Thông tư 47/2014/TT-BTC

CIRCULAR

GUIDING THE IMPLEMENTATION OF SOME ARTICLES OF THE PRIME MINISTER’S DECISION No. 03/2011/QĐ-TTG DATED JANUARY 10, 2011 ON PROMULGATING THE STATUTE OF GUARANTEE ENABLING MEDIUM AND SMALL BUSINESSES TO BORROW CAPITAL FROM COMMERCIAL BANKS

Pursuant to the Law on State budget dated December 16, 2002;

Pursuant to the Law on credit institutions dated June 16, 2010;

Pursuant to the Law on Enterprise dated November 29, 2005;

Pursuant to the Government's Decree No. 215/2013/NĐ-CP dated December 23, 2013 defining the functions, tasks, rights and organizational structure of the Ministry of Finance;

Pursuant to the Government's Decree No. 56/2009/NĐ-CP dated June 30th 2009 on supporting the development of medium and small enterprises

Pursuant to the Prime Minister’s decision No. 03/2011/QĐ-TTg dated January 10, 2011 on promulgating the Statute of Guarantee for medium and small businesses to borrow capital from commercial banks;

At the proposal of the Director of the Financial Department of banks and financial institutions;

The Minister of Finance has promulgated the Circular guiding the implementation of some articles of the Prime Minister’s Decision no. 03/2011/QĐ-TTg dated January 10, 2011 on promulgating the Statute of guarantee for medium and small businesses to borrow capital at commercial banks.

Article 1. Governing scope

This Circular stipulates some issues concerning provision of guarantee by the Vietnam Development Bank (or Development Bank for short) enabling medium and small businesses to borrow capital at commercial banks according to the Statute of Guarantee enabling medium and small businesses to borrow capital at commercial banks enclosed together with the Prime Minister’s Decision No.03/2011/QĐ-TTg dated January 10, 2011 (or known as Statute of Guarantee enclosed together with the Decision No. 03/2011/QĐ-TTg for short).

Article 2. Regulated entities

Regulated entities under this Circular comprise Development Bank, commercial banks, medium and small businesses (or enterprises for short) and other relevant organizations, individuals related to loan guarantee according to regulations set out in the Statute of Guarantee enclosed together with the Decision No.03/2011/QĐ-TTg.

Article 3. Conditions for a loan guarantee

Conditions for an enterprise to secure a loan guarantee are specified in Article 5 of the Statute of Guarantee enclosed together with the Decision No. 03/2011/QĐ-TTg Some issues are stipulated particularly as follows:

1. The enterprise must be defined in Article 3 of the Statute of Guarantee enclosed together with the Decision No. 03/2011/QĐ-TTg.

2. The investment project should be inclusive of a written approval of loan issued by a commercial bank and appraised and determined by the Development Bank as productive and creditworthy.

3. Equity capital should be at least 15% of the project’s total investment and invested entirely in fixed assets. This capital must be declared in a latest monthly or quarterly financial statement before the submission of application for guarantee and commitment to proper performance.

4. There are no bad debts to any credit institutions and the Development Bank at the time of submission of guarantee request (bad debts comprise loans from group 3 to group 5 as instructed by the State bank of Vietnam).

Article 4. Scope of a loan guarantee

1. The Development Bank shall guarantee the enterprise’s part or whole of the loan at commercial banks but not exceed 85% of the project’s total investment capital, not inclusive of working capital.

2. Guarantee provided by the Development Bank includes covers both principal and interest:

a) Obligation to pay a principal means a due principal payment under the credit contract or the amended credit contract as defined in the Development Bank’s scope of guarantee that an enterprise defaults on or unable to pay or pay insufficiently under obligations undertaken and the Development bank agrees to pay this debt on behalf of the principal debtor;

b) Obligation to pay a loan interest means the interest (not including interest on late payment of interest) in proportion to the principal under the credit contract or amended credit contract signed between a commercial bank and the borrowing enterprise as defined in the scope of guarantee and paid by the Development Bank in case the enterprise is in default.

Article 5 Loan guarantee fees

1. Document appraisal fees, guarantee fees and use of loan guarantee fees are specified Article 9 of the Statute of Guarantee enclosed together with the Decision No. 03/2011/QĐ-TTg Some issues are stipulated particularly as follows:

a) Document appraisal fees shall be collected one time after the enterprise makes full submission of application for loan guarantee to the Development Bank under regulations This fee shall not be refunded if the application is rejected;

b) Loan guarantee fee is calculated on the loan (principal and interest) guaranteed.

2. The Development Bank shall be responsible for planning, managing and using collected loan guarantee fees according to regulations.

