Recently, the Government has issued Decree No. 31/2022/ND-CP (“Decree 31”) on interest rate subsidies from the state budget for loans of enterprises, cooperatives and business households. On the same day, the Governor of the State Bank also issued Circular No. 03/2022/TT-NHNN (“Circular 03”) to commercial banks implementing Decree 31. Decree 31 and Circular 03 officially came into force from May 20, 2022.
In order to assist commercial banks in the application of regulations related to interest rate subsidies, on July 5, 2022, the State Bank of Vietnam issued Official Letter No. 4593/NHNN-TD (“Official Letter 4593”) guiding the implementation of Decree 31 and Circular 03. The content of the instructions in Official Letter 4593 is presented in the form of detailed and clear situational questions and answers. Accordingly, Official Letter 4593 answered 22 situations related to the scope of regulation; principles, conditions, terms and methods of interest rate subsidies; estimation performance, finalization and recollection of the interest subsidy amount; management of interest rate subsidy limit.
In this legal update, ATA Legal Services only points out several notable issues in Official Letter 4593 as follows:
1. Customers, borrowing to repay the loans sponsored by other banks and the loans offsetting their own capital and third-party loans to pay for expenses involving the business plan or project, shall not eligible for interest rate subsidies.
2. Conditions for the Loan Agreement to be considered applicable for interest rate subsidies:
- Must be a written agreement between the credit institution and the customer;
- Having all the minimum contents as prescribed in Article 23.1 of Circular No. 39/2016/TT-NHNN (loan amount, loan limit; loan use purpose; loan currency; loan method; loan term; loan interest rate; repayment of principal and interest; order of repayment of principal and interest; rescheduling of debt repayment; transfer of overdue debt, etc.).
Accordingly, in cases where the customer and the bank sign a frame limit contract/agreement and then sign additional credit contracts in installments or debt receipt agreements, these contracts and agreements will only be considered as a loan agreement if the above conditions are met.
3. In case there are loan agreements related to a loan, the signature time of any of them having the minimum contents as prescribed in Circular 39/2016/TT-NHNN will be determined as the signature time of the loan agreement. In case the minimum contents are only fulfilled in case of the combination of agreements, then such agreements are determined to be a loan agreement and the signature time of the loan agreement is the signature time of the last signed agreement.
4. In case a customer has paid interest after the effective date of Decree 31 (May 20, 2022) but has yet completed the procedures for requesting and approving interest rate subsidies, the interest rate subsidy payment will not be refunded to the customer for that interest payment period.
5. Priority order of interest rate subsidies:
- According to the signature time of a loan agreement satisfying the conditions mentioned in Section 2 above;
- According to the time of interest collection which comes first;
For other details, please contact ATA Legal Services to receive a full version of Official Letter 4593.
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