Lending to rural traders doing business in extremely disadvantaged areas in accordance with Decision No 92/2009/QD- TTg dated 08/7/2009 of the Prime Minister

GUIDANCE ON CAPITAL LENDING IN ADHERENCE TO DECISION NO.92/2009/QD- TTG DATED 08^TH, JULY, 2009 OF  THE PRIME MINISTER  ON CREDIT TO TRADERS CONDUCTING COMMERCIAL ACTIVITIES IN EXTREMELY DISADVANTAGED AREAS

To execute Decision No 92/2009/QD- TTg dated 08/7/2009 of  the Prime Minister on credit to traders doing  business in extremely disadvantaged areas, the General Director of Viet Nam Bank for Social Policies (VBSP) provides guidance on capital lending procedures of this Decision as follows:

1. SOME CONTENTS WHICH ARE UNDERSTOOD AND UNANIMOUSLY ADOPT:
2. Traders conducting commercial activities:

Traders including economic organizations which are established legally, individuals conducting commercial activities independently, frequently and having business registration.

1.1. Traders who are economic organizations include:

Stated - owned enterprises, private enterprises, partnerships, limited liability companies, joint-stock companies, co-operatives who have its ownl name, assets, permanent transaction head offices, and business registration for conducting commercial activities.

1.2. Traders who are individuals include:

- Traders who do not conduct accounting records, and pay flat-rate taxes under regulations of tax offices.

- Traders who conduct accounting records and declare taxes under the law.

2.Target borrowers:

- Traders ( herein after called “ borrowers”), conducting commercial activities frequently in extremely disadvantaged areas. The extremely disadvantaged areas includes communes, wards, towns which are listed in the attachment to Decision No.30/2007/QD – TTg dated 05/3/2007 of the Prime Minister on promulgating list of administrative units in extremely disadvantaged areas.

- Traders doing business at communes which established after Decision No 30/2007/QD-TTg came into effect, based on separation, mergency administrative units  belong to  administrative units’ list at disadvantaged areas.

3.Loan conditions:

To borrow loans, borrowers shall do business frequently in disadvantaged areas and  satisfy following conditions:

3.1. Traders who are individuals:

Shall have registered business licence and confirmed by Commune People’s Committee of doing business frequently at this area.

3.2. Traders who are economic organizations:

Shall have registered business licence  and confirmed by Commune People’s Committee of doing business frequently at this  areas. If economic organizations open representative office or branch at disadvantaged areas, they must have an extra operation license.

3.3. Having owner capital of 20% at the minimum of total capital demands for business activities at disadvantaged areas.

3.4. Traders who borrows over  VND 30 millions have to commit using loan guarantee according to VBSP’s instruction.

4.Owner capital includes:

4.1. Material values, materials, goods, fertilizer, cultivar, domestic animal etc…

4.2. The value of land using right that borrowers own ( defined according to land price at local and had market price’s reference. In case of hiring, the  price  has been paid for hiring term that still be used.

4.3. The value of assets on land ( defined by market price), in case of renting, the rental price has been paid for rent term of assets that still be used.

            4.4. Working day value that borrowers take part in project of production.

            4.5. VietNam Dong, foreign currency, balance of deposit accounts in bank and other financial organizations, and valuable certificates.

5.Loan term, debt extension, divergent term debt, and interest paying term.

5.1 Lending term:

1. Short- term: loans have lending term up to 12 months.
2. Medium and long term: are loans which have lending term from over 12 months but maximum not over 5 year but the maximum of loan term shall not exceed the remained operating term of Registered business licence (if any).

5.2. Debt extension term:

1. The maximum term of debt extension is 12 months.
2. For medium- term and long – term, the maximum term of debt extension is as ½ loan term specified in the lending contract.

5.3. Divergent term debt:

- Divergent term debt is not applied to Short-term  and lending limit.

- For loan of medium and long term which applied installment lending shall be diverged term debt, each term debt extension is 6 months or 1year/ time.

5.4. Paying interest:

- Loan interest is paid monthly.