Article 6. Loan guarantee request document

Loan guarantee request document is regulated in Clause 1, Article 10 of the Statute of Guarantee enclosed together with the Decision No. 03/2011/QĐ-TTg Some issues are stipulated particularly as follows:

1. A written request for loan guarantee made by the borrowing enterprise is regulated by the Development Bank.

2. A written approval of loan issued by the commercial bank.

3. Investment project approved by competent authorities and legal documentation proving the project has completed all investment procedures according to the law.

4. Relevant records:

a) The enterprise’s financial statement formulated according to regulations;

b) Relevant documents proving the enterprise has an equity capital of at least 15% of the project’s investment capital and being invested entirely in fixed assets according to regulations set out in Clause 3, Article 3 hereof;

b) Documents proving the enterprise is fully eligible for a loan guarantee according to regulations set out in Article 3 hereof;

Article 7. Rights and obligations of the Development Bank

Rights and obligations of the Development Bank are exercised under Article 16 of the Statute of Guarantee enclosed together with the Decision No. 03/2011/QĐ-TTg Some rights and obligations are particularly stipulated as follows:

Rights of the Development Bank to commercial banks

a) Request commercial banks to terminate loan agreements, recover debts ahead of time and send a written notice to the Development Bank if the borrowing enterprise is found to have violated the guarantee contract, credit contract or the legislation;

b) Consult with commercial banks about providing loan guarantee related documents which consist of the lending regulations and statutes, statutes of inspecting, monitoring loan with customers to coordinate with the Development Bank for inspection and monitoring of loan according to the regulations set out in Point dd, Clause 1, Article 16 of the Statute of Guarantee enclosed together with the Decision No. 03/2011/QĐ-TTg;

e) When the guarantor’s obligations have to be fulfilled, the Development Bank is entitled to request commercial banks to provide the dossier proving disbursement of legitimate loan (duplicate), information concerning use and control over use of loan, equity capital and assets derived from loans, inspection record on use of loan and assets acquired from loan;

d) Other rights as agreed between the parties and in accordance with the law.

Rights of the Development Bank on enterprises:

b) Request enterprises to provide credit contract, conditions for loan for which the commercial bank has signed with customer (duplicate) and relevant documents according to regulations set out in Article 6 hereof;

b) Request enterprises to put up additional collateral if re-evaluated value of collateral according to the law is lower than outstanding debt of the guaranteed loan or outstanding forced loan.

c) Other Rights agreed between the parties and in accordance with the law.

3. Obligations of the Development Bank to commercial banks

a) Appraise the documents proving disbursement and inspection of loan use provided by the commercial bank upon receipt of request for fulfillment of guarantor’s obligations. Within 30 days since all the documentation is received, the Development Bank shall issue a written notice on approving or not approving payment of the debt on the enterprise’s behalf and state reasons. Within 05 working days since a written approval to perform guarantor’s obligations by the Development Bank is issued, the Development Bank shall carry out payment of the debt on behalf of the borrowing enterprise..

b) Make written comments on adjustments to credit contract; take into consideration the amendment and adjustment of guarantee contract, guarantee certificate appropriately when the Development Bank approves the adjustment and amendment of the credit contract;

c) Transfer to the commercial bank the collateral and/or papers concerning collateral as mortgages to the Development Bank in case the Development Bank refuses its guarantor’s obligations;

d) Other obligations as agreed between the parties and in accordance with the provisions of law.

4. Obligations of the Development Bank on enterprises:

a) Appraise the enterprise’s application for loan guarantee. In case the application is rejected, the Development Bank shall advance written comments to the enterprise. In case of approval, the Development Bank shall conclude a guarantee contract with the enterprise and relevant parties (if any); issue a guarantee certificate based on a credit contract signed between the commercial bank and its client;

b) Fulfill the guarantor’s obligations according to the guarantee contract when the enterprise defaults on a loan undertaken with the commercial bank in accordance with the regulations hereof;

d) Fulfill other obligations as agreed between the parties and in accordance with the law.

Article 8. Rights and obligations of the commercial bank

Rights and obligations of the commercial bank are exercised under Article 18 of the Statute of Guarantee enclosed together with the Decision No. 03/2011/QĐ-TTg Some Rights and obligations are particularly stipulated as follows:

Rights of the commercial bank:

a) Request the Development Bank to provide statutes on credit guarantee;

b) Request the Development Bank to fulfill its obligation under the guarantee certificate and other relevant agreements;

c) Request the Development Bank to hand over its rights to reception and settlement of collateral in case the Development Bank refuses its obligation to guarantee;

d) Request the Development Bank to advance written comments on amendment of the credit contract;

dd) Other rights as agreed between the parties and in accordance with the law.

