Decision No. 71/1998/QĐ-NHNN21 on the issuance of regulations on collateral of assets by credit institutions borrowing from the Rural Development Fund financed by the World Bank.

Pursuant to …;

Regarding the issuance of Regulations on Pledging Assets of Credit Organizations
borrow funds from the Rural Development Fund supported by the World Bank

GOVERNOR OF THE STATE BANK OF VIETNAM

Pursuant to the Civil Code of the Socialist Republic of Vietnam;

Pursuant to the State Bank of Vietnam Ordinance and the Banking, Cooperative Credit Societies, and Financial Companies Ordinance dated May 24, 1990;

Pursuant to the Development Credit Agreement No. 2855-VN between the Socialist Republic of Vietnam and the International Development Association, World Bank;

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

Pursuant to the Governor's Decision No. 47/QĐ-NH21 dated February 28, 1997 on the Regulation on Management and Use of the Rural Development Fund;

Pursuant to the Governor's Decision No. 1641/QĐ-TCCB dated November 27, 1995 assigning the Project Management Board of the Bank to perform the wholesale banking function of the "Rural Finance" project funded by the World Bank;

At the proposal of the Head of the Project Management Board of the Bank;

DECISION:

Article 1. - Issuing with this Decision the "Regulations on Pledging Assets of Credit Organizations Borrowing from the Rural Development Fund Financed by the World Bank";

Article 2. - This Decision takes effect from February 19, 1998.

Article 3.- The Director of the Governor's Office, the Head of the Project Management Board of the Bank, the Inspector General of the State Bank of Vietnam, the Director of the Economic Research Department, the Director of the State Bank of Vietnam Trading Department, the Director of the Financial Institutions Department, and the Heads of relevant units at the Central State Bank, the Branch Governors of the State Bank of Vietnam in provinces and cities, and the General Directors (Directors) of Credit Organizations borrowing from the Rural Development Fund shall be responsible for implementing this Decision.

REGULATIONS

ON THE PLEDGING OF ASSETS BY CREDIT ORGANIZATIONS BORROWING FUNDS
FROM THE RURAL DEVELOPMENT FUND FINANCED BY THE WORLD BANK
(Issued together with Decision No. 71/1998/QĐ-NHNN21 dated February 19, 1998 of the Governor of the State Bank of Vietnam)

Chapter I. GENERAL PROVISIONS

Article 1. These regulations apply to wholesale credit loans provided by the State Bank to credit organizations operating in Vietnam that have been selected to participate and borrow from the Rural Development Fund within the framework of the Rural Finance Project financed by the World Bank (RDF).

Article 2. The State Bank will only lend to credit organizations selected according to Article 1. These credit organizations must ensure their ability to repay and comply with the provisions of the State Bank in this document.

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Chapter II. SPECIFIC PROVISIONS

Article 3. - Collateral assets include:

1. Valuable securities such as treasury bills, government bonds, central bank bills, and central bank bonds;

2. US dollars (or other foreign currencies accepted by the State Bank);

3. Gold, silver, or precious stones.

Article 4. - Collateral assets must meet the following criteria:

1. Treasury bills, government bonds, central bank bills, and central bank bonds: Must have all elements of treasury bills and bonds as prescribed by the Ministry of Finance or the State Bank and not yet due for payment.

2. The maturity date of the collateral securities is the remaining period of treasury bills, government bonds, central bank bills, and central bank bonds. In principle, the maturity date of the collateral securities should be longer than or equal to, but may also be shorter than the loan term from the RDF. If the remaining period of the collateral securities is shorter than the loan term from the RDF, the borrowing credit organization must comply with Article 7 of these regulations.

Article 5. - Prior to requesting a loan from the PTNT Fund, credit organizations must register the list of collateral documents (according to Form 01/CTCC) and foreign currencies (according to Form 02/NTCC attached) with the State Bank of Vietnam.

The pre-registration of the list of collateral documents shall be conducted at the State Bank of Vietnam Branch or the provincial/municipal branch of the State Bank of Vietnam authorized in writing and where the credit organization has its account opened. Within six days from the date of receipt of the documents sent by the credit organization, the State Bank of Vietnam Branch or the provincial/municipal branch of the State Bank of Vietnam must complete the examination of the collateral documents and notify the credit organization of the documents meeting the collateral standards. Documents meeting the collateral standards will be included in the list of documents meeting the collateral standards and confirmed by the Director of the State Bank of Vietnam Branch or the Director of the provincial/municipal branch of the State Bank of Vietnam. When requesting a loan from the PTNT Fund, along with the Loan Request Form, the credit organization must submit to the Project Management Board of the State Bank of Vietnam the list of documents that have been confirmed to meet the collateral standards.

Article 6. - The maximum amount of loan from the PTNT Fund shall not exceed 80% of the value of the negotiable instruments and certificates pledged. In cases where the collateral is foreign currency, the maximum loan amount from the PTNT Fund may equal 90% of the total value of the foreign currency pledged.

Article 7. - For documents used for collateral that reach their maturity date for payment or collection but the loan from the PTNT Fund has not yet reached its repayment deadline, credit organizations must replace or convert these documents into new documents meeting the standards specified in Article 4 of this Regulation at least ten days before the maturity date for payment or collection of the collateral documents until all debts to the State Bank of Vietnam from the PTNT Fund are repaid.

If, after the above period, the credit organization does not have replacement documents, the State Bank of Vietnam will apply penalties according to the penalty interest rate stipulated in Article 9 of this Regulation.

Article 8. - Custody, management, and preservation of collateral documents:

1. The Director of the State Bank of Vietnam Branch or the Director of the provincial/municipal branch of the State Bank of Vietnam where the credit organization's main office is located shall organize the implementation of the examination, supervision, management, and custody of the collateral documents of credit organizations when borrowing from the PTNT Fund.

2. The handover, custody, and preservation of Treasury bills, government bonds; central bank bills, central bank bonds shall be carried out in accordance with the regulations of the Governor of the State Bank of Vietnam.

Article 9. - Upon maturity of the debt, the credit organization must repay the full amount borrowed (principal and interest) to release the collateral documents. If overdue, the credit organization will not be eligible for further loans from the PTNT Fund and will bear the overdue interest rate as stipulated in the Credit Agreement signed between the Project Management Board of the State Bank and the credit organization, and the State Bank of Vietnam will process the collateral documents to recover the principal and interest.

Article 10. - Once the credit organization has fully repaid the loan from the PTNT Fund (principal and interest), the Project Management Board of the State Bank will notify the Director of the State Bank of Vietnam Branch, the Director of the relevant provincial/municipal branch of the State Bank to return the collateral documents to the credit organization. If the credit organization fails to repay the full loan, it will be handled according to Article 9 of this Regulation.

Article 11. - Any amendments or supplements to this regulation shall be decided by the Governor of the State Bank of Vietnam.

 FORM 011/CTCC

LIST OF DOCUMENTS
REGISTERED FOR COLLATERAL TO APPLY FOR LOAN
FROM THE PTNT FUND

Name of credit institution or branch of credit institution...

Name of registration unit (State Bank of Vietnam Branch, provincial/municipal branch of the State Bank)...

..., day... month... year 19...

General Director (Director)

(Name, signature, stamp)

FORM 02/NTCC

LIST OF FOREIGN CURRENCIES
REGISTERED FOR COLLATERAL TO APPLY FOR LOAN FROM THE PTNT FUND

Name of credit institution or branch of credit institution...

Name of registration unit (State Bank of Vietnam Branch, provincial/municipal branch of the State Bank)...

..., day... month... year 19...

General Director (Director)

(Name, signature, stamp)