Circular No. 89/2014/TT-BTC guiding interest rate support for loans and compensation for interest rate differences due to the implementation of policies aimed at reducing losses in agriculture.

CIRCULAR

Guidelines for interest rate support on loans and compensation for interest rate differences due to

implementation ofpolicies aimed at reducing losses in agriculture

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

At the request of the Director of the Processing and Product Safety Department;

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

The Minister of Finance issues this Circular guiding interest rate support on loans and compensation for interest rate differences due to implementation of policies aimed at reducing losses in agriculture as follows: This Circular guides the conditions, documents, procedures, and processes for interest rate support and compensation for interest rate differences through commercial banks to implement loans in accordance with Article 1 and Article 2 of Decision No. 68/2013/QĐ-TTg dated November 14, 2013 of the Prime Minister on policies aimed at reducing losses in agriculture (hereinafter referred to as Decision No. 68/2013/QĐ-TTg).

Article 1. Scope of Regulation and Applicability

2. Applicability:

2.1 Commercial banks established and operating under the Law on Credit Institutions (hereinafter collectively referred to as commercial banks) shall implement loans in accordance with Article 1 and Article 2 of Decision No. 68/2013/QĐ-TTg.

第二条 组织和实施奖励工作的支出水平，如政府第152/2025/NĐ-CP号决定关于分级授权和奖励领域的分权规定

2.2 Relevant agencies, organizations, and individuals.

Article 2. Forms of Implementation of Interest Rate Support on Loans and Compensation for Interest Rate Differences

1. Commercial banks providing loans shall implement interest rate support or support the difference between commercial interest rates and state development credit interest rates for organizations and individuals borrowing funds under the provisions of Article 1, Article 2 of Decision No. 68/2013/QĐ-TTg.

2. The State budget shall support interest rates on commercial loans or compensate the difference between commercial interest rates and state development credit interest rates for commercial banks implementing loans in accordance with Clause 1 of this Article.

Article 3. Conditions for State Budget Interest Rate Support on Loans and Compensation for Interest Rate Differences

1. Commercial banks organizing loan implementation in accordance with Article 1, Article 2, and Article 3 of Decision No. 68/2013/QĐ-TTg and guidance from the State Bank of Vietnam.

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

2.1 Loans must be directed at the correct target, have the correct purpose, and fully comply with the conditions stipulated in Article 1, Article 2, and Article 3 of Decision No. 68/2013/QĐ-TTg.

2.2 Loans must be repaid within the agreed period at the time of interest rate support and compensation for interest rate differences; interest rate support and compensation for interest rate differences will not be provided for overdue principal and interest loans calculated from the date of overdue.

2.3 Loans must have signed loan contracts with commercial banks from the effective date of Decision No. 68/2013/QĐ-TTg to December 31, 2020.

Article 4. Levels of Support, Compensation, and Sources of Funds for Interest Rate Support and Compensation for Interest Rate Differences

1. Levels of 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.

1.2 Loans for implementing investment projects for production lines and equipment; manufacturing projects for agricultural production equipment specified in Clause 2, Article 2 of Decision No. 68/2013/QĐ-TTg shall be compensated by the state budget for the difference between commercial bank loan interest rates and state development credit interest rates. The timing of compensation for interest rate differences for each loan shall be calculated from the disbursement date.

The period during which the state compensates for interest rate differences shall be equal to the loan term specified in Clause 5, Article 2 of Decision No. 68/2013/QĐ-TTg, with a maximum duration of 12 years.

1.3 The commercial bank loan interest rate serving as the basis for state budget interest rate support and compensation for interest rate differences is the lowest commercial bank loan interest rate applied for agricultural and rural sector loans of the same term and period, publicly listed by commercial banks at their transaction points.

1.4 The state development credit interest rate serving as the basis for compensation for interest rate differences according to Article 2 of Decision No. 68/2013/QĐ-TTg is the state development credit interest rate announced for each period.

2. Sources of funds for interest rate support and compensation for interest rate differences:

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 interest rate subsidy fund and the fund for compensating the difference in interest rates to implement policies supporting the reduction of losses in agriculture shall be allocated within the annual budget estimate for compensating the difference in interest rates on preferential credit loans (development investment capital) of the state budget.

Article 5. Documents and Procedures for Interest Rate Subsidies and Differential Interest Rate Compensation

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

By no later than July 31 each year, commercial banks shall base on their forecasted loan balances for purchasing machinery and equipment, investing in production lines and equipment to serve agricultural production in the following year to develop plans for interest rate subsidies and differential interest rate compensation for the planning year (divided quarterly), and submit them to the Ministry of Finance and the Ministry of Planning and Investment.

For the year 2014, within fifteen days from the date this Circular takes effect, commercial banks shall be responsible for establishing and submitting plans for interest rate subsidies and differential interest rate compensation to the Ministry of Finance and the Ministry of Planning and Investment. The Ministry of Planning and Investment shall take the lead and coordinate with the Ministry of Finance to allocate the budget for differential interest rate compensation from the central government's budget to compensate commercial banks for loans implementing policies to reduce losses in agriculture.

