To: Credit institutions

Pursuant to Decree No. 31/2022/ND-CP dated May 20, 2022 of the Government on interest subsidies provided by state budget on loans of enterprises, cooperatives, and household businesses (hereinafter referred to as Decree No. 31);

Pursuant to Circular No. 03/2022/TT-NHNN dated May 20, 2022 of the State Bank of Vietnam on interest subsidies provided by state budget on loans of enterprises, cooperatives, and household businesses (hereinafter referred to as Circular No. 03);

Pursuant to the chart of accounts of credit institutions issued together with Decision No. 479/2004/QD-NHNN dated April 29, 2004 of the Governor of the State Bank and Decisions, Circulars on amendments to the chart of accounts of credit institutions;

To unify the process of handling and accounting for interest subsidy; facilitate the making of reports, settlements and inspection and audit of loans of enterprises, cooperatives and household businesses receiving interest subsidy, the State Bank of Vietnam (SBV) guides credit institutions that are commercial banks (Banks) that are regulated in Decree No. 31 on accounting for interest subsidy as follows:

I. GENERAL PRINCIPLES

1. The Bank shall calculate interests on loans with interest subsidy as prescribed in Point b, Clause 3, Article 7 of Decree No. 31, and record the interests on loans with interest subsidy according to the guidance in this Official Dispatch.

2. The Bank shall collect subsidized interests from borrowers, refund interest subsidies to borrowers, receives interest subsidies from the State Budget, recover interest subsidies and return them to the State Budget, and remit sums of interest subsidies in excess of the granted limit to the State Budget in case they are not allowed to continue receiving interest subsidies, finalize payment of interest subsidies, etc., ensuring the compliance with procedures, time and documents related to interest subsidy in an accurate, transparent, complete way as prescribed in Decree No. 31, guidance in Circular No. 03 and relevant regulations of laws.

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4. For banks that have their own monitoring software system to monitor specific entries of subsidized interest expected to be collected, subsidized portion of interest, etc., the Bank is allowed to calculate, monitor, collate and check the data of the above-mentioned entries according to Sections II and III of this Official Dispatch on separate appropriate management software (not having to open detailed accounts) to record, summarize and report the main report data, forms and documents related to the interest subsidy in an accurate, timely, complete and reliable manner in accordance with the provisions of Decree No. 31, guidance in Circular No. 03 and current regulations of law.  In this case, the Bank must have a management system and practice procedures and give thorough instructions to staff in charge.

II. ACCOUNTS TO BE USED

1. Depending on specific application of technology and management, the Bank shall open general account of level 4, level 5 or appropriate detailed account of category 2 - Credit activities and 02 detailed accounts under account 3941 “Receivable interests from Vietnamese Dong loans” in order to separately supervise the interest excluding the interest subsidy of the loan with interest subsidy (details: Interest receivable from a loan with interest subsidy) and interest subsidy sum that has been granted to the borrower but still has to be recovered at the request of the Bank and/or the competent authority (details:  Interest subsidy granted but still to be recovered).

2. The Bank opens 03 detailed accounts under account 3539 - “Amounts awaiting payment from the State Budget” to separately account for and monitor interest subsidy deducted for/refunded to the borrower (details:  Realized receivables of interest subsidy); interest subsidy awaiting to be deducted for/refunded to the borrower (details:  Unrealized receivables of interest subsidy); and refund the interest subsidy granted to the borrower that has to be recovered to the State Budget or remit to the State Budget the amount of money received in excess of the granted limit (details: The sum of interest subsidy remitted to the State budget pending settlement).

3. When receiving money for interest subsidy from the State Budget, the Bank shall record it to account 4599 - “Other amounts pending payments” (details: Receiving money for interest subsidy).

4. The Bank opens 03 detailed accounts of account 941 - Uncollected loan interest in Vietnam Dong to monitor and record the following transactions:

+ 01 detailed account of account 941 - Uncollected loan interest in Vietnam Dong (details:  Interest receivable from loan with interest subsidy) to monitor and record the interest receivable from the loan with interest subsidy.