2. Obligations of the commercial bank:

a) Provide documents to the Development Bank according to the regulations set out in Points b, c, Clause 7 hereof;

b) Properly and sufficiently exercise regulations set out in the lending regulations and statutes promulgated by the State Bank of Vietnam and professional procedures of the commercial bank on loans guaranteed by the Development Bank (including appraisal of loan application; approval decision for loan; inspection and monitoring of loan; collection of debt; compliance with regulations on documentary evidence, disbursement documentation...);

c) Disburse the loan in proportion to equity capital invested in the project by the enterprise at the time of disbursement to ensure the rate as defined in Clause 3, Article 3 hereof;

d) Be responsible for accuracy and legitimacy of the loan disbursement documentation according to the law; be responsible for results and conclusions from inspection and monitoring;

dd) Closely monitor the enterprise’s source of revenue for collection of debt. In case the enterprise fails to pay the debt due to irresistible difficulties in production and business, take measures such as adjustment of maturity date, extension of debt payment or others in accordance with applicable law. In case these measures are taken, the commercial bank shall coordinate with the Development Bank for handling.

e) Issue written comments within a maximum of seven (07) working days since receipt of the Development Bank’s written rejection to perform guarantor’s obligations. In case the commercial bank fails to issue any notice to the Development Bank after this period, the Development Bank’s written rejection to perform guarantor’s obligations is deemed as accepted;

g) In case of acceptance of the Development Bank’s written rejection to perform guarantor’s obligations, the commercial bank shall be responsible for returning the guarantee certificate (original) and at the same time getting back the collateral and/or collateral related documents for the Development Bank to expedite clearance of the guarantee contract with the enterprise;

h) Other obligations as agreed between the parties and in accordance with the law.

Article 9. Rights and obligations of the enterprise

Rights and obligations of the enterprise are exercised under Article 17 of the Statute of Guarantee enclosed together with the Decision No. 03/2011/QĐ-TTg Some issues are stipulated particularly as follows:

1. Equity capital should be at least 15% of the project’s total investment and invested entirely in fixed assets.

2. Be responsible for the forced loan for the debt the Development Bank has paid on its behalf; supplement collateral when its value is lower than the outstanding debt of the guaranteed loan or outstanding forced loan.

3. Be liable for notifying the Development Bank when the credit contract is adjusted.

4. Other obligations as agreed between the parties and in accordance with the law.

Article 10. Performance of guarantor’s obligations

1. The Development Bank shall rely on the enterprise’s reasons for failure to pay the debt, documentation proving disbursement of loan and related information as well as taken measures of debt collection under the commitments set out in the credit contract to consider liabilities of the parties in the performance of guarantor’s obligations.

2. After a period of seven (07) working days since the maturity date, if the enterprise is unable to pay the debt or fails to fulfill it punctually for the loan guaranteed under the credit contract or the adjusted credit contract approved by the Development Bank through an adjusted guarantee certificate (if any) and the commercial bank does not issue any request for guarantor’s obligations enclosed with the request document to the Development Bank (in case no other agreements are made with the guarantor), the Development Bank shall reject the request for.

3. The Development Bank is entitled to refuse to perform guarantor’s obligations in the cases mentioned in Clause 4, Article 19 of the Statute of Guarantee enclosed together with the Decision No. 03/2011/QĐ-TTg and in the cases below:

a) The commercial bank disburses part or whole of the loan for no legitimate purpose of investment stated in the credit contract;

b) The enterprise uses loan and assets acquired from loan for no legitimate purpose of investment stated in the credit contract and the commercial bank is yet to carry out the inspection and monitoring of the enterprise’s use of loan and assets derived from loan;

e) The commercial bank fails to perform its obligations as specified in Clause 2, Article 8 hereof (unless otherwise stated in Point g, Clause 2, Article 8 hereof) as a way to prove that it (the commercial bank) has disbursed the loan for a legitimate purpose and carried out the inspection and monitoring of the enterprise’s use of loan and assets derived from loan in accordance with the regulations;

d) The commercial bank fails to terminate lending and recover the debt ahead of time immediately upon notice that the client provides false information, violates credit contract and the legislation;

dd) When the guarantee commitment is found expired or documentary evidence falsified.

4. The Development Bank is entitled to refuse to perform part of the guarantor’s obligations in the following cases:

a) The enterprise uses part of the loan, part of the assets acquired from loan with no legitimate purpose of investment stated in the credit contract and the commercial bank is yet to carry out the inspection and monitoring of the enterprise’s use of loan and assets acquired from loan;

b) The Development Bank refuses to pay on behalf of the principal for the loan in proportion to the rate of equity capital that is not invested in the project according to initial capital structure of the project.

