Decision No. 67/1999/QD-TTg On Certain Banking Credit Policies to Support Agricultural and Rural Development

Pursuant to …;

On certain banking credit policies

to serve agricultural and rural development

____________

PRIME MINISTER

Pursuant to the Government Organization Law dated September 30, 1992;

CONSIDERING THE PROPOSAL OF THE STATE BANK OF VIETNAM,

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

Pursuant to …;:

Article 1. Enact certain banking credit policies to serve agricultural and rural development with the following contents:

I. SOURCES OF FUNDS

1. Sources of funds for agricultural and rural development include:

- Funds raised by banks;

- State budget funds;

- Loans from international financial organizations and foreign entities;

The annual supplementary funds are assigned to the Vietnam Agricultural and Rural Development Bank for use in serving agricultural and rural development, including a reasonable portion allocated for poor households to borrow through the bank to serve the poor.

2. Methods of raising funds for agricultural and rural development mainly include:

- Promoting the mobilization of demand deposits, term deposits, issuance of commercial paper, bank bonds, etc., including in Vietnamese dong, foreign currency, and gold when necessary;

- Gradually diversifying medium-term and long-term fund mobilization to ensure funding for agricultural and rural development programs during each period. In the short term, to serve the government's agricultural and rural development program, commercial banks may issue bonds at interest rates higher than the prevailing deposit rates at the same time, with the maximum rate difference being 1% per annum;

- When commercial banks raise medium-term and long-term funds in gold, they must submit a plan for approval by the State Bank, which is responsible for converting the raised gold into Vietnamese dong;

- Actively mobilizing external sources of funds, including ODA and commercial loans. Promptly disburse the two rural finance and agricultural credit projects in phase I, creating conditions for the continuation of borrowing in phase II amounting to approximately 150 million US dollars to 180 million US dollars;

- In addition to the funds raised by banks, the state annually allocates a portion of the budget to credit institutions to lend for implementing economic programs according to state policy.

II. ON CREDIT POLICY AND MECHANISMS

1. For ordinary credit

a) The Vietnam Agricultural and Rural Development Bank and other credit institutions must mobilize and balance sufficient sources of funds to meet the increased volume of credit needed for agricultural and rural development, including:

- Production costs for crop cultivation and animal husbandry such as materials, fertilizers, seedlings, livestock, pesticides, herbicides, disease prevention and treatment drugs, feed for livestock...; production costs for aquaculture (freshwater and brackish water) such as pond improvement, cage farming, seedlings, feed, disease prevention and treatment drugs...; fishing costs such as investment in building new, repairing fishing vessels, purchasing fishing gear, fuel, ice...; salt production costs; irrigation and drainage costs; construction of small-scale irrigation works.

- Consumption, processing, and export of agricultural, forestry, aquatic, marine products, and salt;

- Development of industry, small-scale handicrafts, trades, and services in rural areas;

- Purchase of machinery, equipment, and tools to support agricultural and rural development such as tractors, plows, water pumps, harvesters, rice threshers, rice milling machines, drying machines, processing equipment, pesticide sprayers...; purchase of transportation means for agricultural goods; construction of livestock sheds, warehouses, drying yards, post-harvest preservation facilities;

- Development of rural infrastructure such as electricity, rural roads, clean water supply, environmental sanitation.

b) Loan guarantee mechanism

- For individual households, the bank will lend up to 10 million Vietnamese dong, and the borrower does not need to collateralize assets but only needs to submit an application form and a land use right certificate.

- For households engaged in commodity production and large-scale farms, if the loan exceeds 10 million Vietnamese dong, the borrower must comply with the bank's loan guarantee regulations.

- For production and business cooperatives, depending on specific cases, credit institutions may apply one of the following methods:

+ Implement loan guarantees according to the bank's regulations.

+ Use assets of the Management Board members as loan guarantees;

+ Use assets formed from borrowed capital as loan guarantees, but the maximum loan amount equals the cooperative's own capital.

- For enterprises

+ State-owned enterprises tasked with purchasing rice for export and importing fertilizers can use assets formed from borrowed capital as loan guarantees; for other enterprises engaged in different products, they must implement loan guarantees according to the bank's regulations.

+ Other enterprises must comply with the bank's loan guarantee regulations when borrowing.

2. Preferential interest rate loans shall be implemented according to separate decisions of the Prime Minister and the Law on Encouraging Domestic Investment.

3. For credit implemented according to state policy such as:

- Loans to poor households;

- Loans to recover from typhoon and flood damage;

- Loans for building and upgrading fishing vessels and offshore service vessels;

- Loans for other programs within a certain scope in difficult regions and industries.

Borrowers under these types of state policy loans do not have to comply with loan guarantee regulations; in case of risk, the bank reports to the Prime Minister for specific resolution.

III. ON LOAN TERMS

Banks provide loans based on the growth cycle of crops and livestock, the turnover of materials and goods, and the depreciation of assets, machinery, and equipment.

Short-term loan terms, up to 12 months;

Medium-term loan terms, over 12 months to 5 years;

Long-term loan terms, over 5 years;

IV. REGARDING THE SUPPORT NETWORK

IV. ON NETWORKS SERVING

AND TRANSACTIONS OF BANKS

- Encourage credit organizations to participate in lending for the development of agriculture and rural areas. Other credit organizations participating in lending for the development of agriculture and rural areas shall implement the provisions of this Decision.

- Credit organizations need to improve loan procedures, simplify formalities;

V. RISK MANAGEMENT

In cases where loans for the development of agriculture and rural areas suffer losses due to objective and uncontrollable factors such as typhoons, floods, droughts, epidemics, the State shall have policies to address the losses for borrowers and lending banks (write off, exempt, freeze, extend loans depending on the extent of the loss).

The handling of losses when they occur in specific cases shall be coordinated by the Ministry of Finance in collaboration with the State Bank of Vietnam and local authorities to inspect and recommend measures to handle the situation, which shall be submitted to the Prime Minister for decision.

Article 2. The State Bank of Vietnam and the Ministry of Finance shall be responsible for guiding the implementation of this Decision.

Article 3. THIS DECISION SHALL TAKE EFFECT 15 DAYS FROM THE DATE OF SIGNATURE.

Ministers, Heads of ministerial-level agencies, Heads of government-affiliated agencies, Chairpersons of provincial and municipal People's Committees directly under the Central Government are responsible for implementing this Decision.