but not exceeding the annual budget allocation. In case of non-temporary allocation, the Ministry of Finance must provide a written response to the Vietnam Agricultural and Rural Development Bank within 20 working days.

3. Method for determining the amount of interest support and the amount of interest differential compensation:

3.1. For loans with interest rate support as prescribed in Article 1 of Decision No. 63/2010/QĐ-TTg:

a) The amount of interest supported for a loan is calculated by multiplying the interest support rate with the outstanding loan balance and the period of borrowing supported by interest rate according to the following formula:

Where:

- The actual interest support rate implemented according to Clause 1, Article 3 of this Circular.

- n is the number of days of outstanding balance during the period receiving interest rate support.

b) The total amount of interest supported by the Vietnam Agricultural and Rural Development Bank is the sum of the actual interest supported for all eligible loans.

c) The Vietnam Agricultural and Rural Development Bank uses the above formula to determine the interest support amount requested to be compensated by the Ministry of Finance.

3.2. For loans with compensation for interest rate differences as prescribed in Article 2 of Decision No. 63/2010/QĐ-TTg:

a) The amount of interest difference compensation for a loan is calculated by multiplying the interest rate difference compensation rate with the outstanding loan balance and the period of borrowing compensated by interest rate according to the following formula:

Where:

- The interest rate difference compensation rate as prescribed in Clause 1, Article 3 of this Circular.

- n is the number of days of outstanding balance during the period receiving interest rate support.

b) The actual amount of interest differential compensation of the Vietnam Agricultural and Rural Development Bank is the total actual interest compensation amount of all loans eligible for interest rate compensation.

c) The Vietnam Agricultural and Rural Development Bank uses the above formula to determine the amount of interest differential compensation requested to be compensated by the Ministry of Finance.

4. Settlement of interest rate support on loans and compensation for interest rate differences:

4.1. No later than 45 days from the end of the fiscal year, the Vietnam Agricultural and Rural Development Bank must submit settlement proposal documents for interest rate support on loans and compensation for interest rate differences to the Ministry of Finance. For cases where the documents are not valid, the Ministry of Finance is responsible for notifying the Vietnam Agricultural and Rural Development Bank in writing within 10 days.

4.2. Settlement proposal documents:

a) Settlement Request Documents for Loans Eligible for Interest Rate Subsidies:

- A consolidated report on the settlement of interest rate support for borrowing throughout the system, audited by an Independent Auditor or State Audit Agency (Annex Table 1).

- A report on the settlement of interest rate support for borrowing by province (Annex Table 2).

b) Settlement Request Documents for Loans Eligible for Differential Interest Rate Compensation:

- A comprehensive report on the settlement of interest rate difference compensation according to the investment development credit interest rate, audited by an independent auditor or State Audit (Appendix 3 attached).

- A report on the settlement of interest rate differential compensation according to investment credit interest rates by province (Annex Table 4).

4.3. The Vietnam Agricultural and Rural Development Bank organizes copies and retains detailed vouchers and reports for each interest rate support item to ensure accuracy, transparency, and clarity to facilitate the verification of settlement support interest rate data or compensation for interest rate differences as stipulated in Point 4.4, Clause 4 of this Article.

4.4. Verification of settlement data for interest rate support on borrowing and interest differential compensation:

a) The Ministry of Finance conducts verification of settlement support interest rate data and compensation for interest rate differences after receiving complete settlement support interest rate and compensation for interest rate differences proposal documents.

b) The Ministry of Finance notifies in writing the branches of the Vietnam Agricultural and Rural Development Bank selected to conduct settlement verification.

c) The Vietnam Agricultural and Rural Development Bank is responsible for providing detailed documents for each loan, compiled by branch, selected for settlement verification as follows:

- Credit agreements, promissory notes, or equivalent documents to determine the borrower's identity, loan implementation status, outstanding balance, and repayment.

- A summary table to determine the amount of interest rate support grants and interest rate differential subsidies.

- Customer confirmation regarding receipt of interest rate support on loans and compensation for interest rate differences.

The above documents are photocopies stamped as true copies by the Vietnam Agricultural and Rural Development Bank (one set) and signed by authorized persons with full name.

d) Verification of settlement support interest rate data or compensation for interest rate differences is conducted within 90 days from the date of receiving complete settlement support interest rate or compensation for interest rate differences documents from the Vietnam Agricultural and Rural Development Bank.

4.5. Handling discrepancies between settlement data and temporarily allocated interest rate support or compensation for interest rate differences:

- In case there is a discrepancy between the amount reported in the audited final settlement statement and the amount reviewed in the final settlement by the Ministry of Finance, the Vietnam Agriculture and Rural Development Bank shall adjust its accounting records to accurately reflect the final settlement amount for interest rate support or interest rate differential subsidy.

- If the temporarily provided interest rate support or interest rate differential subsidy amount exceeds the reviewed final settlement amount, the excess amount will be recovered by the Ministry of Finance and deposited into the state budget.

- The adjustment of discrepancies between the reviewed final settlement amount and the temporarily provided interest rate support or interest rate differential subsidy amount shall be carried out within forty-five days from the date of the Final Settlement Review Report.

- In cases where the processing time for discrepancies between the final settlement figures and the reviewed final settlement figures for interest rate support or interest rate differential subsidy needs to be extended, or in special cases, such matters shall be examined and decided by the Minister of Finance.

5. Handling the recovery of previously provided interest rate support or interest rate differential subsidy amounts:

- During the period of support, if the Vietnam Agriculture and Rural Development Bank discovers violations in the use of borrowed funds through customer audits, it shall convert the government-supported loan into a regular loan and immediately recover the temporarily advanced support amount provided to the borrowing customer.

- If violations by borrowing customers are discovered after the final settlement by state management agencies, the Vietnam Agriculture and Rural Development Bank shall be responsible for recovering the government-supported amount and returning it to the state budget.

Article 5. Reporting System

1. Regarding monthly/quarterly reports:

Monthly (no later than the 15th day of the following month), the Vietnam Agriculture and Rural Development Bank shall submit a report on the implementation results of interest rate support policies aimed at reducing post-harvest losses for agricultural and aquatic products to the Ministry of Finance and the State Bank of Vietnam. Quarterly (no later than the 30th day of the following quarter), the Vietnam Agriculture and Rural Development Bank shall compile the system-wide interest rate support data and submit it to the Ministry of Finance.

2. For annual reports:

Within forty-five days from the end of the fiscal year, the Vietnam Agriculture and Rural Development Bank shall submit an annual implementation report to the Ministry of Finance, including:

- The amount of temporarily provided interest rate support or interest rate differential subsidy during the year.

- The actual amount of interest rate support or interest rate differential subsidy that occurred during the year and is requested to be provided.

- The application for settlement as stipulated in Point 4.2, Clause 4, Article 4 of this Circular.

Article 6. Implementation Organization

1. This Circular takes effect from July 1, 2011.

2. During implementation, if any difficulties arise, they should be reported to the Ministry of Finance for consideration and resolution./.