VIETNAM BANK FOR SOCIAL POLICIES
SOCIALIST REPUBLIC OF VIETNAM
No.: 3151/NHCS-TD
Independence – Freedom – Happiness
Hanoi, November 07th 2005
GUIDANCE
On the implementation of housing lending Program in frequently flooded
areas in the Mekong river delta
- Pursuant to the Charter on Organization and operations of Vietnam Bank for
Social Policies (VBSP) promulgated in conjunction with Decision No. 16/2003/QDTTg dated January 22th 2003 by the Prime Minister;
- Pursuant to Joint Circular No. 72/2002/TT-LT-TC-XD-NHNN dated August
23th 2002, by the Ministry of Finance, the Ministry of Construction and the State Bank
of Vietnam, guiding the implementation of polices to households in flooded areas
who purchase deferred-payment house foundations and dwelling-houses in residential
clusters and lines in the Mekong river delta as stipulated in Decision No. 105/QD-TTg
dated August 02nd 2002 of the Prime Minister;
- Pursuant to Decision No. 78/2004/QD-TTg dated May 07th 2004 by the Prime
Minister on amending and supplementing a number of mechanisms and policies in
order to speed up the construction progress of residential clusters and lines as well as
dwelling houses in frequently flooded provinces in Mekong river delta;
- Pursuant to Decision No. 204/QD-TTg dated August 15th 2005 by the Prime
Minister on amending and supplementing the mechanism and targeted clients for
housing loans under the Program to construct residential clusters and lines as well as
dwelling houses in frequently flooded areas in the Mekong river delta; and Document
No. 1125/NHNN-TD dated October 07th 2005 by the Governor of the State Bank of
Vietnam providing guidance for the implementation of this Decision;
The General Director of VBSP hereby instructs the implemetation of
housing lending programme in frequently flooded areas in the Mekong river delta
as follows:
CHAPTER I: GENERAL PROVISIONS
1. Scope of implementation
This guidance shall be applied for branches of VBSP in frequently flooded
provinces in the Mekong river delta including: Long An, Tien Giang, Vinh Long,
Can Tho, Hau Giang, An Giang, Dong Thap and Kien Giang.
2. Beneficiaries
2.1. Households that reside in areas not guaranteeing safety during the flood
and must move to clusters and lines of populations and existing residential
embankments, including:
- Households with permanent residence at local areas;
- Migrant households from other areas that have long-term residential
registration at local areas;
- Households residing in areas that are prone to landslides and not safe in floods
(hereafter referred to as households)
2.2. Enterprises that sell deferred-payment houses to households (hereafter
referred to as enterprises).
3. Principals of borrowing capital
3.1. Using borrowed capital for right purposes;
3.2. Repaying the principle and interest on due time as agreed in the credit
contracts.
CHAPTER II: SPECIFIC PROVISIONS
I. FOR HOUSEHOLDS
VBSP provides loans to households for purchasing deferred-payment houses
from enterprises or constructing houses on their own as stipulated in this guidance.
1. Conditions of lending
1.1. Households that borrow capital to purchase on deferred-payment
houses
a. Households with loan size up to VND 7 million
- Having a decision of house-base assignment signed by the People’s
Committee (either at communal or district level upon the decision of
Provincial People’s Committee);
- Being named in the list of households eligible to purchase deferredpayment houses approved by PPC or DPC under authorization of PPC;
- Having the house assignment record.
b. Households with loan size from VND 7 million up to VND 9 million
In addition to stipulations in Item a Point 1.1, the households must
satisfy the following conditions:
- Being poor and disadvantaged, thus, can not afford flooring their
houses;
- Having moved to cluster and lines of populations and existing
residential embankments from September 11 th 2005 onwards.
- Being named in the List of households eligible for an increase in loan size
approved by PPC or DPC under authorization of PPC;
c. Households applying for additional loan size up to VND 2 million
- Being poor and disadvantaged, and thus can not afford flooring their
houses; Having moved to cluster and lines of populations and existing
residential embankments from September 11 th 2005 onwards; Having been
given maximum loan size up to VND 7 million to purchase deferred-payment
houses; and Applying for additional loan size up to VND 2 million for
flooring purposes.
