Circular No. 11/2013/TT-NHNN

THE STATE BANK OF VIETNAM

Circular No.  11/2013/TT-NHNN dated May 15, 2013 of the State Bank of Vietnam guiding some provisions on housing assistance’s loans in accordance with the Resolution No. 02/NQ-CP dated January 07, 2013 of the Government

Pursuant to the Law on the State Bank of Vietnam No. 46/2010/QH12 dated June 16, 2010;

Pursuant to the Law on credit institutions No. 47/2010/QH12, dated June 16, 2010;

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

Pursuant to the Decree No. 96/2008/ND-CP dated August 26, 2008 of the Government defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam of Vietnam;

Pursuant to the Decree No. 71/2010/ND-CP dated June 23, 2010 of the Government detailing and guiding the implementation of the Housing Law;

Pursuant to the Resolution No. 02/NQ-CP dated January 07, 2013 of the Government on some solutions to remove difficulties for business production, market support, handling of bad debts and the Government’s Resolution No. 48/NQ-CP dated April 04, 2013 on the Government's regular session in March 2013;

At the proposal of Director of Credit Department;

The Governor of the State Bank of Vietnam of Vietnam guiding some provisions on housing assistance’s loans in accordance with the Resolution No. 02/NQ-CP dated January 07, 2013 of the Government,

Chapter 1.

GENERAL PROVISIONS

Article 1. Scope of regulation and subjects of application

1. Scope of regulation

a. This Circular stipulates on provision of loans for housing assistance from the re-financing source of the State Bank of Vietnam (hereinafter referred to as the State Bank of Vietnam) according to the Government’s Resolution No. 02/NQ-CP dated January 07, 2013 on some solutions to remove difficulties for business production, market support, handling of bad debts and the Government’s Resolution No. 48/NQ-CP dated April 04, 2013 on the Government's regular session in March 2013;

b. The State-owned commercial banks, the join stock commercial banks of which the State holds more than 50% of charter capital (hereinafter referred to as banks) shall use a quantity of fund at least 3% of total loan debt balance at the end time of last year for provision of loans to subjects specified in point a clause 2 of this Article. For loans not from the re-financing assistance source of the State Bank of Vietnam, banks may provide loans as prescribed by the current law at interest rate and duration suitable with the payment ability of clients and financial status of banks.

2. Subjects of application:

a. Subjects borrowing loans (hereinafter referred to as clients) include:

- Subjects conducting the purchase, hiring, purchase-hiring of social houses and the hiring, purchase of commercial houses with areas of less than 70m2, at sale price of less than 15,000,000 VND/m2 specified in the Circular No. 07/2013/TT-BXD, dated May 15, 2013 of the Ministry of Construction guiding on the determination of subjects entitled to borrow loans for housing assistance according to the Government’s Resolution No. 02/NQ-CP dated January 07, 2013 and documents revising, replacing the Circular No. 07/2013/TT-BXD (if any);

- In each period, the Ministry of Construction shall announce enterprises being investors of projects on social house construction; enterprises being investors of projects on commercial houses converted the use purpose into projects on social houses (hereinafter referred to as enterprises).

b. Banks providing loans as prescribed in this Circular include:

- Vietnam Agriculture and Rural Development Bank;

- Joint Stock Commercial Bank for Investment and Development of Vietnam;

- Joint Stock Commercial Bank for Industry and Trade of Vietnam;

- Joint Stock Commercial Bank for Foreign Trade of Vietnam;

- Joint Stock Commercial Bank for Housing Development in Cuu Long River Delta;

c. Relevant organizations, individuals.

Article 2. Principles for housing assistance’s loan provision

1. The State Bank of Vietnam shall re-finance for banks providing loans for housing assistance as prescribed in this Circular Disbursement for loans for housing assistance applicable to clients from the re-financing source of the State Bank of Vietnam shall end after the State  Bank of Vietnam has disbursed all amounts for re-financing but the maximum limit time shall be 36 months since this Circular takes into effect.

2. Banks shall implement provision of loans to clients as prescribed by current law on loans of credit institutions to clients and provisions in this Circular. Banks shall consider, appraise, decide on loans to clients and take responsibility for their decisions.

