Decree No. 116/2018/ND-CP dated September 07, 2018 amending Decree 55/2015/ND-CP on credit policy for agricultural and rural development

DECREE

AMENDING SEVERAL ARTICLES OF DECREE NO.55/2015/ND-CP DATED JUNE 09, 2015 OF THE GOVERNMRNT ON CREDIT POLICY FOR AGRICULTURAL AND RURAL DEVELOPMENT

Pursuant to the Law on Government organization dated June 19, 2015;

Pursuant to the Law on the State bank of Vietnam dated June 16, 2010;

Pursuant to the Law on Credit Institutions dated June 16, 2010 and the Law on amendments to the former Law dated November 20, 2017;

At the request of Governor of the State bank of Vietnam;

The Government promulgates a Decree on amendments to several articles of Decree No.55/2015/ND-CP.

Article 1. Amending several articles of Decree No.55/2015/ND-CP

1. Amending Clause 2 Article 2 and adding Clause 3 to such Article as follows:

“2. Customers granted loans by credit institutions are individuals and legal entities, including:

a) Individuals living in rural areas or doing agribusiness or farm owners;

b) Legal entities, including:

(i) Cooperatives and cooperative alliances in rural areas or those engaged in agriculture business;

(ii) Enterprises operating in rural areas, except for the following entities: real estate enterprises, mining enterprises, power generation enterprises and enterprises not specified in item (iii) Point b Clause 2 this Article which are located in industrial zones or export processing zones;

(iii) Providers of agricultural supplies for agriculture production and enterprises producing, purchasing, processing or consuming agricultural products and byproducts.

3. When a family household, artel or organization that does not have a legal status takes the loan, its member or authorized representative shall be the borrower. The authorization must be recorded unless otherwise agreed. Any replacement of the representative must be notified to the other parties in the loan agreement. In case a member takes a loan without authorization of the aforementioned household, artel or organization, he/she will be the sole borrower of the loan.

Family households, artels and organizations not holding a legal status mentioned above include:

a) Family households residing in rural areas or doing agribusiness;

b) Household businesses in rural areas;

c) Artels in rural areas or engaged in agribusiness;

d) Sole proprietorships operating in rural areas, except for the following entities: real estate enterprises, mining enterprises, power generation enterprises and enterprises not specified in Point dd Clause 3 this Article that are located within the industrial zones or export processing zones;

dd) Sole proprietorships providing agriculture supplies for agricultural production and sole proprietorships manufacturing, purchasing, processing or consuming agricultural products and byproducts"

2. Amending Clause 4 Article 3 and adding Clause 13 to such Article as follows:

“4. Farm owner refers to individuals doing agribusiness in accordance with law provisions meeting farm economy criteria issued by competent authorities.

13. High-tech agribusiness plan/project refers to business plans or projects carried out in high-tech agricultural zones high-teach agricultural areas or high-tech agribusiness plan or project prepared by high-tech agriculture enterprises or another high-tech agriculture production plan or project towards clean and environmentally-friendly agriculture and agriculture associated with climate change decided by competent authorities."

3. Amending Point a and b Clause 2 Article 9 as follows:

“a) A maximum amount of VND 100 million for individuals and family households which reside outside of rural areas and do agribusiness (except for cases specified at Point c Clause 2 this Article);

b) A maximum amount of VND 200 million for individuals and family households which reside within rural areas”

4. Amending Clause 4 Article 9 as follows:

“4. Individuals and family households provided with loans by credit institutions under the provisions of Article 4 herein shall not be liable for the following fees: fees for authentication of the collateral pledge agreement performed by notary offices and other competent regulatory agencies and fees for registration of secured transactions with the secured transaction registry.”

5. Adding Clause 3 to Article 11 as follows:

“3. With regard to perennials, credit institutions and their customers shall reach a mutually agreement on the maturity date on which principal and interest repayment is due suitable for the growing stages of perennials."

6. Changing the title of Article 12, Clause 2 Article 12 and adding Clause 3 and 4 to such Article as follows:

“Article 12. Debt restructuring, charge-off and grant of new loans

2. In case the customer suffers loss of their loans or loan-derived assets due to a large-scale natural disaster or an epidemic or force majeure event or other causes not by faults of such customers as prescribed in Clause 3 Article 14 and Clause 3 Article 15 herein and is considered not yet or not capable to repay debts to the credit institution, such credit institution shall consider to charge-off debts without interest payment within 2 years upon consideration of the consolidated report on customer’s losses submitted to the Prime Minister, State Bank of Vietnam and the Ministry of Finance by People’s Committees of provinces and centrally-affiliated cities (hereinafter referred to as “provinces”). As for cases specified in Clause 3 Article 14 and Clause 3 Article 15 herein, the charge-off duration must not exceed 3 years. The categories of charge-off debts shall remain unchanged. Loss from uncollectible interests of the credit institution due to debt charge-off will be covered by local government budget. If the local government budget is not sufficient to cover such loss, provincial People's Committee shall send a report to the Ministry of Finance, which will cooperate with the State Bank of Vietnam and Ministry of Planning and Investment in reporting to the Government for considering providing assistance from provision for central government budget.

