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The State Bank The Socialist Republic of Vietnam
of Vietnam Independence-freedom-Happiness
No. : 198/QD-NH.1
Hanoi, September 16th, 1994
- Pursuant to the Ordinance on State Bank of Vietnam issued in connection with Order No.37/HDNN8, the ordinance on Banks, Credit Cooperatives and financial Corporations issued in connection with the Order No.38/HDNN8 dated May 24th, 1990 of the President of the State Council of the Socialist Republic of Vietnam.
- Pursuant to the Decree No. 15/CP dated March 2nd, 1993 of the Government stipulating the task, powers and responsibilities for the State management of the Ministries and Ministerial-ranking bodies.
- On the proposal of the Director of the Credit Department for economic studies.
DECIDES
Article 1 :
To promulgate in connection with this Decision The Regulation on Short - term credits for economic organizations.
Article 2 :
The Regulation on short - term credits issued in connection with this Decision are generally applied to State Commercial Banks, Investment and Development Banks. Commercial Stock Banks, Joint - venture Banks. Branches of foreign Banks in Vietnam, Credit Cooperatives, financial Corporations operating in accordance with the ordinance on banks, credit cooperatives and financial corporations.
Article 3 :
This Decision shall come into effect from the signing date and replace: the Regulation on short term credit for economic organizations issued in connection with Decision No.04/QD-NH dated January 8th, 1991 and other documents relating to this Regulation.
Article 4 :
The Chief of Governor's Office, the General Inspector of the State Bank, Heads of the sections belonging to the Central State Bank, the Directors of the provincial and city State Banks, the General Directors (Directors) of State Commercial Banks, Investm ent and Development Banks, Commercial Stocks Banks, financial Corporations, joint venture Banks, the branches of foreign banks in Vietnam and managers of credit cooperatives shall be responsible for the implementation of this decision.
for The State Bank of Vietnam Governor CAO SY KIEM (Signed)
The State Bank Socialist Republic of Vietnam of Vietnam Independence-freedom-HappinessHanoi, September 16th, 1994
Article 1 :
The provisions of this Regulation are applied to short-term credits in Vietnamese dong (VND)
1.1. The credit organizations offering short-term loans prescribed in this Regulation include State Commercial Banks, Investment and Development Banks, Commercial Stock banks, financial Corporations, Credit Cooperatives, Joint - venture Banks, branches of foreign Banks in Vietnam which are established and operated in accordance with the Ordinance on Banks, Credit Cooperatives and financial Corporations.
1.2. The economic organizations borrowing short-term loans from credit organizations (hereinafter referred to as the borrowing units) are legal entities and persons undertaking a business or a production process in accordance with the laws of Vietnam. Th ese units include the State - owned enterprises, share-holding Companies, Limited Liability Companies cooperatives, private enterprises, Vietnam - foreign joint venture enterprises, the enterprises in Vietnam with 100% foreign owned capital, individuals a nd production households.
Article 2 :
Credit organizations provide short-term loans to meet the shortages in floating capital for production business operations.
Article 3 :
Principles for credits
3.1. Borrowed funds have to be paid (both principal and interest) in time as committed.
3.2. Borrowed funds have to be used efficiently and in accordance with the defined purpose.
3.3. Borrowed funds have to be guaranteed with equivalent value in materials and commodities.
Article 4 :
Conditions for borrowing funds
4.1. for every borrowing unit :
4.1.1. Having full legal status and operating its production business in accordance with the existing laws of Vietnam.
4.1.2. Operating profit yielding business or being subsidized in accordance with Government policy; having no overdue debts.
4.1.3. Having self possessed capital. The amounts of self possessed capital of different units are determined by General Directors (Directors) of credit organizations.
4.1.4. Organizing the cost accounting and financial management in accordance with the Ordinance on accounting and statistics.
4.1.5. Having collateral properties or being guaranteed by a competent third party. The cases being applied to credit collateral are determined by the lending credit organization.
4.1.6. Recognizing and complying with the regulation on credit of the State Bank of Vietnam and specific regulations of the lending credit organizations.
4.2. for private enterprises, apart from the conditions defined in the above Article 4.1, they must have business licenses, their offices must be in the same vicinity with lending credit organizations. for individuals, the production households, must have permanent living registration in the same vicinity with the lending credit organization.