6.Loan types:

-  Installment loan: each time get loans, borrower and VBSP where give loan shall implement the lending procedure according to regulations and sign the lending contract ( borrowing notebook).

- Lending by credit line: VBSP where give loan and borrowers  agree a credit line in a period of time ( applied to traders who are economic organizations). The determination of credit line based on the total value of frieght in period minus (-) owners capital of financial organizations but the maximum credit line shall not exceed VND 500 millions.

7.Loan size:

7.1. If borrowers are individual who do not open a bank account and pay flat-rate tax according to tax office’s regulations: the maximum size is VND 30 millions.

7.2. If borrowers are individual  who open a bank account and declare tax under provision of law, the maximum size is VND 100 millions.

7.3. If borrowers are economic organizations which established legally: the maximum size is VND 500 millions.

8.Lending method:

8.1. Traders who are individual: VBSP give loans directly to borrowers via partial entrusted method to social- politic organizations as the same method of lending to the poor and other policies beneficiary. For areas where have Savings and credit group (SCG), leaders of SCG shall hold meetings to recruit members to groups to help them having conditions of getting loans of VBSP.

With areas which have not SCG yet, VBSP shall agree with social-politic organizations at local to guide the establishment of SCG to creat  conditions for borrowers making lending procedures at VBSP.

8.2. Traders who are economic organizations, VBSP shall give loans directly at  VBSP Head Quarter at province and district level.

9.Loan guarantee:

9.1. Loan size is VND 30 millions, borrowers do not have to commit  loan guarantee.

9.2. Loan size is over VND 30 millions to VND 500 millions, borrowers have to commit  loan guarantee following to VBSP’s regulations.

1. LENDING PROCESS AND PROCEDURE:
2. Traders who are individual:

1.1. Lending document:

1.1.1. Traders who are individual that do not open a bank account and pay flat-rate tax:

- Registered business license ( copy has confirmation or notary of  Commune People’s Committee);

- Flat – rate paying tax’s notice of previous priod of Tax Office ( copy has confirmation or notary of Commune People’s Committee );

- Proposal for Borrowing and Project of using loan (Sample 01/TD);

- The list of households who offer to borrow money from VBSP ( Sample 03/TD);

- The minute of Savings and credit group meeting (Sample 10/TD);

- Borrowing notebook.

1.1.2. Traders who is individual that open a bank account and pay taxes according to law regulations.

- Registered business license (copy has confirmation or notary of Commune People’s Committee);

- Tax Return or Balance Tax (copy has confirmation or notary of Commune People’s Committee);

- Proposal for Borrowing and Project of Using loan (Sample 01/TD);

- The list of households who offer to borrow money from VBSP (Sample 03/TD);

- The minute of Savings and Credit group meeting (Sample 10/TD);

- Borrowing notebook;

- Guarantteed Document of loans for borrowers who borrows over 30 million.

1.2. Lending process:

1. Borrowers shall write Proposal for Borrowing and Project of using loan ( sample 01/TD) attach copies of the following documents: registered business license, notice of paying tax or Tax Return or (Balance Tax) then address to Savings and credit group (SCG).
2. SCG receiving document of borrowers, holding meetings to recruit members to groups, checking elements on Proposal for Borrowing (Sample 01/TD) under the VBSP’s regulations and the beneficiaries are enough conditions to get loans according to Government’s policies. If documents are not correct, SCG shall guide borrowers to redo procedures or supplement missing parts. After that, SCG shall make a list of households who offer to borrow money ( Sample 03/TD) attaches to defined documents at section a, point 1.2 of this document to send to Commune People’s Committee for approval.
3. After having Commune People’s Committee’s approval on the list of households who offer to borrow money ( sample 03/TD), the SCG shall send to VBSP these documents for approval.
4. After receiving these documents sent by SCG, the assigned staff of VBSP shall check the suffiency and correct of all documents and send to the Manager or leader of credit group; Director or leader of Credit group are responsible for checking the legally and validity of these documents to submit to Director for lending approval. After being approved, VBSP shall make an anouncement on lending approval ( Sample 04/TD) to send to Commune People’s Committee, and guide borrowers to make Borrowing notebook. In case, borrower borrows over VND 30 millions, staffs shall guide borrower to make the contract of loan guaranttee according to regulations.
5. Commune People’s Committee shall inform the commune social- politic organizations ( who are the lending trustee) and these organizations inform SCG, SCG informs borrowers to come to transaction points at commune or the office of VBSP to receive loans.

