STATE BANK Of VIETNAM      SOCIALIST REPUBLIC Of VIETNAM
    No.05/CT-NH14          Independence-freedom-Happiness
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                                     Hanoi, 18 June 1994.


                       INSTRUCTION
  ON LOANS  EXTENDED  BY  SEVERAL  COMMERCIAL BANKS
  AND THE BANK fOR INVESTMENT AND DEVELOPMENT TO AN
                 INDIVIDUAL ENTERPRISE

In the past, the Governor of the State Bank signed Decision No 04/NH-QD on 8 January 1991, issuing short-term credit regulations applicable to economic institutions and Decision No 23/NH-QD on 6 March 1991, issuing medium and long-term credit regulations applicable to economic institutions.
With the aim of increasing borrowing resources for enterprises, the Governor of the State Bank issued Decision No 273/QD-NH1 on 8 December 1992 to revise the lending conditions under the two aforesaid decision. Ever since, the fact that several merchant b anks join in extending loans to an individual enterprise has promoted the alignment and support among banks in credit extension, there by meeting capital requirements for enterprises' production and business. Apart from the obtainable outcomes, however, t hese merchant banks have faced difficulties in calling back their loans due to the fact that they failed to thoroughly understand the financial position of the borrowing enterprises or to be aware of the enterprise's borrowings from other banks. The numbe r of bad and insolvent loans has seemingly increased; and the loan insecurity has reached the alarming extent because certain enterprises have proved to be insolvent.

In order to overcome these shortages and to increase security for credit operations on the part of those banks which join in extending loans to an individual enterprise, the Governor of the State Bank asks banks to implement the following key points:

1- Commercial Banks or their branches and the Bank for Investment and Development (referred herein as the Banks) shall fully grasp the applicable credit principles and regimes when joining in extending loans to an individual enterprise; and find out the f inancial position of the borrowing entity with the assistance of the Risk Information Center of the State Bank branch in their locality. Loans shall only be extended to those enterprises which meet all borrowing criteria and guarantee to make complete rep ayment. The Banks shall strictly monitor and supervise the utilization of the loans and ultimately recover the loans.
2- Upon extending loans, the Banks shall be entitled to require the borrowing enterprise to provide all necessary information in connection with the loans and to create all favorable conditions for the Banks' monitoring and supervising.
The borrowing enterprise shall inform the lending bank of its loan outstanding with the other lending banks and be responsible for the accuracy of its information.
When making borrowings from those banks where the borrowing enterprise shall not open its principal deposit account, it shall sign a commitment to authorize the bank holding its principal deposit account to deduct its deposit account as repayment at the request of the lending bank. The bank which holds the borrowing enterprise's principal deposit account shall fully discharge the authorization commitment of the borrowing enterprise. Should the bank hold currency in the deposit account and fail to deduct this account to repay the due debt, hence causing any losses to the lending bank, it shall bear both material and administrative responsibility subject to the extent of violation.
3- To prevent and limit risk in credit operations, the banks shall attach importance to the provision and exploitation of the information related to the business and financial position of the borrowing enterprises through the system of the Risk Informatio n Centers of the credit institutions and the State Bank. Upon the extension of loans, the lending banks shall notify on a timely basis the Risk Center System of the loan proceedings with the aim to adding up the borrowing enterprise's economic record.
4- In the case that the borrowing enterprise whose loans with several banks shall fall due on the same date, the banks shall recover their loans on a pro rata basis (due loan of each bank in the enterprise's due debt outstanding) computed on the balance o f the repayment deposit account in order to restrict the concentration of risk on a single bank (in particular the bank which holds the enterprise's principal deposit account) in recovering repayment.
5- The recovery of debt by the banks from a bankrupt enterprise shall be made in line with the bankruptcy law (issued under Order No 30 L/CTN of the President of the Socialist Republic of Vietnam on 10 January 1994)
6- The Banks shall closely coordinate in extending loans, in monitoring and supervising the utilization by the enterprise of the loan, and at the same time assist each other in providing necessary information in relation to loan security, strengthen the c lose alignment between banks, thus further developing the banks' credit operations in a highly effective way.
7- The municipal or provincial branch of the State Bank in the location where the borrowing enterprise in headquarters shall coordinate the treatment of any disputes or violations on the part of the banks which join in extending loans to an individual ent erprise.
The General Directors (Directors) of the commercial banks and the Bank for Investment and Development shall be responsible for guiding and arranging the proper implementation of the above-mentioned points in their own system. In the implementation course, if any difficulties and misunderstandings may occur, commercial banks shall report in a timely manner to the head office of the State Bank for settlement.
for the State Bank of Vietnam
Deputy Governor
DO QUE LUONG
(Signed)