Article 5 :
The scope for borrowing funds
Each unit, apart from its borrowing from credit organization where it opens an account for financial transaction (where it opens its first financial transaction account) it is eligible to borrow loans from other credit organizations in accordance with the following stipulations :
5.1. A unit borrowing loans from the credit organization where it has an account for financial transaction, is eligible to borrow additional loans from other credit organizations of the same or different credit system.
5.2. When borrowing loans from other credit organizations, the borrowing unit has to list fully the remaining debts from previous credit organizations and commit to deduct money from deposited accounts fro financial transaction or lay down money in cash o r cheques to pay for lending credit organizations when debts reach their maturity. This commitment shall be valid until loans are paid (both in principal and interest) or agree upon the lending credit organization to annul.
5.3. When granting loans to a unit which has borrowed money from other credit organization, the lending credit organization has to request a ratification from the credit organization that keeps the deposited account for financial transaction on the condit ions for borrowing loans as stipulated in Article 4 of this Regulation and at the same times has to use the information of the TTR computer center of the State Bank in the vicinity to define the conditions for securing capital before deciding to grant the loans.
5.4. Any credit organization can only grant short-term loans for the purpose of operating production/business of a borrowing unit. In case the borrowing unit moves its office to another location and shifts its deposited accounts for financial transaction to another credit organization, it can borrow money from the new credit organization to pay the old debts to the previous credit organization.
5.5. In the case of unit borrowing money from many branches of the same financial system, the General Director (Director) shall determine this decision.
Article 6 :
The principles for settlement of some specific cases :
6.1. The credit organization shall collect debts both principal and interest prior to their maturity in the following cases :
6.1.1. The borrowing unit disbands or stops its operations (not because of bankruptcy).
6.1.2. The borrowing unit is divided or merges with a new unit.
6.1.3. The borrowing unit moves its office to another place and opens its deposited account for financial transaction at another credit organization.
6.1.4. The manager of the borrowing unit is subject to criminal prosecution.
6.1.5. There appears law-suits which threaten the mots part of the borrowing unit's assets.
6.1.6. The borrowing unit violates the contract for loan borrowing and credit regulations.
The borrowing unit has to pay both principals and interests when the credit organization requests the payment of premature debts in accordance with this regulation.
6.2. If the borrowing unit goes bankrupt, the debts shall be settle in accordance with the Law on Enterprise Bankruptcy.
6.3. In any case, when the borrowing unit replaces its manager, the successor bears full responsibility for the debts (both principals and interests) that his predecessor borrowed from the credit organization.
Article 7 :
The objects for lending include values of materials and commodities in reserves and circulation and the cost composing of the buying price or cost price of the product.
Article 8 :
Prices serve as a base for determining the amount of money to lend according to the economic contract or document, receipts for buying materials, commodities and other costs accepted by the loan borrowing unit.
Article 9 :
Terms of the debts are defined in accordance with the features of fund - flow of the borrowing unit but the maximum is 12 months.
Article 10 :
The borrowing interest rate is determined by the General Director (Director) of the credit organization in accordance with the interest framework defined for each period of time by the Governor of the State Bank of Vietnam.
Article 11 :
A credit organization is not allowed to grant to a borrowing unit more than 10 percent of its self possessed capital and reserve fund, the total loans granted to 10 borrowing units can not exceed 30 percent of the total remaining debts of that credit orga nization. If it wants to grant loans more than the above prescribed percentage, that must be approved by the Governor of the State Bank of Vietnam.
Credit organizations are not allowed to offer right of lending preference to their clients as prescribed in Article 30 of Ordinance on banks, credit cooperatives and financial corporations.
Article 12 :
Rights and obligations of credit organizations:
12.1. To request their loan borrowing units to provide necessary information and documents relating to borrowed loans.
12.2. Having the right to inspect the loan related issues of the borrowing units before, during and after granting loans.
12.3. When the debts reach their maturity, if the borrowing units do not actively pay them, the credit organization has the right to deduct money from the deposited account for financial transaction or ask other credit organization, which holds deposited account for financial transaction of the borrowing unit to deduct money from that account for paying the debts. The credit organization which holds the deposited account of the borrowing unit is obliged to carry out the request of the lending credit organ ization.