- Being named in the List of households eligible for an increase in loan size
approved by PPC or DPC under authorization of PPC;
1.2. Households that borrow capital to construct houses on their own
a. Households with loan size up to VND 7 million
- Having a decision of house-base assignment signed by the People’s
Committee (either at commune or district level upon the decision of Provincial
People’s Committee);
- Being in the list of eligible households to take loans from VBSP for
constructing houses approved by PPC or DPC under authorization of PPC;
- Houses being completely constructed in compliance with the regulations of
PPC.
b. Households with loan size up to VND 9 million
In addition to stipulations in Item a Point 1.2, the households must
satisfy the following conditions:
- Having moved to cluster and lines of populations and existing
residential embankments from September 11 th 2005 onwards.
- Being named in the List of households eligible for an increase in loan size
approved by PPC or DPC under authorization of PPC;
2. Loan size
2.1. Households that are eligible beneficiaries and satisfy the conditions
stipulated in this Guidance are entitled to get loans for purchasing one (01) house
with deferred-payment from enterprises or constructing one (01) house on their
own according to the actual value of thorough construction in accordance with the
regulations of PPC, but the maximum value does not exceed VND 7 million. If the
actual value of the house is higher than VND 7 million, the rest shall be paid by the
households.
2.2. Households that are poor, disadvantaged and thus, can not afford
flooring their houses shall be entitled to maximum loan size up to VND 9 million.
3. Loan term
- The maximum loan term is up to ten years after the first loan disbursement,
of which the grace period is five years. For households with additional loans as
mentioned above, the additional loan term does not exceed the final loan term
agreed in the previous credit contract.
- In the first five years’ grace time, households do not have to repay
principal and interest of loans.
- Principal and interest repayment begins from the 6th year. The minimum
amount of repayment each year is equal to 20% of the total loans (including
principal and interest).
- During loan term, households that borrow capital from VBSP to purchase
deferred-payment houses are not permitted to sell, pledge, mortgage or transfer
their houses.
4. Interest rate
Interest rates shall be decided by the Prime Minister in certain period.
The current interest rate is 3%/year (0.25%/month) calculated for the entire
loan term, including five years’ grace.
Interest rate of overdue debt is 130% of the borrowing interest rate.
5. Policies to encourage early repayment before maturity
Households that repay loans before maturity shall be entitled incentive
policies in compliance with the MOF’s regulations as follows:
-
If a household repay total loan amount stated in the credit contract and the
time of repayment before maturity is a round number of years, then the
discounted amount shall be calculated by the following formula:
Reduced
=
Total deferred
X 4% X
Years (round
amount
amount as contracted
number) of
repayment before
maturity
-
If a household does not repay total amount stated in the credit contract but
instead repay in installments and the time of repayment before maturity is
not a round number of years, then the discounted amount shall be
calculated by the following formula:
Amount
Reduced
amount
=
repaid
before
4%
X
12 months (or
maturity
360 days)
Months (or
X
Days) of
Repayment
before maturity
VBSP will calculate the discounted amount of repayment according to actual
time of repayment before maturity of each household. Hence, the household will
have to repay to the VBSP: total loan amount + interest – discounted amount as
regulated. This discounted amount shall be deducted from the household’s total
repayment to VBSP. Each branch is requested to prepare the “Table of discounted
amount for households that repay before maturity under housing lending
programme (in the form 04/CVN attached) and send to the H.O (the Accounting
and Financial Management Department).
Example: The household of Mr. Nguyen Van A. signed a VND 7,000,000
credit contract with VBSP to purchase deferred-payment house. If his household
repays this loan before maturity:
Case 1: If Mr. A’s household repay the total amount in the credit contract
(VND 7,000,000) and the time of repayment before maturity is seven years (round
number).