3. Clients are responsible for use of loans properly with purpose and returning full principal, interest on schedule to banks according to credit contracts.

4. Banks shall provide loans to enterprises being investors of projects on social house construction and projects on commercial houses converted the use purpose into projects on social houses, on the basis of list announced by the Ministry of Construction in each period. Total loan levels of bank to enterprises maximally may be 30% of the re-financing source for house assistance specified in clause 1 Article 8 of this Circular.

Chapter 2.

PROVISION OF HOUSING ASSISTANCE’S LOANS

Article 3. Loan’s conditions

Apart from conditions for loans as prescribed by current law on loans of credit institutions to clients, provisions in the Circular No. 07/2013/TT-BXD dated May 15, 2013 of the Ministry of Construction and documents revising, replacing the Circular No. 07/2013/TT-BXD (if any), clients must meet additionally the following conditions:

1. For clients being individuals who borrow loans for purchase, hiring, purchase-hiring of social houses and for hiring, purchase of commercial houses with areas of less than 70m2, at sale price of less than 15,000,000 VND/m2:

a. Having contracts of purchase, hiring, purchase-hiring of social houses; contracts of hiring, purchase of commercial houses with investors;

b. Having purpose of borrowing loans for paying amounts not yet paid from purchase, hiring, purchase-hiring of social houses; hiring, purchase of commercial houses as prescribed in this Circular for contracts signed with investors from January 07, 2013.

c. Having request for borrowing loans for purchase, hiring, purchase-hiring of social houses; hiring, purchase of commercial houses and committing that clients as well as members in their households have not yet been borrowed loans for assistance at banks for purchase, hiring, purchase-hiring of houses as prescribed in this Circular;

d. Having full minimum capital to participate in the loan plan as prescribed in clause 3 of this Article.

2. For clients being enterprises:

b. They are enterprises as prescribed in point a clause 2 Article 1 of this Circular;

b. Having purpose of borrowing loans for paying expenses not yet paid arising from January 07, 2013 (excluded tax expenses) for implementation of projects on social house construction, projects on commercial houses converted the use purpose into projects on social houses as prescribed in this Circular;

c. Having full minimum capital to participate in the loan plan as prescribed in clause 3 of this Article.

d. Committing that they have not yet been borrowed loans for assistance at banks for implementation of projects on social house construction, projects on commercial houses converted the use purpose into projects on social houses as prescribed in this Circular;

3. Banks shall specify the minimum capital of client participating in the loan project or plan but not exceed 20% of loan plan for clients specified in clause 1 of this Article and not exceed 30 % of total investment level of the loan project or plan for clients specified in clause 2 of this Article. If a client purchase-hiring social house had paid full 20% of value of house, it is not required for bank to stipulate the minimum capital.

Article 4. Interest rates of loan

1. The State Bank of Vietnam shall announce annually the loaning interest rates for housing assistance of banks to clients and apply to loans with debt balance in year.

2. The interest rate applied in 2013 is 6%/ year.

3. Periodically, in December every year, the State Bank of Vietnam shall determine and announce the interest rate applied for the next year, which is equal to 50% of average loaning interest rate of banks in the market but does not exceed 6%/ year.

4. Duration to apply the loaning interest rate as stated in this Article shall not exceed 10 years for clients purchasing, hiring, purchase-hiring social house and hiring, purchasing commercial house and 5 years for clients being enterprises, but not pass June 01, 2023.

Article 5. Duration of loan

1. Loaning duration applying to customers purchasing, hiring, purchase-hiring social house and hiring, purchasing commercial house shall be not less than 10 years. If a client wishes to borrow loans in duration less than 10 years, he/she may agree with bank on loaning duration lower than the minimum loaning duration.

2. Loaning duration applying to clients being enterprises shall be not more than 5 years.

Article 6. Assurance measures of loans

Banks shall consider and decide the provision of loans with or without guarantee by asset as prescribed by law

Article 7. Classification of debts and settlement of risks

Classification of debts, setting up provision and use of provision for settling of risks applicable to loans for housing assistance according to this Circular shall comply with regulations of the State Bank of Vietnam.

