CIRCULAR

STIPULATING IN DETAIL THE PROVISION OF THE INTEREST RATE SUPPORT FOR ORGANIZATIONS AND INDIVIDUALS BORROWING BANK LOANS FOR THEIR PRODUCTION AND BUSINESS

Pursuant to the Government's Resolution No. 30/2008/NQ-CP of December 11, 2008, on urgent measures to curb economic decline, maintain economic growth and assure social welfare;
Pursuant to the Prime Minister's Decision No. 131/QD-TTg of January 23, 2009, on the interest rate support for organizations and individuals borrowing bank loans for their production and business;

The State Bank of Vietnam stipulates in detail the provision of the interest rate support for organizations and individuals borrowing bank loans for their production and business (below referred to as the interest rate support) as follows:

Article 1. Entities eligible for and scope of application of regulations on interest rate support

1. Credit institutions that provide loans to organizations and individuals under law and provide the interest rate support, including state-run commercial banks, joint-stock commercial banks, joint-venture banks, foreign banks' Vietnam-based subsidiaries, wholly foreign-owned banks and the Central People's Credit Fund (below collectively referred to as commercial banks).

2. Organizations and individuals borrowing bank loans eligible for the interest rate support are borrowers that get loans for realizing their domestic production or business plans under Article I of the State Bank Governor's Decision No. 127/2005/QD-NHNN of February 3. 2005, amending and supplementing a number of articles of the Regulation on provision of loans by credit institutions to borrowers, promulgated together with Decision No. 1627/200l/QD-NHNN of December 31,2001.

3. Eligible for the interest rate support are Vietnam dong short-term loans (of a term of up to 12 months) provided under credit contracts entered into and performed between February 1 and December 31, 2009, including:

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b/ Loans to be used by borrowers as working capital for their production or business activities, including building houses for low-income earners under current law; or domains calling for social resources for their development specified in the Government's Decree No. 69/2008/ND-CP of May 30, 2008, on policies to encourage the participation of all social strata in the domains of education, job training, healthcare, culture, sports and environmental protection.

4. Loans which are provided to entities in sectors or domains classified in the Appendix to Decision No. 131/QD-TTg are ineligible for the interest rate support, including:

a/ Medium- and long-term loans in Vietnam dong; short-, medium- and long-term loans in foreign currencies.

b/ Vietnam dong short-term loans provided to entities in economic sub-sectors classified in Appendix 7 to Decision No. 477/2004/QD-NHNN, including:

- Mining industry;

- Financial, banking and insurance operations, covering also loans for offshore direct and indirect investment, payment of foreign debts or debts owed to other credit institutions and payment of debts to lending commercial banks;

- Activities related to property dealing and consultancy services;

- State management, national security and defense; activities of Party and mass organizations; compulsory social assurance;

- Education and training;

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- Cultural and sport activities, including entertainment and recreation activities;

- Activities for personal and public-service purposes (covering also consumer loans and loans provided through issuance and use of credit cards);

- Household-based services;

- Operations of international organizations and societies.

c/ Vietnam dong short-term loans for purchase of foreign-currency amounts to pay for imported consumer goods, on which statistics are made under the State Bank of Vietnam's Document No. 13684/NHNN-CSTT of December 26, 2007, on sending of written temporary reports. Consumer goods include gems and precious metals; cars in complete units with 12 seats or less; consumer goods of all kinds specified in the Trade Minister's Decision No. 07/2007/QD-BTM of February 28, 2007, promulgating the list of consumer goods to serve as a basis for determination of import tax payment time limits; the Industry and Trade Minister's Decision No. 10/2008/QD-BCTof May 16, 2008. supplementing the list of consumer goods to serve as a basis for determination of import tax payment time limits; and the Industry and Trade Minister's Decision No. 27/2008/QD-BCT of August II, 2008, promulgating the list of consumer goods to serve as a basis for determination of import tax payment time limits.

d/ Loans for securities investment and trading specified in the State Bank Governor's Decision No. 03/2008/QD-NHNN of February 1, 2008. on provision of loans and discount of negotiable instruments for securities investment and trading.

dd/ Loans for purchase and sale of land use rights, on which statistics are made under the State Bank of Vietnam's Document No. 5659/NHNN-CSTT of June 25, 2008, on reporting on a number of credit criteria.