12.4. In the case that, the debts reach their maturity but the borrowing unit is unable to pay, neither has an explanation of legitimate reasons for debts extension, the credit organization has a right to shift those debts to the account of overdue debts and the borrowing unit is obliged to pay the interests of overdue debts.
12.5. Having power to consider and extend the terms of debts when the borrowing unit faces difficulties due to objective cause and can not pay the debts according to their maturity.
12.6. Having rights and obligations to collect debts prior to their maturity in accordance with Article 6 of this regulations.
12.7. Having right to hold auction the collateral assets, to request guarantor to carry out guaranty obligations and to take part in the assets liquidation to collect debts when the borrowing unit is unable to pay them.
Article 13 :
The loan - borrowing unit has the following responsibilities and obligations :
13.1. To use the borrowed loan efficiently and in accordance with the defined purpose, to take initiative in paying full debts (both principals and interests) according to their maturity as committed in application and contract for borrowing loans.
13.2. To provide necessary information and documents relating to the loans as requested by the credit organization and create favorable condition for inspection by credit organization when it requests.
13.3. To inform its lending credit organization of the events as defined in Article 6 of this regulation and other changes relating to the enterprise and its manager.
Article 14 :
forms of lending short-term loans :
Credit organization are allowed to grant short-term credits to the borrowing units in the following forms :
14.1. Granting loans to meet the shortage in floating capitals.
14.2. Deducting money from the money - bearing documents.
II/ Specific provisions.
A. Granting loans to add to the floating capital
Article 15 :
When it has a demand to borrow loans to add to the floating capital, the borrowing unit fill in the application form for borrowing loans and send together with the plan for production/business operations to the credit organization for loan - granting cons ideration.
Article 16 :
The methods of loan - granting
16.1. The loan borrowing units belonging to a type of stable production/business, if they have the demand for regular loans, they can work out the plan for borrowing and paying for the whole quarter, season or crop together with the application for borrow ing the first loan. If the credit organization agrees to offer, it shall (within the period of time prescribed by itself) inform the borrowing unit to launch the procedures for borrowing loans.
16.2. for the units that do not have the demand for regular loans, the credit organization shall apply the method of granting loans on the basis of case by case. Each time, the borrowing unit has to send an application for borrowing loans to the credit or ganization for loan - granting consideration in the application it has to state clearly the demand for capital for production/business operations, the already available fund, the amount of money it asks for the purpose of its use, term of the loan and the plan for paying its.
16.3. for all borrowing units following either or both the above - mentioned methods, after being approved by the credit organization, they have to work out contracts for borrowing money with a plan for paying debts in each as guided by the credit organiz ation, each time they receive loans, they have to attest their signatures on the contracts.
16.4. The borrowed money is transferred to pay directly for the enterprises which provide materials, commodities or services for the borrowing unit. In the case that the borrowing unit has used other sources of funds to pay for the supplier or if the supp lier does not have an account at the bank, it shall then be transferred to a deposit account, offering cheques or cash to the borrowing unit.
Article 17 :
After approving the loans and completing the procedures for borrowing loans, the credit organization opens one account for each borrowing unit so as to calculate the borrowed money and collect debts (if the borrowing unit does not have a borrowed account yet).
Article 18 :
fixing terms for debts shall be based on the features of capital circulation of borrowing client. If it is a unit that borrows loans and pays debts regularly according to its plans for a quarter, a season or a crop, the terms for debts shall be determined in accordance with the capital circulation of borrowing client and the plan for collecting debts shall go in accordance with the debt maturity. If the loan is granted on the basis of case by case, the term for debt shall expire when the borrowing client finishes its round of capital circulation.
Article 19 :
The process of collecting debts is carried out in accordance with the schedule as prescribed in the contract. The borrowing unit can pay debts prior to their maturity and ought to take initiative in paying debts for the credit organization when the debts reach their maturity as stipulated in Article 13 of this Regulation. In the case that, due to objective difficulty, the borrowing unit is unable to pay debts according to their maturity and submit an explanation for debt extension and decide on the debt e xtension, the credit organization may take it into consideration and decide on the debt extension in accordance with the specific situation of the settlement of the difficulty but the maximum extended time can not exceed the previous term of the debt.