Chapter 3.

REFINANCING FOR THE HOUSING ASSISTANCE’S LOAN

Article 8. Refinancing of the State Bank of Vietnam

1. The State Bank of Vietnam shall implement disbursement for refinancing loans of about 30,000 billion VND for banks on the basis of loan debt balance of banks to clients, but the maximum limit time shall be 36 months since this Circular takes into effect. The Governor of the State Bank of Vietnam shall specify total re-financing amounts.

2. Re-financing interest rate:

a. Re-financing interest rate of the State Bank of Vietnam to banks which is lower than loaning interest rates of banks to clients shall be 1.5%/year at the same time. Overdue debt interest rate shall be 150% of the re-financing interest rate in term;

b. Periodically, on the first working day of every month, banks shall pay the re-financing interest rate of the previous month to the State Bank of Vietnam.

3. Re-financing duration: Except case of withdrawing the refinancing debt under notification of the State Bank of Vietnam specified in point d clause 5 this Article, time limit for refinancing for loans for housing assistance every time shall be 364 days and automatically be extended for the remaining debt refinancing balance at the time of overdue with 01 (one) duration equal to the first duration of refinancing. The automatic extension is performed with maximally prolonging till June 01, 2023. The remaining debt balance of clients at bank after June 01, 2023 shall be transferred to form of loans by funding of banks.

4. Disbursement and refinancing: Monthly, based on results of loans for housing assistance of banks, the State Bank of Vietnam shall implement disbursement or withdraw the refinancing debts from banks, ensuring the refinancing debt balance of banks at the State Bank of Vietnam not to exceed the loaning debt balance of banks to clients at the time point of disbursement or withdrawal of the refinancing debts.

5. Process, procedures for refinancing:

a. The State Bank of Vietnam shall sign a principle contract of refinancing on loans for housing assistance with each bank;

b. Periodically, not later than the fifth day of every month, banks shall report results of loans for housing assistance according to Annex No. 01 enclosed with this Circular to the State  Bank of Vietnam (Credit Department) serving as basis for the State  Bank of Vietnam to implement disbursement or withdrawal of the refinancing debts;

c. Cases of disbursement for refinancing:

i. Banks have written request for the refinancing loans enclosed with report on result of loans for the housing assistance;

ii. Within 01 working day after receiving full dossier of banks, the Credit Department shall preside over consult the Monetary policy department, agency of banking inspection and supervision about requests for the refinancing loans of banks;

iii. Within 02 working days, units stated in point c (ii) of this clause shall give written advices and send them to the Credit Department to sum up and submit to the Governor of the State Bank of Vietnam for decision on approval of the refinancing amounts to banks;

iv) Based on decision on the Governor of the State Bank of Vietnam and the principle contract of refinancing on loans for housing assistance between the State Bank of Vietnam and banks, within 01 working day after having decision of the Governor of the State Bank of Vietnam, the transaction Service of the State Bank of Vietnam shall implement disbursement and banks shall sign promissory contract for the refinancing amounts disbursed.

c. Cases of withdrawal of refinancing debts:

i. Within 02 working days after receiving reports on result of loans for housing assistance of banks, the State  Bank of Vietnam (Credit Department) shall determine and notify the transaction Service of the State  Bank of Vietnam and banks about the refinancing principals which banks must pay for the State  Bank of Vietnam;

ii. Within 01 working days after receiving notification of the State Bank of Vietnam (Credit Department), banks are responsible for returning the principals from refinancing to the State Bank of Vietnam;

iii. Withdrawal of the principals from refinancing may be deducted alternately to promissory contracts of banks at the State Bank of Vietnam according to their time order, from the first promissory contract;

iv. On June 01, 2023, banks must return all principal and interest of refinancing loans for the State Bank of Vietnam.

6. Handling for case of failing to pay debt on schedule:

In case a bank violates payment of principal and interest as prescribed in this Circular, the State Bank of Vietnam shall transfer debt (principal and interest) into overdue debt and apply the interest rate of overdue debt, from the overdue day. Concurrently, the State Bank of Vietnam shall implement withdrawal of overdue debts according the priority orders as follows:

a. Deducting from deposit of bank at the State Bank of Vietnam;

b. Withdrawing principal and interest from other sources (if any) of bank;

c. Other forms as prescribed by law.

