In furtherance of the provisions in Clause 3, Article 3 and Clause 4, Article 8 of the Prime Minister�s Decision No. 80/2002/QD-TTg of June 24, 2002 on policies to encourage the contractual sale of commodity farm produce, the State Bank Governor hereby guides commercial banks to provide loans and apply the mechanism of loan security with properties formed from loan capital or with trust guarantee, as well as interest rates to producers and enterprises that have signed contracts on commodity farm produce consumption as follows:

1. Commercial banks shall accelerate the mobilization of domestic capital and take advantage of foreign assistance capital source, so as to ensure adequate loan capital to be provided for producers and enterprises that have signed contracts on commodity farm produce consumption in the forms prescribed in Article 2 of the Prime Minister�s Decision No. 80/2002/QD-TTg:

- Producers, including: cooperatives, peasant households, farm owners and representatives of peasant households engaged in agricultural, forestry, and aquacultural production and salt-making that have signed commodity farm produce consumption contracts with commodity farm produce-consuming enterprises;

- Enterprises of various economic sectors, which have signed contracts on the consumption of commodity farm produce or salt with producers.

2. Commercial banks shall provide loans to producers and enterprises that have signed contracts on commodity farm produce consumption under commercial credit mechanism and apply some measures as follows:

a) To take initiative in approaching and evaluating loan demands of producers and enterprises; for efficient and feasible production and business plans as well as investment projects, to promptly sign credit contracts and disburse the loan capital according to the tempo of contractual performance, suitable to the crop seasons and demands of producers and enterprises.

b) The capital-lending procedures and dossiers should be ensured with their legality and simplified so as to create favorable conditions for producers and enterprises to borrow capital for production as well as purchase and consumption of commodity farm produce under signed contracts.

c) The mortgage and pledge of properties by producers and enterprises, and trust guarantee by the third party for producers and enterprises shall be effected under the current mechanism applicable at the time of loan provision. Cases where the producers and enterprises borrow loans without property security (loan provision with trust guarantee) and make loan security with property formed from loan capital shall comply with the following:

- Peasant households, farm owners and representatives of peasant households engaged in agricultural, forestry and aquacultural production or salt making, that borrow loans of up to VND 20 million for production of commodity farm produce or under VND 50 million for production of aquatic breeds, shall not have to mortgage their properties; cooperatives and enterprises, which borrow loans of under VND 50 million for production of aquatic breeds, shall not have to mortgage their properties. The provision of these loans shall comply with the provisions of such documents as Resolution No. 11/2000/NQ-CP of July 31, 2000, Decision No. 103/2002/QD-TTg of August 25, 2000, Circular No. 10/2000/TT-NHNN1 of August 31, 2000 and Document No. 934/CV-NHNN1 of September 25, 2000 of the State Bank Governor.

- Commercial banks shall consider and opt for loan provision without property security to producers and enterprises that have efficient production and business projects and plans according to the provisions in Article 20 of Decree No. 178/1999/ND-CP of December 29, 1999 and Clause 6, Section III of Resolution No. 11/2000/NQ-CP of July 31, 2000, Section 1, Chapter IV of Circular No. 06/2000/TT-NHNN1 of April 4, 2000 and Clause 2, Section I of Circular No. 10/2000/TT-NHNN1 of August 31, 2000 of the State Bank Governor.

- Producers being poor households may borrow capital from the Bank for the Poor without having to mortgage their properties or from commercial banks with trust guarantee by socio-political organizations according to the provisions in Section III, Chapter IV of Decree No. 178/1999/ND-CP of December 29, 1999.

- Producers and enterprises may mortgage their properties formed from loan capital to borrow short-, medium-, and long-term loans according to the provisions in Clause 2, Article 14 of Decree No. 178/1999/ND-CP of December 29, 1999, provided that such properties meet the conditions prescribed in Clause 2, Article 15 of that Decree.

3. On lending interest rates

a) The commercial banks shall apply the lending interest rates as agreed upon with producers and enterprises, in conformity with the capital demand-supply on the market and their own customer policies.

b) To reduce lending interest rates applicable to producers and enterprises under the current regulations of the Government and Vietnam State Bank as follows:

- Producers and enterprises in mountainous regions III, off-shore islands and areas concentratedly inhabited by Kh�me ethnic minority, when borrowing capital from State-run commercial banks, shall be entilted to a reduction of 20% as compared to the common lending interest rates.

- Producers and enterprises in mountainous region II, when borrowing capital from State-run commercial banks, shall be entitled to a reduction of 15% as compared to the common lending interest rates.

- Producers and enterprises in mountainous regions II covered by the Programs on communes meeting with exceptional difficulties in the provinces of Gia Lai, Kon Tum, Dac Lac and Lam Dong, prescribed in the Prime Minister�s Decisions No. 1232/1999/QD-TTg of December 24, 1999 and No. 42/2001/QD-TTg of March 26, 2001, when borrowing capital from State-run commercial banks, shall be entitled to a reduction of 30% as compared with common lending interest rates.

4. Commercial banks shall timely grasp the projects on production, processing and consumption of commodity farm produce eligible for interest rate support from local budgets under the Finance Ministry�s guidance, so as to obtain basis to expertise the principal and interest repayment capability and create favorable conditions for producers and enterprises to borrow capital for the implementation of the signed contracts.

5. Implementation organization

a) This Circular takes effect 15 days after its signing.

b) The heads of the agencies under the State Bank, the directors of the State Bank�s provincial/municipal branches, the chairmen of the management boards and the general directors (directors) of commercial banks shall have to implement this Circular.

For the State Bank Governor
Deputy Governor
PHUNG KHAC KE