I. CAPITAL CONTRIBUTION BY CREDIT INSTITUTIONS TO CREDIT
GUARANTEE FUNDS

Credit institutions shall base themselves on their charter capital and reserve funds, as well as the situation on the use of charter capital and reserve funds for credit institutions' activities as prescribed by the Law on Credit Institutions and the development of small- and medium-sized enterprises in their localities to decide the contribution of capital to credit guarantee funds set up by the provincial/municipal People's Committees. In cases where it is difficult to use the above-stated capital sources, credit institutions may use the source of long-term mobilized capital to contribute capital for setting up credit guarantee funds. When credit institutions use the source of long-term mobilized capital to contribute capital for setting up credit guarantee funds, they shall have to work out plans on replacing such long-term mobilized capital source with the sources of charter capital and reserve funds for a maximum duration of 10 years.

- The proportion of capital contributed by a credit institution to one credit guarantee fund to the charter capital of such credit guarantee fund must not exceed the following percentages:

+ For banks: 6%

+ For non-bank credit institutions (financial companies): 10%.

- The proportion of the total amounts of capital used by a credit institution for contribution to, and/or the purchase of shares in, all enterprises and credit guarantee funds to the charter capital as well as reserve fund of such credit institution must not exceed the following percentages:

+ For banks: 30%

+ For non-bank credit institutions (financial companies): 40%.

II. IMPLEMENTATION ORGANIZATION AND IMPLEMENTATION PROVISIONS

1. The State Bank's provincial/municipal branches

On the basis of reviewing and evaluating the practical situation on the operation of small- and medium-sized enterprises in their localities, the directors of the State Bank's provincial/municipal branches shall have to coordinate with local departments and branches in advising the presidents of the provincial/municipal People's Committees on the setting up of credit guarantee funds in the localities.

When requested by the presidents of the provincial/municipal People's Committees, the directors of the State Bank's branches shall appoint their representatives to join in the Preparatory Boards for setting up credit guarantee funds and the Managing Boards of credit guarantee funds of the provinces or cities.

2. Credit institutions

2.1. To appoint representatives to join in the Preparatory Boards for setting up credit guarantee funds at the request of the presidents of the provincial/municipal People's Committees, and to join in the Managing Boards of credit guarantee funds in cases where they contribute capital to the credit guarantee funds set up in their localities.

2.2. To guide small- and medium-sized enterprises which wish to be guaranteed by credit guarantee funds when borrowing capital at credit institutions in strict accordance with the provisions in Decision No. 193/2001/QD-TTg, Circular No. 42/2002/TT-BTC and this Circular as well as the current stipulations of the State Bank Governor on loan provision to customers.

2.3. To coordinate with credit guarantee funds in inspecting and supervising the course of using borrowed capital and repaying debts by customers, thus ensuring capital safety.

3. This Circular takes effect 15 days after its publication in the Official Gazette. The provisions in Official Dispatch No. 1070/NHNN-TD of October 3, 2002 are no longer effective.

4. Any difficulties and problems arising in during the course of implementing this Circular should be reported to Vietnam State Bank for study and settlement.

For the State Bank Governor
Deputy Governor
NGUYEN THI KIM PHUNG