Writing-off without interests in case of natural disasters and epidemics

19/04/2010 According to the States new credit policy for agricultural and rural development, since 1/6/2010, individuals and households who work in agriculture, forestry, aquaculture and salt industry can be considered eligible for loans up to VND 50 million without any asset mortgage. Also with loans without any mortgage, households which do business, manufacture or provide services for agricultural and rural development will be considered eligible for loans up to VND 200 million; cooperatives and farm owners eligible for loans up to VND 500 million. Those targets have to submit the Certificate of land use right (for those who are granted with certificates of land use right) or they are confirmed by the commune Peoples Committee that no certificate for land use right has been granted and the land has no conflicts. This is one of important contents of Decree 41/2010/N-CP on the credit policy for agricultural and rural development which has just been issued by the Prime Minister Accordingly, the Government has a policy on promoting and supporting loans for the agriculture and rural field through management tools of monetary policies, management policies for risks arisen extensively in the agriculture and rural field and other specific policies in each period. The targets for applying the policy consist of organizations which provide loans for the agriculture and rural development (credit organizations (TCTD), small-scale financial organizations; banks, financial institutions established by the Government to provide loans according to the State policies) and organizations and individuals who are eligible for loans as stipulated for their production, business and consumption in agriculture and rural field. Trusted lending Regarding the loan warranty mechanism, the Decree stipulates that credit organizations can provide loans to customers on the basis of with or without asset mortgage according to current regulations. At the same time, credit organizations should specify loan rates without asset mortgage, applicable conditions and procedures for each type of customers, appropriate with current regulations applied by credit organizations for customers. In addition, credit institutions should consider trusted lending for types of customers who are individuals and households on the basis of warrantee of rural political and social organizations according to current regulations. Lending interests

For loans provided for agriculture and rural field by credit organizations, which are entrusted by the Government, other organizations or individual, the interest will be followed according to the Government regulations or agreed with the entrusting party. And for micro-finance organizations providing loans for target groups in agriculture and rural field, the interest is agreed with customers as stipulated by laws. Banks, financial institutions carry out lending activities for those who are subject to policies and economic programs as delegated by the Government, warranted by the Government with conditions to implement through policies on agriculture, rural area and farmers for each period. In this case, the lending interest shall be followed the ones stipulated by the Government. In addition, the Decree also stipulates that credit organizations should have policies on exempting, reducing interests for customers who participate in buying insurance for agriculture in order to promote borrowing customers to buy insurance, reducing risks for credit organizations. Writing-off without interests in case of natural disasters and epidemics Regarding the lending duration, based on the revolving time of funds, ability to return the project funds, business and manufacturing plans of customers, credit organizations and customers agree on appropriate borrowing durations. In case customers cant repay loans in a due time for a credit organization due to objective reasons (natural disasters, epidemics...), the credit organization is eligible to consider extending the borrowing duration for customers according to existing regulations, at the same time it is based on effective business and manufacturing projects and plans, ability to pay back of customers to consider new loans without depending on former loans which customers havent paid back in time. In case natural disasters, epidemics occur extensively, when there is the notice from the authority level, in addition to considerations of extending borrowing durations for customers, the Government has specific supporting policies for borrowing organizations and individuals who are heavily damaged and are not able to pay back. The lending credit organization can write-off without interests for borrowers with outstanding amounts at the time natural disasters, epidemics occur and are announced in local areas. The maximum time for writing-off is 2 years and the interest amount which is written-off for customers are deducted to pre-tax profits of the credit organization.