Chapter 4.

IMPLEMENTATION ORGANIZATION AND IMPLEMENTATION PROVISIONS

Article 9. Customers’ responsibilities

1. To comply with regulations of law on borrowing loans for housing assistance and commitments in the credit contracts with banks.

2. To be responsible before law for accuracy of information, documents provided for banks to appraise and decide on provision of loans.

Article 10. Banks’ responsibilities

1. To promulgate documents guiding on provision of loans for housing assistance in the system in conformity with regulations of this Circular and relevant laws.

2. To monitor, perform accounting and manage separately the loans for housing assistance.

3. Periodically, not later than the fifth day of every month, send the State  Bank of Vietnam (Credit Department) results of loans for housing assistance and take responsibility for accuracy of information reported to the State  Bank of Vietnam;

4. After make appraisal and tentative decision on provision of loans for enterprises, banks shall send tentative report on loans for enterprises according to the Annex No. 02 enclosed with this Circular to the State Bank of Vietnam and solely sign contracts with enterprises after the State Bank of Vietnam notify that it still has funding source to refinance for these subjects.

Article 11. Responsibilities of units directly under the State Bank of Vietnam

1. Credit Department:

a. To assume the prime responsibility for, and coordinate with the Monetary policy department, Agency of banking inspection and supervision in advising for the Governor of the State  Bank of Vietnam to handle matters arising in the course of implementation of this Circular.

b. Monthly, to sum up and report the Governor of the State  Bank of Vietnam, and send to the Monetary Policy Department, agency of banking inspection and supervision about the result of loans for housing assistance of banks;

c. To propose the monitoring measures to advice the Governor of the State  Bank of Vietnam in decision on specific total amount for refinancing and time ending disbursement for refinancing as prescribed in this Circular;

d. To monitor, sum up the banks' financial demand for loans to enterprises. Within 03 working days after receiving reports of banks as prescribed in clause 4 Article 10 of this Circular, notifying banks about the refinancing source for these subjects;

2. The Monetary Policy Department:

a. To coordinate with Credit Department and relevant units in handling of matters arising during implementation of this Circular.

b. To assume the prime responsibility for, and coordinate with the Credit Department, Agency of banking inspection and supervision in determining and submitting the loaning interest rates for housing assistance specified in clause 3 Article 4 of this Circular to the Governor of the State  Bank of Vietnam.

3. Transaction Services:

a. To draft and conclude in the principle contracts on loans for housing assistance between the State  Bank of Vietnam and banks; disburse, withdraw principal; calculate, notify and collect interest; perform accounting and monitor amounts of refinancing for housing assistance with respect to banks;

b. To coordinate with Credit Department and relevant units in handling of problems arising during the course of implementation of this Circular.

4. Finance and Accounting Departments:

To preside over handling on accounting related to loans for housing assistance as prescribed in this Circular.

5. Agency of Banking Inspection and Supervision:

a. To implement inspection, supervision of provision of loans by banks to clients as prescribed in this Circular and relevant legal documents;

b. To coordinate with Credit Department and relevant units in handling of matters arising during implementation of this Circular.

6. The State Bank of Vietnam’s branches in central-affiliated cities and provinces shall monitor and coordinate in handling of matters arising during implementation of loans for housing assistance in their localities.

Article 12. Implementation Provisions

1. This Circular takes effect on June 01, 2013.

2. The Chief of office, Director of Credit Department and heads of units of the State Bank of Vietnam; Directors of the State Bank of Vietnam’s branches in central-affiliated cities and provinces; Chairpersons of Members' Council, Chairpersons of Board of Directors and Directors General of State-owned commercial banks, joint stock commercial banks of which State holds more than 50% of charter capital; subjects of assistance in borrowing loans for housing shall implement this Circular./.

For the Governor of the State Bank of Vietnam

Deputy Governor

Nguyen Dong Tien

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