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
|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 08TH, 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:
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.
- 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.
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:
5.2. Debt extension term:
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.
- 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.
7.1. 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.
8.1. 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.
9.1. 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.
1.1. 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:
1.3. 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:
- 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 .
- 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.
- 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....
2.1. Borrowing document:
Including 3 types of document are: legal document, economic profile, loan application.
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).
- The Periodical Business Plan;
- Financial Statement and Business results of the preceding period.
- Proposal for Borrowing and Project of using loan ( Sample 01/DNV &N);
- Project, Production and Business Plan, services ( borrowers make by themsevles);
- 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:
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.
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:
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).
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:
Incase the borrowers use loan with wrong purposes, providing incorrect information..
- 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.
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.
- 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.
- 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).
The handling risk debt due to objective reason is implemented according to risk debt regualtions of VBSP system.
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.
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.
Accounting of credit for traders doing business at disadvantaged areas is accounted and monitored under the VBSP’s regulations.
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.
On the implementing process, if have any difficults, please inform to HQ for considering and solving./.
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