+ 01 detailed account of account 941 - Uncollected loan interest in Vietnam Dong (details:  Unrealized receivable of interest subsidy) to monitor and record unearned interest receivable from loan with interest subsidy.

+ 01 detailed account of account 941 - Uncollected loan interest in Vietnam Dong (details:  Realized interest subsidy to be recovered) to account for and manage the realized interest subsidy to be recovered.

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1. Accounting for receivable loan interest of borrower

a) At the time of calculation and accounting of receivable loan interest, based on the result of receivable interest calculation, the accountant shall make following accounting entries:

↑ To Debit against account 3941 – Receivable interest from Vietnamese Dong loan:
                          (detailed: Receivable interest from loan with interest subsidy)

Interest amount receivable from borrower (interest subsidy excluded)

↑ To Debit against account 3539 – Amounts pending for payment by State budget:
                         (detailed: Unrealized receivable of interest subsidy)

Interest subsidy pending for deduction for borrower

To Credit to account 702 - Collection of loan interest:

Total interest amount receivable from borrower

b) When the borrower pays in full and on schedule the principal balance and/or interest receivable to the Bank, it is not a loan extension, but the borrower's loan is not classified into the standard debt category as prescribed in applicable law, the accountant shall make following accounting entries:

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Total interest amount receivable from borrower

Or To Debit against account 809 - Other expenses for credit activities:
                              (different accounting period)

Total interest amount receivable from borrower

To Credit to account 3941 – Receivable interest from Vietnamese Dong loan:
                      (detailed: Receivable interest from loan with interest subsidy)

Interest amount receivable from borrower (interest subsidy excluded)

↓ To Credit to account 3539 – Amounts pending for payment by State budget:
                        (detailed: Unrealized receivable of interest subsidy)

Interest subsidy pending for deduction for borrower

At the same time, open the accounting books (off-balance sheet) and record:

- To Debit to account 941 - Uncollected loan interest in Vietnam Dong (details:  Unrealized interest receivable from borrower) to monitor the amount of loan interest receivable from the borrower whose interest subsidy has not been realized corresponding to the balance of account 3539 mentioned above;

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c) In case of the loan with overdue principal balance and/or late payment interest balance:

On the date on which the loan has overdue principal balance and/or late payment interest balance, the accountant shall prepare a document to finalize the interest subsidy deducted for the borrower for the late payment period:

+ In case the interest subsidy is waiting to be deducted for the borrower is monitored on account 3539 - Amounts waiting for payment from the State budget (details:  Unrealized receivable of interest subsidy), the accountant shall make following accounting entries:

↑ To Debit against account 3941 – Receivable interest from Vietnamese Dong loan:
                         (detailed: Receivable interest from loan with interest subsidy)

Interest subsidy pending for deduction for borrower

↓ To Credit to account 3539 – Amounts pending for payment by State budget:
                         (detailed: Unrealized receivable of interest subsidy)

+ In case the interest subsidy is waiting to be deducted for the borrower is monitored on the accounting book (off-balance sheet), the accountant shall make following accounting entries: To Credit to account 941 - Uncollected loan interest in Vietnam Dong (details:  Unrealized receivable of interest subsidy); and to Debit against account 941 - Uncollected loan interest in Vietnam dong (details: Receivable interest from loan with interest subsidy).

d) When the borrower fully pays the overdue principal balance and/or the late payment interest balance, the loan is still eligible for interest subsidy for the next repayment terms, based on the receipts for calculating interest receivable, the account shall do similarly to Point (1.a) Section III of this Official Dispatch.