Article 2. Interest rate support principle, duration, level and method

1. The interest rate support principle is that commercial banks shall provide loans to meet needs for working capital for production and business under the ordinary credit mechanism and provide the interest rate support in strict compliance with the Prime Minister's regulations and this Circular. They may not refuse to provide the interest rate support for eligible loans and shall periodically report to the State Bank of Vietnam for inspection and supervision of interest rate support provision.

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3. The interest rate support level for borrowers is 4%/year calculated on the loan balance and actual loan term within the period from February 1 to December 31,2009.

4. The method of providing the interest rate support is that when loan interests are due. commercial banks shall immediately reduce loan interest amounts payable by borrowers by a level equal to interest amounts of loans eligible for the interest rate support. The State Bank of Vietnam shall transfer loan interest-rate support amounts to commercial banks according to the lalter's reports on interest rate support amounts.

Article 3. Procedures for and responsibilities of borrowers and commercial banks providing the interest rate support

1. Borrowers getting loans eligible for the interest rate support shall:

a/ When getting for the first time loans from lending commercial banks between February 1 and December 31, send their written requests for interest rate support, made according to a set form (not printed herein), to these commercial banks.

b/ Use loans for proper purposes eligible for the interest rate support stated in credit contracts. If they use loans for improper purposes, they will no longer be entitled to the support and shall refund to commercial banks previously supported loan interest amounts and be handled under law.

c/ Request lending commercial banks to provide the interest rate support under the Prime Minister's regulations and the State Bank of Vietnam's guidance.

d/ Account loan interest amounts payable to commercial banks after receiving the interest rate support under current law.

2. Commercial banks shall:

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b/ Chairmen of Boards of Directors and Directors General (Directors) of commercial banks shall be held responsible before law for cases of interest rate support provision in contravention of law. Violating commercial banks shall be handled under law and will not be considered for annual ranking, permission for charter capital increase or grant of licenses to open their operating networks.

c/ Apply the ordinary lending mechanism and interest rates to entities wishing to get loans eligible for the interest rate support in compliance with the Regulation on provision of loans by credit institutions to borrowers, promulgated together with the State Bank Governor's Decision No. 1627/2001/QD-NHNN of December 31, 2001, and other relevant legal documents:

- Conduct inspections before, upon and after the provision of loans to ensure that the interest rate support is provided in accordance with law. Upon detecting borrowers that use loans for improper purposes, recover the provided loan interest support amounts. If it is impossible to do so, report to competent state companies for handling or initiation of lawsuits against borrowers' breaches of credit contracts.

- Satisfy borrowers' needs for loans under Clause 3, Article 15 of the Regulation on provision of loans by credit institutions to borrowers, promulgated together with the State Bank of Vietnam's Decision No. 1627/2001/QD-NHNN and guiding Document No. 10307/NHNN-CSTT of November 21, 2008, regarding reporting on banking credit relations.

d/ Provide the interest rate support for Vietnam dong short-term loans under credit contracts entered into and performed between February I and December 31, 2009. For credit contracts entered into before February 1, 2009, which contain an agreement on disbursement in installments through covenants or IOUs, loans will be disbursed according to covenants or IOUs made between February 1 and December 31. 2009, and eligible for the interest rate support.

dd/ When loan interests are due to be collected from borrowers, reduce loan interest amounts payable by borrowers by a level equal to the loan interest-rate support amounts under law. If by the end of December 31, 2009, loan interests are not due, calculate loan interest amounts payable by borrowers and give loan interest reductions equal to the loan interest-rate support amounts. When giving loan interest reductions to borrowers under regulations, make interest rate support certificates with certifications by borrowers and lending commercial banks (with signatures and seals) for use as documentary proof for inspection and supervision.

