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THE STATE BANK
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SOCIALIST REPUBLIC OF
VIET NAM
Independence - Freedom – Happiness
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No. 154/1998/QD-NHNN14
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Hanoi, April 29, 1998
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DECISION
PROMULGATING THE
REGULATION ON CO-FINANCING BY CREDIT INSTITUTIONS
THE GOVERNOR OF THE STATE BANK
Pursuant to the Ordinance on the State Bank
of Vietnam and the Ordinance on Banks, Credit Cooperatives and Financial
Companies promulgated by Order No.37/LCT-HDNN8 and Order No.38/LCT-HDNN8 of May
24, 1990 of the Chairman of State Council of the Socialist Republic of Vietnam;
Pursuant to Decree No.15-CP of March 2, 1993 of the Government on the tasks,
powers and State management responsibilities of the ministries and
ministerial-level agencies;
Pursuant to the current credit regulations and provisions on guaranty issued by
the Governor of the State Bank;
At the proposal of the Head of the State Bank's Credit Department,
DECIDES:
Article 1.- To issue together with this
Decision the Regulation on co-financing by credit institutions;
Article 2.- This Decision takes effect 15
days after its signing; all provisions contrary to this Regulation are now
annulled.
Article 3.- The Director of the State
Bank Governor's Office, the head of the Credit Department, the heads of the
units attached to the central State Bank, the directors of the
provincial/municipal State Bank's branches, the general directors (directors)
of credit institutions shall have to implement this Decision.
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FOR THE GOVERNOR OF
THE STATE BANK
DEPUTY GOVERNOR
Duong Thu Huong
REGULATION
ON CO-FINANCING
BY CREDIT INSTITUTIONS
(Issued
together with Decision No.154/1998/QD-NHNN14 of April 29, 1998 of the Governor
of State Bank)
I. GENERAL PROVISIONS
Article 1.- Co-financing by credit
institutions (CIs) (hereafter in this Regulation referred to as co-financing)
is the process of lending-guaranteeing a project by a group of CIs (two or
more), with a CI acting as the coordinator among the financing parties to raise
the capability and effectiveness of production-business activities of
enterprises and CIs.
Article 2.- The co-financing parties
shall have to reach agreement on the mode of project evaluation, may set up a
joint evaluation council or not but must ensure that the lending (guaranty) is
strict and convenient and at the same time manage the project after providing
loan (guaranty) so as to regularly and periodically inspect the co-financed
party and handle arising problems.
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Article 3.- Forms of co-financing in this
Regulation shall include:
1. Consolidated loan;
2. Guaranty and re-guaranty;
3. Combination of the above forms.
Article 4.- Co-financing shall apply in
the following cases:
1. The demand for loans or guaranty to implement
the project exceeds the maximum limit allowed for lending or guaranteeing by a
CI;
2. There's a demand to distribute risks among
CIs;
3. Capital sources of one CI fail to meet the
capital demand of the project.
The currency used for co-financing may be VND or
a foreign currency, depending on the demand of the project and according to the
relevant provisions on the management of foreign exchange.
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- Commercial banks;
- Investment and development banks;
- Joint venture banks;
- Branches of foreign banks;
- Central people's credit funds and financial
companies are entitled to participate in co-finance but not allowed to organize
it.
Article 6.- Scope of co-financing:
The co-financing shall be effected when there is
a demand for loan or guaranty for short-, medium- and long-term investment in
projects.
Article 7.- Parties involved in the
relationship of in co-financing:
1. Co-financing party: The co-financing party is
composed of 2 or more members, each of which is a CI or a CI's branch
authorized by the CI's General Director (Director) (as stipulated in Article
5). These members shall take part in capital contribution, provide direct loan
or guaranty in order to jointly finance a project with certain amounts of money
mutually agreed upon through the signing of a co-financing contract.
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2. Co-financed party: is a legal person or an
individual that needs the loan or the guaranty and is provided with loan or
guaranty by the co-financing party in accordance with the provisions of this
Regulation for the implementation of the project.
Article 8.- Capital sources for
co-financing:
The co-financing members shall use their own
capital sources, mobilized capital and/or borrowed capital to participate in
the co-financing.
Article 9.- The level of capital set for
each member to participate in co-financing (for both lending and guaranty) shall
be agreed upon by the co-financing parties but must not exceed the lending
and/or guaranty limits for a customer of such CI according the provisions of
law.
Article 10.- Principles and conditions
for the consideration of co-financing, the determination of co-financing
objects and duration and the lending interest rates or guaranty charge,
conditions on pledge, mortgage and/or guaranty shall comply with the current
regulations and provisions on credit and guaranty issued by the Governor of the
State Bank and with this Regulation.
Article 11.- The coordinating CI shall be
entitled to the arrangement charge on the basis of mutual agreement between the
co-financing members. The levels of charge shall be calculated on the basis of
reference to international practices or based on the percentages of the
interest rate fixed for the co-financing of the project.