-
The interest amount for three years = VND 7,000,000 x 3%/year x 3
years = VND 630,000
-
The repayment amount for three years (without discount) = VND
7,000,000 (principle) + VND 630,000 (3 years’ interest) = VND
7,630,000
-
The amount to be discounted = 4% x VND 7,000,000 x 7 years = VND
1,960,000
The amount to be repaid to VBSP by Mr. A’s household = VND
-
7,630,000 – VND 1,960,000 = VND 5,670,000
Case 2:
1st installment: Mr. A repaid a partial amount of VND 3.5 million and the
time of repayment before maturity is 6 years and 2 months (equivalent to 74
months).
-
The interest amount for 3 years and 10 months (equivalent to 46 months)
= VND 3,500,000 x 3%/12 x 46 months = VND 402,500
-
The repayment amount for 46 months (without reduction) = VND
3,500,000 (principle) + VND 402,500 (46 months’ interest) = VND
3,902,500
-
The amount to be discounted = VND 3,500,000 x 4%/12 x 74 months =
VND 863,333
-
The amount to be repaid to VBSP by Mr. A’s household = VND
3,902,500 – VND 863,333 = VND 3,039,167
2nd installment: After the 1st repayment, the remaining loan principal
between Mr. A’s household and VBSP is VND 3,500,000. In his 2nd installment,
Mr. A repaid VND 2,000,000 to the bank, and the time of repayment before
maturity is 4 years, 6 months and 15 days ( equivalent to 1,635 days).
-
The interest amount for 1965 days (counted from loan receipt date to the
date of 2nd installment) = VND 2,000,000 x 3%/360 x 1,965 days =
VND 327,500
-
The repayment amount for 1965 days (without discount) = VND
2,000,000 (principal) + VND 327,500 (1965 days’ interest) = VND
2,327,500
-
The amount to be discounted = VND 2,000,000 x 4%/360 x 1,635 days =
VND 363,333
The amount to be repaid to VBSP by Mr. A’s household = VND
-
2,327,500 – VND 363,333 = VND 1,964,167
3rd installment: In the 10th year – when the loan is due, the amount that Mr. A has
to repay to VBSP is equal to:
VND 1,500,000 (principal) + (VND 1,500,000 x 3%/year x 10 years) = VND
1,950,000
6. Lending dossiers
6.1. For households that borrow capital to purchase deferred-payment
houses
- Loan application cum commitments to use loan for right purpose and repay
on due time (form 01A/CVN) or Additional loan application in the case of
household borrowing additional loan (form 01B/CVBSN);
- Decision of house-base assignment signed by the People’s Committee
(either at commune or district level upon the decision of PPC);
- List of households eligible to purchase deferred-payment houses
approved by PPC or DPC under authorization of PPC;
- Record of house assignment signed by the People’s Committee (either
at commune or district level upon the decision of PPC), the enterprise and the
household;
- List of households eligible for an increase in loan size up to VND 9
million approved by PPC or DPC under authorization of PPC;
- Credit contract (form 02A/CVN) or Additional credit contract (form
02B/CVN) in the case of household borrowing additional loan ;
6.2. For households that borrow capital to construct houses on their own
- Loan application cum commitments to use loan for right purpose and repay
on due time (form 01A/CVN);
- Decision of house-base assignment signed by the People’s Committee
(either at commune or district level upon the decision of PPC);
- List of eligible households for taking loans from VBSP to construct
houses on their own, approved by PPC or DPC under authorization of PPC;
- Certification issued by competent authority on the completion of house
constructed in compliance with the regulations of PPC.