2. The establishment of plans for interest rate subsidies and differential interest rate compensation for the year shall be carried out according to the following formula:

2.1 Regarding subsidized interest rates 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 loan balance is calculated by the commercial bank based on the average of the actual outstanding balances.

- The average subsidy interest rate equals 100% of the average lending interest rate of the commercial bank for the first two years, and 50% of the average lending interest rate of the commercial bank for the third year, as stipulated in Clause 1, Article 4 of this Circular.

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

Where:

- The average loan balance expected to be supported in the year is calculated using the arithmetic mean between the beginning-of-year outstanding balance and the end-of-year outstanding balance.

- The average subsidy interest rate equals 100% of the average lending interest rate of the commercial bank for the first two years, and 50% of the average lending interest rate of the commercial bank for the third year, as stipulated in Clause 1, Article 4 of this Circular.

2.2 Regarding differential interest rate compensation 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 loan balance eligible for differential interest rate compensation is calculated by the commercial bank based on the average of the actual outstanding balances.

- The average differential interest rate compensation is the difference between the average lending interest rate of the commercial bank and the state investment development credit interest rate, calculated using the arithmetic mean between the differential interest rate compensation at the beginning of the year and the end of the year.

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

Where:

- The average loan balance expected to be compensated in the year is calculated using the arithmetic mean between the beginning-of-year outstanding balance and the end-of-year outstanding balance.

- The average differential interest rate compensation is the difference between the average lending interest rate of the commercial bank and the state investment development credit interest rate, calculated using the arithmetic mean between the differential interest rate compensation at the beginning of the year and the end of the year.

3. Quarterly Temporary Provision of Interest Rate Subsidies and Differential Interest Rate Compensation:

Within thirty days from receiving the quarterly implementation report as stipulated in Clause 1, Article 6 of this Circular along with the commercial bank's request, the Ministry of Finance will temporarily provide eighty percent of the interest subsidy amount of the previous quarter but the cumulative temporary provision from the beginning of the year shall not exceed the allocated budget for the year. In cases where temporary provision is not made, the Ministry of Finance shall issue a written response explaining the reasons and guiding commercial banks on how to handle the situation within twenty working days.

4. Method for Determining the Amount of Interest Supported and Differential Interest Rate Compensation:

4.1 For loans subject to interest rate subsidies as stipulated in Article 1 of Decision No. 68/2013/QĐ-TTg:

a) The amount of interest supported for a loan is calculated by multiplying the subsidy interest rate with the loan balance and the duration of the loan supported by interest subsidies according to the following formula:

Where:

- The subsidy interest rate is implemented according to Clause 1, Article 4 of this Circular and is measured in units of % per month.

- n is the actual number of days of outstanding balance during the period being supported for interest rate.

b) The total amount of interest supported by commercial banks is the sum of the actual interest support for all loans eligible for interest rate subsidies.

c) Commercial banks use the above formula to determine the amount of interest subsidy requested to be compensated by the Ministry of Finance.

4.2 For loans subject to differential interest rate compensation as stipulated in Article 2 of Decision No. 68/2013/QĐ-TTg:

a) The amount of differential interest rate compensation for a loan is calculated by multiplying the differential interest rate compensation with the loan balance and the duration of the loan compensated by differential interest rates according to the following formula:

Where:

- The differential interest rate compensation is stipulated in Clause 1, Article 4 of this Circular and is measured in units of % per month.

- n is the number of actual outstanding days occurring during the period supported by interest rate subsidies.

b) The total amount of differential interest rate compensation by commercial banks is the sum of the actual differential interest rate compensation for all loans eligible for differential interest rate compensation as specified in subpoint a, point 4.2, Clause 4 of this Article.

c) Commercial banks use the above formula to determine the amount of differential interest rate requested to be compensated by the Ministry of Finance.

5. Final Settlement of Interest Rate Subsidies and Differential Interest Rate Compensation:

5.1 Within ninety days from the end of the fiscal year, commercial banks must submit settlement requests for interest rate subsidies and differential interest rate compensation to the Ministry of Finance. In cases where the submitted documents are incomplete or invalid, the Ministry of Finance shall notify the state commercial banks in writing within ten working days.

5.2 Settlement Request Documents:

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

- A consolidated report system-wide on the final settlement of interest rate subsidies, audited by an Independent Auditor or State Audit Agency (Annex 1 issued together with this Circular).

- Reports by province on the final settlement of interest rate subsidies (Annex 2 issued together with this Circular).

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

- A consolidated report system-wide on the final settlement of differential interest rate compensation based on investment development credit interest rates, audited by an Independent Auditor or State Audit Agency (Annex 3 issued together with this Circular).

