Circular No. 81/2016/TT-BTC guiding the interest rate support mechanism for implementing credit policies under Decree No. 75/2015/NĐ-CP dated September 9, 2015 of the Government on mechanisms and policies to protect and develop forests, linked with poverty reduction policies and support for ethnic minorities from 2015 to 2020.

CIRCULAR

Guidelines for the interest rate support mechanism under the credit policy implemented pursuant toDecree No. 75/2015/NĐ-CP dated September 9, 2015 of the Governmenton mechanisms and policies for forest protection and development, linked with rapid poverty reductionsustainably and support ethnic minority groups during the period 2015-2020 

Pursuant to Decree No. 60/2003/NĐ-CP dated June 6, 2003, promulgated by the Government detailing and guiding the implementation of the Law on State Budget;

Pursuant to Decree No. 75/2015/NĐ-CP dated September 9, 2015 of the Government on mechanisms and policies for forest protection and development, linked with rapid and sustainable poverty reduction and support for ethnic minority groups during the period 2015-2020;

Pursuant to Decree No. 215/2013/NĐ-CP dated December 23, 2013, promulgated by the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

At the proposal of the Director of the Department of Banking and Financial Institutions;

The Minister of Finance issues this Circular guiding the interest rate support mechanism under the credit policy implemented pursuant to Decree No. 75/2015/NĐ-CP dated September 9, 2015 of the Government on mechanisms and policies for forest protection and development, linked with rapid and sustainable poverty reduction and support for ethnic minority groups during the period 2015-2020;

PART I. GENERAL PROVISIONS

Article 1. Scope of Regulation and Applicability

2. Applicability:

This Circular guides the interest rate support mechanism for loans taken out to implement the credit policy stipulated in Article 8 of Decree No. 75/2015/NĐ-CP dated September 9, 2015 of the Government on mechanisms and policies for forest protection and development, linked with rapid and sustainable poverty reduction and support for ethnic minority groups during the period 2015-2020 (hereinafter referred to as Decree No. 75/2015/NĐ-CP).

Thông tư này áp dụng đối với tổ chức, cá nhân có liên quan đến hoạt động kinh doanh đối tượng thủy sản nuôi chủ lực trên lãnh thổ Việt Nam.

a) The Vietnam Bank for Social Policies and the Vietnam Agriculture and Rural Development Bank.

b) Households belonging to the target group as prescribed in Clause 1, Article 2 of Decree No. 75/2015/NĐ-CP.

c) Other relevant organizations and individuals.

Article 2. Interest Rate Support for the Vietnam Bank for Social Policies

The Vietnam Bank for Social Policies shall be supported by the State budget in terms of interest rates when implementing the credit policy as stipulated in Article 8 of Decree No. 75/2015/NĐ-CP according to the mechanism of compensating the difference in interest rates as currently applied to the Vietnam Bank for Social Policies when providing loans for support programs for the poor and other policy beneficiaries of the State.

PART II. INTEREST RATE SUPPORT FOR THE VIETNAM AGRICULTURE AND RURAL DEVELOPMENT BANKAND THE DEVELOPMENT OF VIETNAMESE RURAL AREAS

Article 3. Conditions for State Budget Interest Rate Support

Loans eligible for State budget interest rate support must meet all of the following conditions:

1. They have been signed in contracts and disbursed at the Vietnam Agriculture and Rural Development Bank from November 2, 2015 to December 31, 2020 in accordance with Article 8 of Decree No. 75/2015/NĐ-CP and guidelines issued by the State Bank of Vietnam.

2. They are correctly targeted and the borrowers use the loan funds for the intended purposes as prescribed by law.

3. They are within their repayment period at the time of interest rate support.

In cases where the loans (including both principal and interest) are overdue or extended (except for cases where loans are extended due to objective and force majeure circumstances as prescribed in Decree No. 55/2015/NĐ-CP dated June 9, 2015 of the Government on credit policies to serve agricultural and rural development and guidelines issued by the State Bank of Vietnam), such loans will not be eligible for interest rate support during the period of overdue repayment or extension.

In cases where the borrower has repaid the overdue debt and made timely repayments from the subsequent payment periods, the borrower will continue to enjoy interest rate support as prescribed in Decree No. 75/2015/NĐ-CP and as detailed in this Circular.

Article 4. Interest Rate Subsidy Differential

The interest rate subsidy differential is calculated by subtracting 1.2% per annum from the lowest lending interest rate for agriculture and rural areas with the same term during the same period of the Vietnam Agriculture and Rural Development Bank.

In cases where the Vietnam Agriculture and Rural Development Bank does not have a specified interest rate for loans with a long-term duration corresponding to the actual loan term in accordance with Decree No. 75/2015/NĐ-CP, to determine the interest rate subsidy differential, the Vietnam Agriculture and Rural Development Bank shall use the interest rate applicable to short-term agricultural and rural area loans with the nearest term to the actual loan term. When the interest rates for agricultural and rural area loans change, the Vietnam Agriculture and Rural Development Bank has the responsibility to report to the Ministry of Finance on the lowest interest rates for each term to serve as the basis for determining the interest rate subsidy.

Article 5. Interest Rate Subsidy Procedures

1. Formulating the Interest Rate Subsidy Plan:

a) The Vietnam Agriculture and Rural Development Bank formulates the annual interest rate subsidy plan according to the following formula:

Where:

- The average annual loan balance is calculated as the arithmetic mean between the beginning-of-year and end-of-year balances.