3. Application and procedure for charge-off

a) An application for debt charge-off consists of:

(i) A written notification of the large-scale natural disaster or epidemic prepared by provincial People’s Committee in case natural disasters or epidemics break out;

(ii) An application form for debt charge-off prepared by the customer;

(iii) Documents proving the customer has an outstanding loan, including a copy of loan agreement and loan note;

(iv) A record on customer’s loss of loans and loan-derived assets which specifies the rate of loss due to the large-scale natural disaster or epidemic, force majeure event or other causes not by faults of the customer and is signed by the credit institution, the customer and competent authority (provincial People's Committees for enterprises and cooperative alliances, district-level People’s Committees for household businesses, cooperatives and farm owners and commune-level People’s Committees for individuals, family households and artels);

(v) A report on appraisal of loss, solvency of the customer, business plan, debt repayment plan after charge-off period and proposal of debt charge-off period made by the branch of credit institution and people's credit funds.

b) Procedure for debt charge-off

(i) The branch of credit institution and people’s credit fund shall cooperate with the applicant specified in Point a Clause 3 this Article in making and sending a list of applicants according to Form No.1 issued thereto to the Department of Finance and provincial branch of the State Bank within 30 days from the day on which the written notification of the large-scale natural disaster or epidemic prepared by provincial People’s Committee is received or the day on which the loss is incurred;

(ii) The provincial branch of the State Bank shall take charge and cooperate with the Department of Finance in checking and certifying legality of the application, data and sending a list of applicants to provincial People’s Committees for the purpose of certifying and making a report according to Form No.2 issued thereto which is submitted to the State Bank of Vietnam and Ministry of Finance together with the application for debt charge-off within 15 days from the day on which the application for debt charge-off and the list of applicants from branches of credit institution and people's credit funds are received;

(iii) The branch of credit institution shall send a consolidated report on documents specified in (i) and (ii) Point b Clause 3 this Article to the head office for verification and application within 15 days from the day on which the list of applicants is certified by the provincial People's Committee; upon consideration of the inspection result, the head office of credit institution shall make a list of applicants according to Form No.3 issued thereto and send it along with documents provided in the application to the State Bank of Vietnam and Ministry of Finance for considering whether to grant permission for debt charge-off;

(iv) The State Bank of Vietnam shall take charge and cooperate with the Ministry of Finance in considering whether to grant permission for debt charge-off or ask for approval from Prime Minister as per provisions in Clause 4 this Article within 30 days from the day on which the satisfactory application specified in item (ii) and (iii) Point b Clause 3 this Article.

4. The State Bank of Vietnam shall take charge and cooperate with the Ministry of Finance in considering whether to grant permission for debt charge-off if the amount of debt subject to charge-off in case of a natural disaster or epidemic or force majeure event or other causes not by faults of the customers as specified in Clause 3 Article 14 and Clause 3 Article 15 herein is equal to or less than VND 1 billion or sending a report to the Prime Minister for approval if such amount is greater than VND 1 billion. For the case in which the State Bank of Vietnam and the Ministry of Finance fail to reach a mutual agreement on debt charge-off in case the amount of debt subject to such charge-off is equal to or less than VND 1 billion, the State Bank of Vietnam shall send a report to the Prime Minister for consideration and approval purpose."

7. Adding Clause 4 to Article 14 as follows:

“4. Management of loans granted under an association contract for agriculture production

a) Management of loans granted under an association contract according to the value chain:

According to the value chain-based association contract between the main organization and participants in the association (hereinafter referred to as "the associated party"), the credit institution shall enter into a loan agreement with the main organization and/or the associated party and manage the loan granted under such association contract adhering to the following principles:

(i) The main organization and associated party shall open an account at the credit institution granting the loan and make a commitment to conduct all currency transactions related to the value chain through this account.

(ii) In case the main organization makes advance payment for production cost of the associated party:

- The credit institution shall grant a loan to the main organization to pay for supplies purchased, input service provided to the associated-party in advance, products purchased by the associated-party after the advance is deducted, product processing and consuming by the main organization.