2. Accounting when collecting loan interest

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a) Collect the interest according to the accrual accounting method:

- In case the interest subsidy is waiting to be deducted for the borrower is monitored on account 3539 - Amounts waiting for payment from the State budget (details:  Unrealized receivable of interest subsidy), the accountant shall make following accounting entries:

To Debit against appropriate account (cash, deposit of borrower)

Interest amount paid by borrower (of which interest subsidy amount has been deducted)

To Credit to account 3941 - Receivable interest from Vietnamese Dong loan (Detailed:  Receivable interest from loan with interest subsidy)

At the same time, to deduct the interest subsidy for borrower, the accountant shall make accounting entries as follows:

To Debit against account 3539 – Items pending for payment by State budget (detailed: Realized receivable of interest subsidy)

Realized interest subsidy

To Credit to account 3539 – Amounts pending for payment by State budget (detailed: Unrealized receivable of interest subsidy)

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To Debit against appropriate account (cash, deposit of borrower):

Interest amount paid by borrower (of which interest subsidy amount has been deducted)

To Debit against account 3539 – Amounts pending for payment:
                      (detailed: Realized receivable of interest subsidy)

Amount of interest subsidy granted to the borrower

To Credit to account 702 - Collection of loan interest:

Total collected interest

To Credit to account 941 - Uncollected loan interest in Vietnam Dong (details:  Unrealized receivable of interest subsidy) for the interest subsidy granted to the borrower and to Credit to the account 941 - Uncollected loan interest in Vietnam Dong (details: Receivable interest from loan with interest subsidy).

b) In case of interest collection according to the cash accounting method:  The accountant shall make the following entries:

To Debit against appropriate account (cash, deposit of borrower):

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To Debit against account 3539 – Amounts pending for payment:
                      (detailed: Realized receivable of interest subsidy)

Amount of interest subsidy granted to the borrower

To Credit to account 702 - Collection of loan interest:

Total collected interest

2.2. In case the full loan interest of the borrower in the period is collected and the amount of interest subsidy is refunded to the borrower on the same day of interest collection

a) Collect the interest according to the accrual accounting method:

- In case the interest subsidy is waiting to be deducted for the borrower is monitored on account 3539 - Amounts waiting for payment from the State budget (details:  Unrealized receivable of interest subsidy), the accountant shall make accounting entries as follows:

To Debit against appropriate account (cash, deposit of borrower):

Total interest amount receivable from borrower

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Interest amount receivable from borrower (interest subsidy excluded)

To Credit to account 3539 – Amounts pending for payment by State budget:
                      (detailed: Unrealized receivable of interest subsidy)

Interest subsidy pending for deduction for customer

At the same time, to refund the interest subsidy to borrower on the same day of interest collection, the accountant shall make accounting entries as follows:

To Debit against account 3539 – Items pending for payment by State budget (detailed: Realized receivable of interest subsidy)

Realized interest subsidy

To Credit to appropriate account (cash, deposit of borrower)

- In case the interest subsidy waiting to be deducted for the borrower is monitored on accounting book (off-balance sheet), the accountant shall make accounting entries as follows:

To Debit against appropriate account (cash, deposit of customer)

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To Credit to account 702 - Collection of loan interest

When refunding the interest subsidy to the borrower on the same day of interest collection, the accountant shall make accounting entries as follows:

To Debit against account 3539 – Items pending for payment by State budget (detailed: Realized receivable of interest subsidy)

Realized interest subsidy

To Credit to appropriate account (cash, deposit of borrower)

To Credit to account 941 - Uncollected loan interest in Vietnam Dong (details:  Unrealized receivable of interest subsidy) for the interest subsidy deducted for the borrower and to Credit to the account 941 - Uncollected loan interest in Vietnam Dong (details: Receivable interest from loan with interest subsidy).

b) In case of interest collection according to the cash accounting method:  The accountant shall make the following entries:

To Debit against appropriate account (cash, deposit of customer)

Total collected interest

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At the same time, to refund the interest subsidy to borrower on the same day of interest collection, the accountant shall make accounting entries as follows:

To Debit against account 3539 – Items pending for payment by State budget (detailed: Realized receivable of interest subsidy)

Realized interest subsidy

To Credit to appropriate account (cash, deposit of borrower)

3. Accounting for interest subsidy received from the State Budget

When the Bank receives the sum of interest subsidy from the State Budget, the accountant shall make the accounting entries as follows:

To Debit against appropriate account (deposit, etc.)