- The annual interest rate subsidy differential is implemented in accordance with Article 4 of this Circular.

b) By no later than July 31 each year, the Vietnam Agriculture and Rural Development Bank formulates the annual interest rate subsidy plan (divided by quarter) in accordance with point a of this clause; it sends the plan to the Ministry of Finance (one copy), the Ministry of Planning and Investment (one copy), and the State Bank of Vietnam (one copy) for inclusion in the state budget estimate.

2. Quarterly Temporary Interest Rate Subsidy Advance:

a) Within a maximum of thirty days from the date of receipt of the quarterly report on loan implementation and the request for temporary interest rate subsidy advance from the Vietnam Agriculture and Rural Development Bank, the Ministry of Finance will implement the temporary interest rate subsidy advance.

b) The amount of the temporary interest rate subsidy advance in a quarter equals eighty percent of the interest rate subsidy amount generated in the previous quarter. The total amount of the temporary interest rate subsidy advance in a year shall not exceed the allocated budget estimate.

3. Finalizing the Interest Rate Subsidy:

a) At the end of the fiscal year, the Vietnam Agriculture and Rural Development Bank determines the actual interest rate subsidy amount for the year and requests state budget support as follows:

- The actual interest subsidy amount for a disbursement is calculated using the sum of products of the interest rate subsidy level and the corresponding loan balance for the actual number of days, according to the following formula:

Where: The annual interest rate subsidy differential is stipulated in Article 4 of this Circular and is calculated in units of % per annum; n is the number of days of the loan balance during the subsidized period.

- The actual interest subsidy amount for a loan is the total of the actual interest subsidy amounts for all disbursements under that loan.

- The total amount of interest subsidy is the sum of the actual interest subsidy amounts for all loans falling within the scope defined in Decree No. 75/2015/NĐ-CP and guidelines issued by the State Bank of Vietnam.

b) The finalization documentation for the interest rate subsidy includes:

- A consolidated report on the data requested for finalization of the interest rate subsidy for each loan, audited independently or by the National Audit Office according to Appendix 01/BC issued together with this Circular.

- A letter requesting the Ministry of Finance to finalize the interest rate subsidy, wherein the amount requested for finalization does not exceed the confirmed figures by the auditing agency.

-Documentation (originals or certified copies stamped by the bank) includes: credit agreements, promissory notes, or equivalent documents to identify borrower clients, loan implementation status, balances, collections; forest planting design - budget, livestock development plans; reports to the Ministry of Finance on the lowest lending interest rates as the basis for approving the subsidy amount. These documents are stored at the headquarters of the bank for verification purposes when necessary.

The Chairman of the Board of Members and General Director of the Vietnam Agriculture and Rural Development Bank are responsible for the validity and accuracy of the finalization documentation and the data requested for state budget interest rate subsidy support.

c) Within 120 days from the end of the fiscal year, the Vietnam Agriculture and Rural Development Bank must complete the finalization documentation and submit it to the Ministry of Finance for finalization, reporting the consolidated data requested for the interest rate subsidy finalization as stipulated in point b of Clause 3 of this Article.

4. Reviewing the Data Requested for Finalization of the Interest Rate Subsidy.

a) Conducting the review of the data requested for finalization of the interest rate subsidy.

The Ministry of Finance conducts a review of the data requested for finalization of the interest rate subsidy of the Vietnam Agriculture and Rural Development Bank within sixty days from the date of receipt of the request for finalization of the interest rate subsidy from the bank, provided that the bank has prepared the finalization documentation in accordance with point b of Clause 3 of this Article.

b) Handling discrepancies in the data.

- If there is a discrepancy between the amount requested for finalization and the amount reviewed by the Ministry of Finance, the Vietnam Agriculture and Rural Development Bank will adjust the accounting records of the finalized interest rate subsidy according to the reviewed figures by the Ministry of Finance.

- The handling of discrepancies between the reviewed amount and the requested amount is carried out within forty-five days from the date the Ministry of Finance issues the approval notice for finalization.

- In cases where the time for handling discrepancies between the reviewed amount and the requested amount needs to be extended or other special cases, they will be considered and decided by the Minister of Finance.

In the case where the state budget temporarily supported interest rates for the Vietnam Agriculture and Rural Development Bank exceeds the amount reviewed for final settlement by the Ministry of Finance, the Ministry of Finance will transfer the difference to become the temporary allocation for the following year.

c) Handling in cases where borrowers misuse loan funds: Upon discovering that borrowers have misused loan funds, the Vietnam Agriculture and Rural Development Bank shall handle the situation according to the provisions of the law, simultaneously returning the amount of interest subsidy provided by the state budget for the misused loan amount (in cases where the state budget has provided interest subsidies) or excluding the misused loan amount from the outstanding loan balance requesting state budget interest subsidies (in cases where the state budget has not yet provided interest subsidies).

Article 6. Reporting System

1. For quarterly reports.

Within the first month of the next quarter, the Vietnam Agriculture and Rural Development Bank shall submit quarterly reports on the results of lending as stipulated in Article 8 of Decree No. 75/2015/NĐ-CP to the Ministry of Finance and the State Bank of Vietnam according to Appendix 02/BC issued together with this Circular.

2. For annual reports.

Within 90 days from the end of the fiscal year, the Vietnam Agriculture and Rural Development Bank shall submit annual reports on the results of lending as stipulated in Article 8 of Decree No. 75/2015/NĐ-CP to the Ministry of Finance and the State Bank of Vietnam according to Appendix 03/BC issued together with this Circular.

Section 3. IMPLEMENTATION PROVISIONS

Article 7. Implementation Organization

1. This Circular takes effect from July 29, 2016.

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