1.3. Disbursement, Debt collection, Interest collection:

Disbursement, debt collection and interest collection are as the same to lending to the poor, borrowers get loan directly at assigned office. In case borrowers can not come to receive money, they can give the other member in their family a mandate to receive loan, the mandated person has to submit letter of attorney confirmed by the Commune People’s Committee.

Each disbursement, debt collection, interest collection, accountant shall fully write contents and ask the borrowers of signing in the Borrowing Notebook according to regulations. 

1.4. Inspecting, supervising and proccessing loan:

1. Savings and Credit group (SCG):

- SCGs are responsible for checking borrowing conditions when they get Proposal for Borrowing ( Sample 01/TD) from Borrowers to determine the beneficiaries.

- Monitoring, overseeing, and urging the borrowers frequently in SCG of using the borrowing capital with right purposes, paying the interest and debt at schedule as committed, witnessing and checking the disbursements , debt collections and interest collections.

- Together with social- politic organizations and staffs of VBSP unifying the ways to handle the overdue debt, cases that do not pay debt, risk debt to submit to Commune People’s Committee for treating .  

1. Social- political organizations at Commune level:

- Steering and joining with SCG to hold Group meetings to evaluate publicily borrowers who have demand for loans and enough borrowing conditions to list in the list of households who offer to borrow money form VBSP ( Sample 03/TD).

- Inspecting and supervising the process of using loan according to the form of public comparison ( Sample 06/TD), informing timely wrong purpose loan using cases, decamp case, died cases, missing cases or get risk by objective reasons ( natural calamity, epidemic diseases, fire) to VBSP to have timely measures.

- Co-ordinating with VBSP and local authorities to handle overdue debts. Guiding borrowers to make document to ask for risk debt treatment by objective reason ( if any).

- Steering and supervising the Management Board of SCG in implementing the entrusted contract that signed with VBSP.

1. VBSP where give loan:

- Checking The list of households who offer to borrow money from VBSP (Sample 03/TD) against The minute of Savings and Credit group meeting (Sample 10/TD). Verifying the legality of Loan Application according to  VBSP ‘s regulations.

- Prediodically or unexpectedly, VBSP’s leaders shall invite members in Representative Units of BOD at same level to implement checking and supervising the SCG’s activities, borrowers’ activities and junior level associations in executing credit policy and the effective of using loan of borrowers. .

- Dealing with due debt, overdue debt, debt which ( bi xâm tiêu)...., making document to risk debts ( if any) etc....

2. Traders who are financial organization:

2.1. Borrowing document:

Including 3 types of document are: legal document, economic profile, loan application.

1. Legal document:

Depending on the type of economic organization, borrowers shall send to VBSP following documents: ( notralized copy):

- Enterprise Regulation, Co-operative Regulation (except Private Enterprise);

- Decision to appoint Board Chairman ( if any), General Director ( Director), Chief Accountant.

- Registered Business License. In case Financial Organizations opening representative offices or branches at disadvantaged areas, they have to have operation licence in addition;

- Work permit for commercial operation ( for example: Phamaceutical Business);

- Capital contribution Report, The list of Founding Members ( Joint stock- company, Limited Liability Company, General Partnership Company);

- Forms of registering seal sample, signature and opening accounts;

- The number of cooperative member, list of Management Board, Supervision Board ( for Co-operative);

- Document approved at Co-operative Established Meeting ( for Co-operative).

1. Economic profile:

-  The Periodical Business Plan;

- Financial Statement and  Business results of the preceding period.