e/ Calculate and collect loan interest amounts from borrowers entitled to the interest rate support by the interest calculation method provided in the State Bank Governor's Decision No. 625/2001/QD-TTg of May 17, 2001, promulgating the Regulation on methods of calculating and accounting interests to be collected or paid by the State Bank of Vietnam and credit institutions, and other relevant legal documents:

- Account all loan interest amounts as incomes on the basic principle of accumulation and current financial regulations. Loan interest-rate support amounts transferred from the State Bank of Vietnam shall be accounted into separate accounts (Account for "receivables" - Sub-account for "receivables from the State Bank of Vietnam for interest rate support in 2009").

- Draw up lists (or develop databases) to monitor in detail loans eligible for the interest rate support (borrowers, loan amounts, terms and interest rates, interest support amounts), then send them to borrowers for use in monitoring, statistical and internal audit operations, reporting to the State Bank of Vietnam and inspection and supervision by competent state agencies.

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- Written registrations of quarterly interest rate support plans, sent not later than the 10Ih of the first month of a quarter. Particularly, written registrations of interest rate support plans for February and March of 2009 shall be sent not later than February 10, 2009.

- Monthly reports on interest rate support provision, sent not later than the 10th of the month following the reported month, and made in an accurate and timely manner.

h/ Monitor and make timely and accurate statistics on loans eligible for the interest rate support for use in internal audit and reporting to the State Bank of Vietnam, and for inspection and supervision by competent state agencies; open accounts or apply appropriate management systems for separately accounting and making statistics on loans eligible for the interest rate support.

i/ Archive dossiers of loans eligible for the interest rate support under Article 55 of the Law on Credit Institutions and the State Bank of Vietnam's guidance.

Article 4. Responsibilities of the State Bank of Vietnam

1. To transfer, on a monthly basis, up to 80% of loan interest rate support amounts to commercial banks according to their reports. To transfer loan interest rate support amounts remaining in 2009 after it receives commercial banks' reports on final settlement of interest rate support.

2. To assume the prime responsibility for, and coordinate with the Finance Ministry and concerned ministries and branches in, conducting inspection and supervision of the compliance with law on interest rate support when necessary.

3. Responsibilities of units of the State Bank of Vietnam assisting the State Bank Governor in performing jobs involving in the implementation of the interest rate support mechanism:

a/ The Monetary Policy Department shall coordinate with units of the State Bank of Vietnam in solving problems related to the interest rate support mechanism; receiving written registrations of interest rate support plans and reports on provision of interest rate support by commercial banks; notifying the transfer of interest rale support amounts to commercial banks; guiding the final settlement of interest rate support amounts; and making and sending reports to the Prime Minister.

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c/ Transaction bureaus shall account and transfer interest rate support amounts to commercial banks.

d/ The banking inspection and supervision agency (the State Bank Inspectorate) shall inspect, supervise and handle commercial banks and borrowers violating regulations on interest rate support.

dd/ The State Bank of Vietnam's provincial-level branches shall, according to their competence, examine, supervise and inspect die implementation of regulations on interest rate support, and report on arising problems to the State Bank Governor and presidents of provincial-level People's Committees for solution.

Article 5. Organization of implementation

1. This Circular takes effect on the date of its signing.

2. A working group will be set up to organize the implementation of Decision No. 131/QD-TTg, and composed of representatives of the State Bank of Vietnam and the Finance Ministry and headed by a deputy governor of the State Bank of Vietnam.

3. The directors of the Office and the Monetary Policy Department and heads of units of the State Bank of Vietnam, directors of the Slate Bank of Vietnam's provincial-level branches; chairmen of boards of directors and directors general (directors) of commercial banks, and borrowers shall implement this Circular.

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