- Reports by province on the final settlement of differential interest rate compensation based on investment development credit interest rates (Annex 4 issued together with this Circular).

5.3 Commercial banks shall organize the copying and storage of documents and detailed reports for each interest rate support grant to ensure accuracy, transparency, and clarity, thereby facilitating the verification of the final settlement figures for interest rate support grants and interest rate differential subsidies as stipulated in Point 5.4, Clause 5, Article 5 of this Decree.

5.4 Verification of the final settlement figures for interest rate support grants and interest rate differential subsidies:

a) The Ministry of Finance shall conduct the verification of the final settlement figures for interest rate support grants and interest rate differential subsidies after receiving complete settlement request files for interest rate support grants and interest rate differential subsidies.

b) The Ministry of Finance shall notify in writing the branches of commercial banks selected to carry out the verification of the final settlement.

c) Commercial banks shall be responsible for providing detailed files for each loan, compiled by each selected branch to carry out the verification of the final settlement 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.

- A customer confirmation letter directly borrowing funds regarding the receipt of interest rate support grants and interest rate differential subsidies annually, listing each time they received support in any form.

- An interest rate notification document to serve as the basis for approving the final settlement figures for interest rate support grants and interest rate differential subsidies. The above documents must be photocopied with an official stamp from the commercial banks (one set) and signed by authorized personnel with their full names.

d) The verification of the final settlement figures for interest rate support grants and interest rate differential subsidies shall be completed within 90 days from the date of receiving complete settlement request files for interest rate support grants and interest rate differential subsidies from commercial banks.

5.5 Handling discrepancies between the final settlement figures and the temporarily granted interest rate support grants and interest rate differential subsidies:

- In cases where there is a discrepancy between the reported final settlement figures confirmed by the auditing agency and the verified final settlement figures by the Ministry of Finance, commercial banks shall adjust their accounting records to accurately reflect the final settlement figures for interest rate support grants and interest rate differential subsidies.

- If the temporarily granted interest rate support grants and interest rate differential subsidies transferred by the state budget exceed the verified final settlement figures, the excess will be recovered by the Ministry of Finance and submitted to the state budget.

- If the temporarily granted interest rate support grants and interest rate differential subsidies transferred by the state budget are less than the verified final settlement figures, the difference will be supplemented by the state budget.

- The handling of discrepancies between the verified final settlement figures and the temporarily granted interest rate support grants and interest rate differential subsidies shall be completed within 45 days from the date of the verification report.

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

6. Handling the recovery of interest rate support grants and interest rate differential subsidies in cases where borrowers misuse borrowed funds:

- During the loan period, if it is discovered that the borrower has misused the borrowed funds, commercial banks shall immediately recover the corresponding amount of interest rate support grants and/or interest rate differential subsidies provided by the state budget for the borrower's loan at the bank and return it to the state budget while taking appropriate legal actions.

- If the borrower's misuse of borrowed funds is discovered after the Ministry of Finance has conducted the verification of the final settlement, commercial banks shall be responsible for recovering the corresponding amount of interest rate support grants and/or interest rate differential subsidies provided by the state budget for the borrower's loan at the bank and returning it to the state budget. In cases where all measures have been taken but the recovery is not possible, commercial banks shall submit detailed reports on each case to the Ministry of Finance for guidance on handling.

Article 6. Reporting System

1. For quarterly reports:

Quarterly (no later than the 30th day of the first month of the next quarter), commercial banks shall compile data on the results of implementing interest rate support policies aimed at reducing losses in agriculture throughout the system, assess the implementation situation, and submit to the Ministry of Finance.

2. For annual reports:

Within 90 days from the end of the fiscal year, commercial banks shall submit annual implementation reports to the Ministry of Finance including:

- The amount of interest rate support grants and interest rate differentials temporarily granted during the year.

- The actual amount of interest rate support grants and interest rate differentials generated during the year, requesting full-year funding.

- Settlement request files as stipulated in Point 5.2, Clause 5, Article 5 of this Circular.

Article 7. Transitional Provisions

1. For loans eligible for interest rate support and interest rate differential subsidies as specified in Decision No. 63/2010/QĐ-TTg dated October 15, 2010, and Decision No. 65/2011/QĐ-TTg dated December 2, 2011 of the Prime Minister concerning policies to reduce post-harvest losses for agricultural and aquatic products, the provisions on the level, source of funds, application procedures, reporting requirements for interest rate support and interest rate differential subsidies shall continue to apply as stipulated in Circular No. 188/2012/TT-BTC dated November 7, 2012 issued by the Ministry of Finance.

2. For loans signed from the effective date of Decision No. 68/2013/QĐ-TTg (January 1, 2014) and meeting the conditions for interest rate support and interest rate differential subsidies as specified in Decision No. 68/2013/QĐ-TTg, these loans shall be implemented according to the provisions of this Circular.

Article 8. Effectiveness and Implementation

1. This Circular takes effect from August 22, 2014.

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