1. Loan Application:

- Proposal for Borrowing and Project of using loan ( Sample 01/DNV &N);

- Project, Production and Business Plan, services ( borrowers make by themsevles);

- Profile of Loan Security under regulation;

- Assessment note, Reassessment ( Sample 02/DNV&N);

- Loan approval information ( Sample 04/TD);

- Credit Contract ( Sample 03/DNV&N);

- Minute after lending ( Sample 06/DNV&N);

2.2. Lending process:

1. Borrowers have loan demands shall write Proposal for Borrowing loans ( Sample 01/DNV&N) approved by Commune People’s Committee. Then borrowers will hand directly Loan Application to VBSP where give loan.
2. After receiving Proposal for Borrowing and Project of using loan ( Sample 01/DNV&N) and documents regulated at section a,b point 2.1, Part II of this document, credit staff will appraise according to Sample 02/DNV&N.

 Basing on appraised results of credit officers, manager of credit leader is responsible for checking the legally, validity of document or reappraise ( if needed ) to submit to Director for approval.

1. If approved for loan, assigned credit staffs shall guide borrowers to make the Loan Security Contract as regulated. If they are not to borrow, staff shall make notice as Sample 04/TD to send to borrowers.
2. After completing loan security procedure as regulated, borrower and VBSP will make Credit Contract ( Sample 03/DNV&N). Borrowers have rights to make their choice and agree with VBSP to apply one of two lending methods: installments or credit line .

2.3. Disbursement:

For borrowers who are financial organizations have to opening deposit account at VBSP where give loan to implementing forms of non – cash payment and repayment of bank.

Borrowers get loans directly at assigned office. If they can not come to receive money, they can give other member in family a mandate to receive loan by approved document of local leader.

For each loan disbursement, the Bank disburse directly in cash or bank transfer following to request of borrowers.

Incase loan disbursed under the norm: Each time receiving loan, borrowers shall write debt paper, the total amount of the debt this time plus (+) outstanding that does not exceed the maximum limit approved. Bank shall disburse directly in cash or bank tranfer at the request of borrowers.

2.4. Collecting debt, interest:

Principal debt collection is implemented directly at the VBSP’s office where give loan. If borrowers use lending line, they can pay debt directly to loan account or deduct from deposit account to pay debt daily or pay debt according to business cycle.

Debt collection is carried out monthly at VBSP where give loan.

Each time of collecting debt and interest, accountant of bank where give loan shall make receipt note. Basing on document, accountant write a loan application which saved at VBSP and borrowing document of borrower  as regulations.

2.5. Supervising, overseeing and handling loan:

2.5.1. Content of supervising and overseeing loan:

VBSP is responsible for supervising and overseeing loan process, purpose of using loan and paying of borrowers in order to speeding up borrowers to implementing correctly and sufficiently commitments of credit document, the contents are as follow:

1. To Check before lending: is appraising or reappaising borrowing conditions under regulations.

b.To Check while lending: is checking the fully, legally, validity of lending document and vouchers, the match between identity card and borrower, the beneficiary and the person named on the written request for loan....

c.To Check after lending:

-  To check  the purpose of using loan written in credit document;

- To check the project progress, production plan, business and services;

- To check the situation of loan security assets and secured loan profile ( Sample 06/DNV&N).

1. Checking results have to be written in checking record after giving loan to monitoring and managing ( Sample 06/DNV&N).

2.5.2. Handling loan:

Basing on the checking results and depending on the seriousness of borrowers, VBSP shall decide to revoking/recovering  debt before term or move to overduedebt  and tackling as follow:

1. To temporarily suspending:

Incase the borrowers use loan with wrong purposes, providing incorrect information..

1. To terminating loan: incases the borrowers break the committed credit contract but do not repair or fix; borrowers stop producing may lead to bankruptcy; process of reproduction cannot determine who is responsible before the law for the relations of borrowing loan and repaying debt.
2. To sueing before law:

- Borrower breaks the credit contract, loan security contract, informed by document by lender but do not recover;

- Borrower has overdue debt due to subjective reason but does not have feasible method to pay bank’s debt;

- Borrower has financial capacity to pay debt but intentionally evade bank debt obligations under the agreement;

- Borrower has defraud or deceptive behavior;

- Other offends as regulated by law.