- The credit institution shall collect debts from the main organization according to revenues of from sales under consuming contracts between such organization with consumers and other legal revenues.

(iii) In case the main organization does not make advance payment for production cost of the associated party:

- The credit institution shall grant a loan to the associated-party to pay for supplies purchased and input services provided for association in production.

- The credit institution shall collect debts from the associated-party according to its revenues from sales to main organization.

- The credit institution shall grant a loan to the main organization to pay for product purchased by the associated-party, product processing and consuming by the main organization. Disbursement with the main organization to pay for product purchased by the associated party shall be made in conjunction with debt collection from such associated party.

- The credit institution shall collect debts from the main organization according to revenues of from sales under consuming contracts between such organization with consumers and other legal revenues.

b) Management of loans granted under an association contract:

(i) In case the parties enter to the association contract to complete one or more than one phase in the value chain collaboration as per provisions in Clause 6 Article 3 herein, the credit institution shall enter into an agreement with such parties to complete each phase in the value chain collaboration.

(ii) The credit institution and parties of the association contract shall enter into an agreement on repayment term in consistent with time for completing each phase in the value chain collaboration. The credit institution shall provide intermediary payment service for parties entering into the association contract who open an account at such credit institution at request of such parties."

8. Amending Clause 1 Article 15 and adding Clause 2a and Clause 4 to Article 15 as follows:

“1. Customers having business projects or business plans in hi-tech agricultural zones or hi-tech agricultural areas may apply to credit institutions for unsecured loans of up to 70% of the value of such project or plan.

2a. Enterprises not issued with a hi-tech agribusiness certificate but having hi-tech agribusiness plans or projects outside the hi-tech agricultural zones or hi-tech agricultural areas may apply for unsecured loans of up to 70% of the value of such project or plan.

4. The credit institution shall be entitled to use assets derived from loans of the hi-tech agribusiness plan/project and other assets to secure loans granted to their customers as per law soft."

9. Adding Clause 5 and 6 to Article 18 as follows:

“5. The Ministry of Agriculture and Rural Development shall take charge and cooperate with the Ministry of Science and Technology and relevant ministries and ministerial agencies in proposing criteria for determination of hi-tech agribusiness plans/projects specified in Clause 2a Article 15 herein.

6. Detailed instructions for criteria for farm economy determination can be found in Clause 4 Article 3 herein."

10. Amending Clause 1 and Clause 4 Article 19 as follows:

“1. Take charge and cooperate with the Ministry of Justice in providing guidelines for entities to be exempted from paying fees for authentication of the collateral pledge agreement and secured transaction registration as stipulated in Clause 4 Article 9 herein.

4. Take charge and cooperate with the State Bank of Vietnam and the Ministry of Planning and Investment in recommending the Prime Minister to consider and cover the loss from uncollectible interests suffered by localities with poor conditions due to debt charge-off performed by credit institutions through implementation of social security policies funded by local government budget under assistance of central government budget.

11. Amending Clause 3 Article 20 as follows:

“3. Cooperate with the Ministry of Finance in allocating funding for debt charge-off under provisions herein.”

12. Adding Clause 5 and 6 to Article 22 as follows:

“5. Instruct People’s Committees of various levels and Department of Finance to cooperate with each other in checking and certifying applications for debt charge-off as per regulations herein.

6. Allocate local funding to recover loss from uncollectible interests due to debt charge-off under regulations herein and deal with problems occurring during implementation."

13. Adding Clause 4 to Article 23 as follows:

“4. Use the provision for credit loss to handle risks related to principals as per law provisions.”

Article 2. Annulling Point c Clause 3 Article 14

Article 3. Transfer provisions

Credit institutions and their customers shall continue to execute the signed loan contracts in conformity with law provisions that are applicable on the signing dates thereof or amend such contracts according to regulations herein.

Article 4. Implementation provisions

1. This Decree comes into force from October 25, 2018.

2. Ministers, Directors of ministerial agencies and Governmental agencies, Chairpersons of provincial People's Committees and relevant organizations and individuals shall take responsibility to implement this Decree./.

APPENDIX

(Issued together with Decree No.116/2018/ND-CP dated September 97, 2018 of the Government)

Form No.1

LIST OF CUSTOMERS APPLYING FOR DEBT CHARGE-OFF

Calculation unit: VND (Foreign currency converted to VND)

Form No.2

LIST OF CUSTOMERS APPLYING FOR DEBT CHARGE-OFF

Calculation unit: VND (Foreign currency converted into VND)

Form No.3

LIST OF CUSTOMERS APPLYING FOR DEBT CHARGE-OFF

Calculation unit: VND (Foreign currency converted into VND)