Article 11. Forced loan term and interest

1. In case the Development Bank pays the debt on behalf of the enterprise, the Development Bank shall become the creditor of the enterprise.

a) The Development Bank and the enterprise shall execute a contract of indebtedness in which tenor, maturity date, interest and other related information should be specified according to the law;

b) The Development Bank shall rely on the enterprise's business plan and financial situation to determine the tenor for payment of the forced loan;

c) Interest rate of forced loan shall be 150% of the initial interest rate within a tenor applicable for economic organizations of the commercial bank receiving guarantee for the loan of the same tenor at the time of indebtedness.

2. When the forced loan is due, in case the enterprise is unable to pay the debt, or fails to fulfill it punctually, the followings must be executed:

The Development Bank shall rely on the enterprise’s reasons for temporary financial difficulties to decide the settlement of the risks within their competence or make submission to the competent authorities for decision to restructure debt, settle collateral and risks of guarantee; b) For one investment project, extension of deadline for forced loan payment is allowed only once. Maximum extension of forced loan payment shall not be permitted to exceed the tenor of forced loan as regulated in the contract of indebtedness; c) Interest rate of the extended forced loan shall be 150% of initial interest rate within a tenor applicable for economic organizations of the commercial banks receiving guarantee for the loan of the same tenor at the time of extension.  

3. In case payment of extended forced loan is due but the enterprise defaults, the Development Bank is entitled to apply measures as set out in Clause 2, Article 20 the Statute of Guarantee enclosed together with the Decision No. 03/2011/QĐ-TTg:

Article 12. Funds for loan loss provision

1. The Development Bank is entitled to establish the funds for loan loss provision and resources for the establishment shall be executed according to Article 21 of the Statute of Guarantee enclosed together with the Decision No. 03/2011/QĐ-TTg:

2. The funds for loan loss provision shall be used as off-balance sheet items for the principal of the loans at risk; to make up for the difference between sale of debt and the principal (sale of debt lower than principal) according to provisions of loan risk handling issued by the Development Bank. Amount collected from handled guaranteed amount, including the amount collected from handling of collateral shall be supplemented to the funds for loan loss provision according to the regulations.

3. The Development Bank shall manage, use and enter in the accounts for the funds for loan loss provision under the regulations.

4. In case the funds for loan loss provision fail to make up for the risk, the Development Bank shall report to the Ministry of Finance and relevant entities for making submission to the Prime Minister for consideration and decision.

5. At the end of year the balance of the funds for loan loss provision shall be transferred to the following year.

Article 13. Report information

1. The Development Bank shall perform report information regime on credit guarantee for enterprises on a quarterly, yearly basis and unexpectedly; periodical reports shall be sent to the Ministry of Finance, the State bank of Vietnam and the Ministry of Planning and Investment.

2. The Development Bank shall take responsibility and obligation to provide information, on-demand report to competent agencies according to the law.

Article 14. Transitional regulation

1. The guarantee certificate issued before this Circular becomes effective shall be executed according to signed agreements untill its expiration.

Amendment of the guarantee certificate since this Circular comes into force shall be executed if the amendments are in accordance with the regulations set out in the Decision No. 03/2011/QĐ-TTg dated January 10, 2011, guidance in this Circular and relevant law provisions.

2. For any forced loan arising from guaranteed loans under the Decision No.14/2009/QĐ-TTg dated January 21, 2009 and Decision No. 60/2009/QĐ-TTg dated April 17, 2009 and in the event the contract of indebtedness signed between the Development Bank and the enterprise complies with the conditions set out in Article 11 hereof and the enterprise is unable to pay the debt due to temporary financial difficulties, the Development Bank shall rely on the enterprise’s financial situation, production and business plan to decide the extension of debt payment, adjust interest rate of forced loan according to this Circular’s regulations.

3. For any forced loan arising from guaranteed loans under the Decision No.14/2009/QĐ-TTg dated January 21, 2009 and Decision No. 60/2009/QĐ-TTg dated April 17, 2009 and in the event the contract of indebtedness signed between the Development Bank and the enterprise complies with the conditions set out in Article 11 hereof and the enterprise is unable to pay the debt due to temporary financial difficulties, the Development Bank shall rely on the enterprise’s financial situation, production and business plan to decide the extension of debt payment, adjust interest rate of forced loan according to this Circular’s regulations.

Article 15. Implementation

1. This Circular shall come into force since June 6, 2014.

2. Chairman of the management board, general directors of the Development Bank, commercial banks, enterprises, organizations, individuals concerned during the implementation of this Statute shall be responsible for exercising this Circular.

Difficulties that arise during the implementation of this Circular should be reported punctually to the Ministry of Finance and relevant entities for consideration and handling according to the law provisions.