To Credit to account 4599 – Amounts pending for payment (detailed: Receiving money for interest subsidy)

4. Accounting for recovering the sum of interest subsidy improperly granted:

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a) The Bank converts the entire amount of interest subsidies to borrowers into an interest receivable from borrowers:

- In case the interest subsidy granted to the borrower is monitored on account 3539 - Amounts waiting for payment from the State budget (details:  Realized receivable of interest subsidy), the accountant shall make accounting entries as follows:

To Debit against account 3941 - Receivable interest from Vietnamese Dong loan (detailed:  Interest subsidy granted but still to be recovered)

Realized interest subsidy to be recovered

To Credit to account 3539 – Amounts pending for payment by State budget (detailed: Realized receivable of interest subsidy)

- In case the interest subsidy has not been deducted for the borrower, the Bank recorded and monitored it on account 3539 - Amounts waiting for payment (details:  Unrealized receivable of interest subsidy) and account 941 - Uncollected loan interest in Vietnam Dong (details:  Unrealized receivable of interest subsidy) on the accounting book (off-balance sheet):

+ Regarding the receivable interest subsidy that has not been deducted/paid for the borrower and is monitored it on account 3539 - Amounts waiting for payment (details:  Unrealized receivable of interest subsidy), the accountant shall make accounting entries as follows:

To Debit against account 3941 - Receivable interest from Vietnamese Dong loan (Detailed:  Receivable interest from loan with interest subsidy)

Unrealized receivable of interest subsidy

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+ Regarding the receivable interest subsidy that has not been deducted/paid for the borrower and is monitored on the accounting book (off-balance sheet), the accountant shall finalize it to monitor it as interest receivable from loan with interest subsidy for continued collection, the accountant shall make the accounting entries as follows:  To Credit to account 941 - Uncollected loan interest in Vietnam Dong (details:  Unrealized receivable of interest subsidy) and Debit against account 941 - Uncollected loan interest in Vietnam Dong (details:  Interest receivable from loan with interest subsidy) with the corresponding amount.

- When the borrower's deposit account has enough balance to immediately withdraw the interest subsidy that has been granted against the regulations, or the borrower has paid enough cash corresponding to the interest subsidy that has been granted against regulations before or the Bank recovers part of the improperly granted interest subsidy from the borrower, the accountant shall make accounting entries as follows:

To Debit against appropriate account (cash, deposit of borrower, etc.):

To Credit to account 3941 - Receivable interest from Vietnamese Dong loan (detailed:  Interest subsidy granted but still to be recovered)

+ If the Bank immediately remits the recovered interest subsidy that has been improperly granted to the State Budget, the Bank shall account it according to the guidance at Point (5), Section III of this Official Dispatch.

+ If the Bank does not immediately remit the recovered interest subsidy that has been improperly granted to the State Budget, the Bank is responsible for making a report to deduct it from the amount the State Budget pays for interest subsidy in accordance with Decree No. 31.

- For the interest subsidy that has been granted but has not been recovered:

+ In the process of monitoring and management, if the Bank considers that the granted interest subsidy is uncollectible in accordance with the applicable law, the accountant shall make the accounting entries as follows:

To Debit against account 809 - Other expenses for credit activities (different accounting period)

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To Credit to account 3941 - Receivable interest from Vietnamese Dong loan (detailed:  Interest subsidy granted but still to be recovered)

And open accounting book (off-balance sheet) to Debit against account 941 - Uncollected loan interest in Vietnam Dong (details:  Realized interest subsidy to be recovered) to account for the realized interest subsidy to be recovered.

+ When the Bank recovers the loan interest that has been granted that is monitored on account 941 - Uncollected loan interest in Vietnam dong (details:  Realized receivable of interest subsidy), the accountant shall make accounting entries as follows:

To Debit against appropriate account (cash, deposit of borrower, etc.):

To Credit to account 702 - Collection of loan interest

To Credit to account 941 - Uncollected loan interest in Vietnam Dong (details:  Interest subsidy granted but still to be recovered).