Article 20 :
The calculation and collection of interests shall be conducted monthly or once together with the principal according to the proper debt term. If the borrowing unit can not pay the interests according to their maturity, the credit organization shall calcul ate and put it into the extra-account for gradual collection, not to bring the interests into the principal. In the case of the borrowing unit facing financial difficulty due to unavoidable cause, the General Director (Director) of the credit organizatio n may decide to reduce or exempt the interests for the borrowing unit in accordance with the regulation on interests exemption and reduction of credit organization approved by the Governor of the State Bank of Vietnam.
B. Deduction from money - bearing document
Article 21 :
The loan borrowing units mentioned in Article 1 of this Regulation, when facing shortage of capital for paying or production/business operations, can bring money bearing documents (if they have) to credit organizations for borrowing loans in the form of d eduction (abbreviated as deduction).
Article 22 :
The money - bearing documents for deduction are deadline - fixed credits, short - term bonds ... issued legally by authorized units and they must be still valid for financial transaction and guaranteed for their value.
Article 23 :
The procedures for deduction
23.1. The borrowing unit has to submit to the credit organization a dossier for deduction, which includes : an application for deduction, a list of documents for deduction together with the original documents to apply for deduction.
23.2. The credit organization shall examine the dossier for deduction, consider and let the unit know the documents and total value accepted for deduction.
23.3. The deduction rate ranges from 80 to 120 percent of the profit yielding rate of the deducted documents : the specific deduction rate is agreed upon by the borrowing unit. In case, the profit - yielding rate is not clearly noted down on the deducted documents, the credit organization shall figure out the deduction rate as high as the lending interests rate at the time of deducting.
The deducted money is discounted from the amount of money applied for deduction, the amount of remaining money shall be noted down in the deposited, paid out in cash or in credits for the unit.
23.4. The term for deduction shall be defined for each document in the scope of remaining valid time but it can not exceed the maximum of 90 days.
23.5. The credit organization has to preserve carefully the document accepted for deduction as it does to the money bearing documents.
Article 24 :
When the term for deduction comes to an end, the credit organization shall extract from the deposited account or request the unit to pay in cash as much as the amount of money applied for deduction so as to pay debts and to carry out the procedures for re turning the deducted documents. When the terms reach their maturity but the borrowing unit is unable to pay deducted debts, the credit organization shall shift them the overdue debts and settle them as overdue debts.
If they are transferable documents, the credit organization has the right of ownership over them and shall carry out the procedures with the issuing unit for liquidating and collecting debts when those documents reach their terms for liquidating.
III/ Inspection and settlement of granted debts
Article 25 :
The credit organization bears responsibilities for strict inspection before, during and after granting loans on the issues relating to the borrowing and use of the loans of the borrowing unit so as to secure the borrowed loans.
Article 26 :
During the inspection, if the credit organization discovers that the borrowing unit violate this Regulation or other specific regulations of the credit organization, thus exposing a danger of loss to capital, the borrowing unit shall be subject to, accord ing to degree of violation, such administrative penalties as : temporarily suspend its credit relations seek all ways and means to collect debts, shift all debts to overdue debts although they have not reached their maturity, hold auctions on the collater al properties to collect debts. The stronger measure for it is to set up a file and bring it to an economic court for decision or launch a law suit before the laws in other forms according to the nature and seriousness of the violation.
IV/ Provisions for implementation
Article 27 :
Pursuant to this Regulation, General Directors (Directors) of credit organizations shall issue specific guidance in accordance with the features of operations of each system, define more special cases with which conditions for borrowing are applied, the s pecific degrees of self possessed capitals of each type of borrowing units; the forms of loan lending, debt-collecting, debt - extending, overdue - debt shifting; the process of inspecting, supervising the lending and using of borrowed loans, the decisive amount of loan - granting, regulation on interests reduction and exemption; responsibilities and measures for dealing with officials when the commit violations etc...
Heads of the concerned units belonging to the Central State Bank, Directors of the provincial and city state supervision over the implementation of this regulation.
Article 28 :
Any amendment and addition to this regulation are submitted for consideration and decision by the Governor of the State Bank of Vietnam
for The State Bank of Vietnam The Governor
CAO SY KIEM (Signed)