3. Procedure for loan security:

Procedure for loan security is implemented according to the guidance of loan security of VBSP at Document No. 2478/NHCS -TDSV dated 04/9/2009 by VBSP’s General Director on guiding the implementation of measures to ensure the loan system of VBSP.

4. Handling due debt:
5. On debt schedule, borrower is responsible to pay fully principal debt and interestto VBSP.
6. The adjustment of term debt:

- Refer to medium and long term loan which loan size is under VND

30 millions , borrowers meet difficult and have not pay principal debt on term debt, VBSP  shall consider at the next term debt ( do not transfer to overdue-debt of each term). 

- Refer to medium and long term loan with loan size from over VND  30 millions to  VND 500 millions, incase borrower does not pay principal debt timely, they have to write  requets for adjustment term debt ( Sample 08/DNV&N for economic organizations and Sample 08/TD for borrowers who are individual) before 5 days to send to  VBSP where give loan for consideration and adjustment of the next term debt.

1. Loan extension: Before 5 days of the last term of loan term repayment, if borrower can not pay debt due to objective reasons, they shall have Proposal for loan Extesion ( Sample 09/ DNV&N for economic organization and Sample 09/TD for borrowers who are individual) then send to VBSP where gives loan for considering of loan extension.
2. Transfering overdue debt:

- By the term of repayment for loan over VND 30 millions, if they are not considered by bank for debt adjustment shall transfer the due loan of this term to overdue debt.

- By the time of the last debt payment,  if borrower does not repay the debt and VBSP does not approve for loan extension, outstanding debt shall be transferred to overdue debt.  

- For cases which borrowers use capital with wrong purpose, VBSP where give loan shall revoke debt before term or transfer all principal outstanding loan to overdue debt.

When transferring to overdue debt, VBSP where give loan shall inform to borrower ( Sample 05/DNV&N for financial organizations, Sample 14/TD for individual borrower).

6. Handling risk debt due to objective reason:

The handling risk debt due to objective reason is implemented according to risk debt regualtions of VBSP system.

7. Recording loan application:

VBSP shall record loan application as regulated, ensure obsolute security. Assigned person to maintenance records must be responsible before law if lost, misplaced or modified the contents of the dossier.

7.1. Credit Department keeps: Economic Profile of borrowers.

7.2. Accounting Department keeps: Legal Document, Loan Application and other vouchers of borrower. Loan security’s documents of borrower are recorded under VBSP’s regulations.

Refer to document keeped by accountant, Credit Dept and other Depts  will copy as original one if needed and shall have permission of  Director or assigned person.

III. IMPLEMENTATION

1. Working plan:

Every year, VBSP’s branches shall make capital demand for traders doing business at disadvataged areas  to send directly to senior branches under the current regulations of VBSP.

2. Accounting:

Accounting of credit for traders doing business at disadvantaged areas  is accounted and monitored under the VBSP’s regulations.

3. Statistical reporting:

Monthly, on the 07th, VBSP at province’s branch will make and submit reports according to Sample No.02.10/BCTDSV-TNVKK attach this document and complementing column 29 and 30 on the classified report of entrusted outstanding ( Sample 05/BCTD) to HQ.

4. VBSP at local branches which have communes at disadvantaged areas on the issued list and attached to Decision No. 30/2007/QĐ-TTg are responsible for reporting to the People Committee and Provincial and District Representative Units of BOD to implementing the Decision No. 92/2009/QĐ-TTg and guidance of  the General Director in this document.
5. To hold and deploy the content of Decision No.92/2009/QĐ-TTg and professional training the content of this document to the VBSP’s officers, social-polictic organizations officers, leaders of Savings and Credit group and Communal People Committee’s staffs to implementing the lending programm as regulations.
6. To advise People’s Committee at all level, entrusted social- politic organization to propagandize and publicize guidance and policies on lending to traders doing business at disadvantaged areasaccording to Decision No.92/2009/QĐ.
7. This document is effective from the date of signing. Points that are not guided in this document, VBSP shall implement according to the content of Decision No.92/2009/QD-TTg dated 08/7/2009 by the Prime Minister on credit to trader doing business at disadvantaged areas.

On the implementing process, if have any difficults, please inform to HQ for considering and solving./.