After the interest subsidy is recovered, the Bank shall refund it to the State Bank and make accounting entries as prescribed in Point (5) Section III of this Official Dispatch or make a report to deduct it from the amount the State Budget pays for interest subsidy as prescribed in Decree No. 31.

5. Accounting for refund to the State Budget the amount of interest subsidy that has been improperly granted or remittance to the State Budget the amount received in excess of the granted limit

In case the Bank immediately refunds to the State Budget the amount of interest subsidy that has been improperly granted or remits to the State Budget the amount received in excess of the granted limit, the accountant shall make following accounting entries:

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To Credit to appropriate account (deposit, etc.)

6. Accounting when finalizing interest subsidy:

Based on the results of annual appraisal of interest subsidy of the Ministry of Finance, it is required to notify the amount that the State Budget still has to pay to the Bank or recover; after checking, if it matches exactly with the recorded and monitored data of management of financial information at the Bank, the accountant shall document and record the balance of account 4599 - Other pending payments (details:  Receive money for interest subsidy) and account 3539- - Amounts pending for payment by State budget (detailed: The sum of interest subsidy remitted to the State budget pending settlement).

- In case the State Budget still has to pay the remaining part of the interest subsidy to the Bank:  The accountant shall make the following entries:

To Debit against appropriate account (deposit, etc.)

The sum of interest subsidy to be received after settlement of interest subsidy

To Debit against account 4599 - Other amounts pending for payment:
                       (detailed: Receiving money for interest subsidy)

Total interest subsidy amount received from the State Budget

To Credit to account 3539 – Amounts pending for payment by State budget (detailed: The sum of interest subsidy remitted to the State budget pending settlement).

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To Credit to account 3539 – Amounts pending for payment by State budget:
                      (detailed: Realized receivable of interest subsidy)

Total realized interest subsidy – (minus) realized interest subsidy to be recovered

- In case the State Budget recovers the part of the interest subsidy that has been overpaid to the Bank:  The accountant shall make the following entries:

To Debit against account 4599 - Other amounts pending for payment:
                       (detailed: Receiving money for interest subsidy)

Total interest subsidy amount received from the State Budget

To Credit to account 3539 – Amounts pending for payment by State budget (detailed: The sum of interest subsidy remitted to the State budget pending settlement).

Sum of money remitted to the State Budget

To Credit to account 3539 – Amounts pending for payment by State budget:
                      (detailed: Realized receivable of interest subsidy)

Total realized interest subsidy – (minus) realized interest subsidy to be recovered

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Sum of interest subsidy to be remitted to the State Budget after settlement of interest subsidy

7. Handling of interest subsidies receivable after finalizing interest subsidy for the whole program (both in the period of 2022 and 2023)

- Regarding the interest subsidy that has been granted but has not been recovered from the borrower and is monitored on account 3941 - Uncollected loan interest in Vietnam dong (details:  Realized interest subsidy to be recovered) and account 941 - Uncollected loan interest in Vietnam Dong (details:  Realized interest subsidy to be recovered), the Bank continues to monitor and recover this sum of interest subsidy.

- In case the Bank and/or an inspection authority (SBV, Government Inspectorate, etc.) discover more amounts to be recovered from the interest subsidy granted after the settlement of interest subsidy for the whole program has been approved, the Bank shall immediately recover such amounts to return it to the State.

The above is the guidance of the State Bank of Vietnam on accounting for interest subsidy from the State Budget on loans of enterprises, cooperatives, and household businesses to Banks for study and implementation.

Difficulties that arise during the implementation of this document should be reported to the State Bank (via Department of Finance and Accounting) for guidance and further actions./.

BY ORDER OF THE GOVERNOR
DIRECTOR OF DEPARTMENT OF FINANCE AND ACCOUNTING




Nguyen Hong Van

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