- Credit contract (form 02A/CVN)
- List of households eligible for an increase in loan size up to VND 9
million approved by PPC or DPC under authorization of PPC;
7. Lending procedures
a. Applicants must submit to VBSP the following documentations:
- Loan application;
- Decision of house-base assignment by competent authorities;
- Record of house assignment if the household purchases deferredpayment houses; OR Certification issued by competent authority on the
completion of house constructed in compliance with the regulations of PPC if
the household do the construction on their own.
b. Upon receiving these above documentations and checking if they are legal
and valid or not, the credit officers of VBSP shall compare them with:
- List of eligible households for purchasing deferred-payment houses or
List of eligible households for taking loans from VBSP to construct houses on
their own;
- List of households eligible for an increase in loan size up to VND 9
million approved by PPC or DPC under authorization of PPC;
If the documentations comply regulations stipulated in this guidance,
VBSP shall instruct the household to set up a credit contract and making
necessary approval.
8. Disbursement
8.1. For households that borrow capital to purchase on deferred-payment
houses
Based upon the lending dossiers, VBSP directly disburses capital to the
enterprises that sell deferred-payment houses according to real value of the house
but not exceeding the maximum regulated loan size.
8.2. For households that borrow capital to construct houses on their
own or borrow additional capital for flooring
Based upon the lending dossiers, VBSP directly disburse capital to the
households according to the total reasonable cost but not exceeding the maximum
regulated loan size. If a disbursement agreement is signed among the bank, the
borrower and the enterprise or supplier, VBSP shall disburse capital to the
enterprise or supplier.
9. Term of loan repayment, principal and interest collection
- From the 6th year of loan receipt onwards, lending households shall have to
repay loan principal and interest to the bank. When providing loan, the amount to
be repaid each year shall have to be negotiated between VBSP and the household
and specified in the credit contract. The minimum value of each installment is 20%
of total outstanding loans (including principal and interest).
- Households are encouraged by the Government to repay debts before
maturity and shall be entitled to incentives as stipulated in Article 5.
10. Rescheduling and Adjusting repayment periods
The rescheduling and adjusting repayment periods shall be implemented in
compliance with current regulations of Lending to the poor Program as stipulated
in Guidance No. 316/NHCS-KH dated May 25th 2003 by The General Director of
VBSP.
11. Overdue debts
If households do not repay debts on due time and are not rescheduled by the
bank, then the debts shall become overdue and shall apply overdue interest rate as
stipulated in Article 4.
12. Handling risky debts
Risky debts cannot be repaid due to objective reasons such as natural
disasters, epidemic diseases, fires, etc. causing direct losses to the capital and
assets of households shall be handled according to current regulations of the
Government and guidance of VBSP.
II. (Guidance for Enterprises: removed)
CHAPTER III: ORGANIZATION OF IMPLEMENTATION
1. Reporting regime
No later than the 5th day every month, provincial branches of VBSP shall
have to report to the HO (Department of Credit) the results of providing loan to
enterprises that sell dwelling houses for households in frequently flooded areas in
the Mekong river delta (form 08/CVDNXD) and the results of providing housing
loan to households in residential clusters and lines (form 03/CVN attached).
2. This Document takes effect from the date of signing and shall replace the
following documents: Guidance No. 303/NHNg-KH dated September 19th 2002 on
loans for households to purchase on deferred payment houses in frequently flooded
areas in the residential clusters and lines of seven Mekong river delta provinces;
Document No. 1414/NHCS-KHNV dated July 03rd 2004 providing guidance on
lending procedures to enterprises that sell houses to households in frequently
flooded areas in the Mekong river delta; Document No. 2366/NHCS-NVTD dated
November 19th 2004 on calculating the reduced amount for households that repay
deferred-payment housing loan before maturity.
The credit agreements (credit contracts) between VBSP and enterprises
constructing houses or households purchasing on deferred-payment houses that
have already been signed before the date this Document takes effect, shall be
continually implemented in compliance with signed stipulations.
3. Upon the receipt of this Document, branch directors of provinces
mentioned in Article 1, Charter I shall have to organize the implementation. Any
problem arising should also be reported to the H.O of VBSP for consideration and
settlement.
FOR THE GENERAL DIRECTOR
DEPUTY GENERAL DIRECTOR
(Signed)
Le Hong Phong