II. SPECIFIC PROVISIONS
Article 12.- Proposal on co-financing for
a project:
When a legal person or an individual wants to
borrow money or to have a guaranty, it/he/she shall have to send a requesting
dossier to the CI it/he/she is having the credit relation; the involved CI
shall make a preliminary evaluation and if it deems that the project is
feasible and needs the co-financing, it shall project the CIs with co-financing
capabilities, invite them to participate therein, and at the same time send
them the preliminary evaluation's results. An invitation for the co-financing
should state clearly the form, duration, interest rate, charge and amount of
money proposed for participation in co-financing the project.
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Within the time proposed by the co-finance
inviting CI and after studying the enterprise's dossier requesting a loan, the
invited CIs shall have to reply in writing, clearly stating its consent (or
refusal) to participate in the co-financing. If wishing to participate in the
co-financing, the invited CI shall have to give reply to the specific proposals
of the inviting CI. In case there are not enough CIs to participate in the
co-financing, the inviting CIs may send its invitation to other CIs. After the
invitation to the co-financing (not more than two rounds), if:
- The co-financing has already been agreed upon,
the participating CIs shall evaluate the documents and dossier requesting
loan(s), sent by the borrowing party so as to decide the lending.
- If the co-financing has not been agreed upon,
the CI that receives the enterprise's dossier shall:
+ Re-consider the possibility of unilateral
financing; if the demand for capital or guaranty does not go beyond the limits
prescribed by law and there're enough capital sources for the finance, it may
decide the financing.
+ Inform the enterprise of the incapability to
provide loan or guaranty, even in the form of co-finance, if it is unable to
undertake the unilateral financing.
During the time of co-financing solicitation,
the party that proposes co-financing may propose another CI to provide loan
(guaranty) but only after consulting with and getting consent from the CI that
has received its dossier.
Article 14.- Co-financing contract
1. A co-financing contract is a written
commitment between the CIs participating in the co-financing to exercise the
rights and fulfill the obligations of each CI in the whole process of lending-
guaranteeing (co-financing) for the implementation of a project; the contents
of the co-financing contract must comply with the provisions of law on economic
contracts, the provisions of this Regulation and other provisions of law.
CIs participating in the co-financing shall have
to reach agreement on the details of the pledge or mortgage of property, and on
the guaranty for amounts of co-financing capital lent to the co-financed party.
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3. Members participating in the co-financing
shall have to jointly compile this contract and strictly abide by the clauses
thereof.
The coordinating CI shall have to draft a credit
contract (or guaranty contract), collect final opinions and get consent from
the financing members; and represent the co-financing party to negotiate with
the co-financed party.
4. Any breach of the contract shall be handled
in accordance with the provisions of law.
Article 15.- Credit contract (or guaranty
contract) between the co-financing party and the co-financed party:
1. Contents of the credit contract (or guaranty
contract): Besides the contents similar to those of a bilateral credit contract
(or guaranty contract) signed between CIs and the capital borrowing parties,
the financing members' names, the amount of co-financing money and proportions
as well as the financing mode of each member and the signatures of the financing
members (excluding the coordinating CI) may be added thereto.
2. In case of lending capital with credit
contract, the coordinating CI shall have to sign a lending contract with the
co-financed party for each time of capital dispersion.
3. The coordinating CI shall, as agreed upon by
the financing parties, perform all obligations and exercise rights of the
co-financing parties towards the co-financed party, which are provided for in
the credit contract (or guaranty contract).
Article 16.- Recovery of financing
capital (principal and interests) (including cases where the CIs must provide
compulsory loans for the performance of their guaranty obligation toward
enterprises):
1. The co-financed party shall have to take
initiative in paying debt (principal and interests) to the coordinating CI
according to the agreed time-limit, or to a third party, which is already
guaranteed by one or several co-financing CIs.
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3. The co-financed party may pay the debt before
its maturity but must notify the coordinating CI thereof in advance and get the
latter's consent, unless it is otherwise stipulated in the contract.
Article 17.- Extension of debt, reduction
of interest rate or co-financing charge:
The coordinating CI shall consult the
co-financing members in dealing with the co-financed party's proposal on debt
payment before its maturity, debt extension, reduction of interest rate or
charges regarding debts under the co-financing in accordance with the
stipulations of the State Bank.
Article 18.- Responsibilities to provide
all necessary information related to the co-financing process by the parties
involved in the co-financing relationship:
1. The co-financed party shall have to fully
report its financial situation and operations to the coordinating CI for
supervision and inspection after effecting the co-financing.
2. The coordinating CI shall have to promptly
and fully inform parties of the results of inspection of the use of capital as
well as all relevant information with a view to discussing and agreeing on
handling measures to be taken when necessary.
3. The coordinating CI shall have to send copies
of the co-financing contract and report the relevant situation to the State
Bank (the Bank Inspectorate) for supervision and support when needed.
III. IMPLEMENTATION PROVISIONS
Article 19.- The CIs mentioned in Article
5 shall, beside jointly participating in the co-financing under the provisions
of this Regulation, be allowed to join other CIs inside or outside the country
in co-financing domestic projects on the basis of ensuring security for the sum
of co-financing money.
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Heads of units attached to the central State
Bank, directors of provincial/municipal State Bank's branches shall, on the
basis of their assigned functions and tasks, have to direct and supervise the
implementation of this Regulation.
Article 21.- Any amendment and/or
supplement to this Regulation shall be decided by the Governor of the State
Bank of Vietnam.