Directive No. 9-CT/NH on lending to industrial production enterprises of war invalids

DIRECTIVE

OF THE STATE BANK OF VIETNAM NO. 9/CT-NH
DATE APRIL 30, 1975 ON LOANS FOR
INDUSTRIAL ENTERPRISES OWNED BY DISABLED VETERANS

On December 23, 1974, the Council of Ministers issued Decision No. 284-CP on policies for enterprises owned by disabled veterans, which stipulated that these enterprises would be provided with construction capital, initial working capital, and long-term and short-term loans from banks at the lowest interest rates.

To implement the above decision, this directive is issued by the Central Bank to guide branches on providing long-term and short-term loans to assist industrial enterprises owned by disabled veterans in obtaining necessary capital to fulfill production plans, while also contributing through lending activities to enhance management operations in accordance with state regulations and policies.

I- CONDITIONS FOR LOANS

Enterprises wishing to obtain bank loans must meet the following conditions:

1- They must have been established by a provincial (city) administrative committee and recognized by the Department (Bureau) of Disabled Veterans and Social Affairs as having completed their apprenticeship period and officially commenced production.

2- They must maintain state capital and gradually accumulate additional self-owned capital during business operations to expand production.

Enterprises encountering difficulties with product quality, low income, and insufficient funds to cover labor costs and other expenses shall be promptly considered for assistance.

3- They must be assigned production plan targets by the provincial (city) administrative committee, have distribution plans for materials, and contracts for product sales.

Improvements in technology and expansion of production requiring loans must demonstrate economic benefits.

Enterprises engaged in repair services without contracts will be considered for loans based on local needs and the service capacity of the facility.

4- Annually and quarterly, they must submit production plans and financial income and expenditure plans (or balanced budget forecasts, income and expenditure plans, and loan plans approved by the Department (Bureau) of Disabled Veterans and Social Affairs) to the bank.

After each month, quarter, and year, they must report to the bank on the implementation of these plans.

5- They must open deposit and settlement accounts, as well as specialized fund accounts, at the State Bank.

Monthly, they must fully transfer all types of funds into their bank accounts and use them for their intended purposes.

II- OBJECTS, TERMS, AND INTEREST RATES FOR LOANS

A- FIXED CAPITAL LOANS

The bank provides fixed capital loans to enterprises to implement technical improvements, rationalize production lines, and expand production to increase labor productivity, reduce costs, improve product quality, and complete production plans.

The objects of loans include:

- Costs for purchasing machinery, equipment, and construction materials;

- Construction and installation costs.

Maximum interest rate on the loan is fifty percent of the ceiling for short-term loan interest rates or the average general loan interest rate published by the Governor of the State Bank. The specific interest rate is determined by the Governor of the State Bank in consultation with the Minister of Education and Training.

The maximum loan term is three years (including construction time) from the date the enterprise receives its first loan installment.

The repayment period begins from the second month after the project is put into production.

Interest rate for loans: 0.18% per month.

Sources of repayment:

Enterprises must use 100% of basic depreciation funds and a portion of accumulated funds generated from technical improvements, production rationalization, and production expansion funded by bank loans to repay the full amount within the specified loan term.

B- WORKING CAPITAL LOANS

The objects of loans include raw materials, spare parts for repairs, consumables directly serving production.

Additionally, in cases where work-in-progress and finished goods increase due to temporary supply and sales difficulties, if it can be overcome within a certain period, the bank may provide loans for these products to pay wages. The loan amount should not exceed the wage payment for one month.

Maximum interest rate on the loan is fifty percent of the ceiling for short-term loan interest rates or the average general loan interest rate published by the Governor of the State Bank. The specific interest rate is determined by the Governor of the State Bank in consultation with the Minister of Education and Training.

- For regular materials, the maximum term is six months;

- For seasonal raw material reserves, the maximum term is twelve months;

- For work-in-progress and finished goods, the maximum term is thirty days.

Interest rate for loans: 0.24% per month.

III- CALCULATION METHODS FOR LOANS AND COLLECTION

Industrial enterprises owned by disabled veterans currently operate under management and distribution systems similar to those of small and handicraft cooperatives, thus the calculation methods for loans and collection follow the current short-term and long-term loan regulations for small and handicraft cooperatives.

IV- RESPONSIBILITIES OF BANK LEVELS

Branches and sub-branches of the bank must regularly send staff to closely monitor the situation at the grassroots level, especially in terms of material management, capital, and product sales; assist enterprises in signing purchase and sale contracts, settling payments, organizing economic and financial analysis to promptly identify deficiencies in management operations, discuss with enterprises measures to address these issues.

In cases where, despite all efforts to assist the enterprise, the problem remains unresolved, they must report to the Central Bank for guidance on resolution.

Upon receiving this directive, branches and sub-branches of the bank must closely coordinate with the Departments (Bureaus) of Disabled Veterans and Social Affairs and related sectors to implement it correctly.

During the implementation process, if there are any obstacles, they must promptly report to the Central Bank for research and resolution.

                                                        Tạ Hoàng Cơ

(Signed)