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					   Vietnam Bank for Social            SOCIALIST REPUBLIC OF VIETNAM
          Policies                   Independence - Freedom - Happiness
                                            -------------------------------
      No. 678/NHCS-TD
                                                           Hanoi, 22th April 2007


                              GUIDANCE
  On lending implementation under Decision No. 32/2007/Q§-TTg dated
March 5th 2007 of the Prime Minister about providing production loans for
              specially disadvantaged ethnic households

       Conducting Decision No.32/2007/QD-TTg dated dated March 5th2007 of
the Prime Minister about providing production loans for specially disadvantaged
ethnic households (hereinafter referred to as Decision 32), the General Director
of the Vietnam Bank for Social Policies (VBSP) provides the guidance as follows:
       I. Key contents
       1. Legal residence of ethnic households
       Is where they regularly live. In case unidentified legal residence of
borrower, it will be where he or she is currently living as certified by communal
People's Committee (PC) (form 03/TD).
       The representative of household in charge of transaction with VBSP, shall
be the person present in the list of specially disadvantaged ethnic households
(SDEH) formulated by communal PC and approved by district PC.
       2. Production project
       The key content of production project is to require borrowers to answer
such questions as: Borrowing purpose, needed materials , loan amount and
maturity.
       The specially disadvantaged ethnic households borrowing loans in VBSP
(hereinafter referred to as borrowers) are instructed to prepare and conduct
production project (form 01/TD “Borrowing request note cum production project
and credit contract").
       3. Loan size
       3.1. To conduct in accordance with provision of item b, point 2, clause 2,
Decision 32. The borrower can borrow one or many times but total outstanding
loan of one household does not exceed VND 05 million per one at any moment.
       3.2. In case there is a local contributed budget for lending over VND 05
million per household under Decision 32, VBSP shall implement in compliance
with the decision of local People's Committee.
       In case of borrowing needs exceeding the above loan size, policy of poor
household lending shall be applied under Decree No.78/2002/N§-CP dated 04th
October 2002 of the Government.
       4. Loan term
        The loan term is decided based on loan using purpose and repayment ability of
 borrower but the maximum term does not exceed 05 years (60 months).
        5. Loan process
      Conduct under the partly entrusted method through mass organizations.
The entrusted lending mechanism under Decision 32 stays the same with lending
to poor households and other policy beneficiaries.

         In case a household which are not a member of Savings & Credit Group
 (SCG) must join SCG and be admitted by SCG, he or she then will be eligible for
 borrowing loans inVBSP.
         In the areas without SCG operation, SCG will be established in
 accordance with the regulation on SCG organization and operation.
         II. Lending procedures
         1. Loan application dossiers
         - Borrowing request note cum production project and credit contract (form
 01/TD).
         - SCG meeting minute (form 10/TD).
         - List of households who request loans from the credit program for
 specially disadvantaged ethnic households (form 03/TD).
         2. Lending process
         2.1. When the borrower has borrowing needs, the SCG or mass
 organizations or People's Committee (PC) at commune level help him or her to
 fill in borrowing request note cum production project and credit contract (form
 01/TD) and send to SCG.
         2.2. SCG, mass organizations and Poverty Reduction Board at commune
 level gather meetings and compare the name of people making borrowing
 request with list of specially disadvantaged households approved by district PC,
 select democratically and on public with the prior priority for lending to policy
 beneficiaries and poor households (if the loan source is not enough for lending).
 Then a list of households making borrowing request shall be formulated (form
 03/TD) and enclosed with note of borrowing request (form 01/TD) and submit to
 communal PC for consideration.
         2.3. After receiving approval of communal People's Committee, SCG will
 submit to the VBSP the list of borrowers (form 03) with notes of borrowing
 request cum production project and credit contract (form 01/TD) for lending
 approval.
         2.4. The VBSP staff take responsibility for check validity of loan application
 dossiers under the regulation and submit to the Director for approval if eligible
 and then prepare the announcement of approved results (form 04/TD) and send
 to communal PC.
         In case the procedures has not yet completed under the provision, the
 staff will instruct SCG to supplement as stipulated.
        2.5. Communal PC shall announce the approved result for communal
mass organizations (entrusted unit) in order to send to SCG. The SCG informs
the result of approved borrower list, schedule and location of disbursement to
each household.
        3. Disbursement
        3.1. The VBSP makes direct disbursement for borrowers in compliance
with the approved list. When receiving loans, the borrowers have to present their
identification cards or certifications from communal PC. In case the borrower
does not come to get loans, he or she can authorize a family member (over 18
years old with full civil behavior ability) to receive loan enclosed with the
authorization letter of communal PC.
        Given the certain context, the bank can disburse cash for the borrower or
in kind with witness of representatives from SCG, mass organizations and PC at
commune level. Kind disbursement shall be conducted in case the local
government or mass organizations can afford to procure seedlings, poultry etc.
and the borrower agrees to receive in kind and signs adequately the loan
application dossier.
        3.2. Pursuant to the loan amount approved in the borrower list (form
03/TD), the bank staff shall take note on adequate information and request the
borrower to sign in the loan receipt part as regulated at part III "loan
supervision" form 01/TD (including copies for the bank and the borrower) for
supervision.
        4. Loan collection
        4.1. Prior to the due date, based on the due loan list (VBSP's
announcement in Transaction Point) the mass organization shall announce
groups leaders to urge borrowers to prepare loan repayment.
        4.2. After receiving the announcement of group leaders, the borrower
comes to VBSP's transaction point (according to the transaction schedule)
for loan repayment.
        Principal collection is conducted one time on the final repayment date. In
case the borrower makes debt repayment before due date, the bank will conduct
loan collection and accounting under the regulation.

        5. Due loan settlement
        5.1. At the end of final repayment period, if the borrower fails to make its
full repayment but still be in list of specially disadvantaged ethnic households and
has demand for carrying on loan utilization, the Bank will consider an extension
(Form 09/TD).
        5.2. The maximum extension period allowed shall be equal to the
repayment term.
        6. Non-performing loan handling
        6.1. When the borrower face with risks due to reasons set forth at Item 5,
Clause 2, Decision 32, the SCG leader and mass organization coordinate to
make the minute of certifying risked loans (Form 02A/NRR enclosed with
Decision 55/Q§-H§QT dated 24th Feb 2006 of the BOD Chairman(hereinafter
called Decision 55) and submit to the communal People Committee for
confirmation and then submit to the district VBSP for data capture.
        6.2.The district VBSP: Periodically on 15th July and 15th January of each
year, based on the minutes of risked loan certification, the district branch make
the consolidation note of write-off request (form 06A/NRR enclosed with Decision
55) and submit to the district People Committee for approval and then send to
the provincial branch.
        6.3. The provincial branch: Periodically on 25th July and 25th January of
each year, based on the approved result of the district People Committee the
provincial branch consolidate (form 07A/NRR enclosed with Decision 55) and
submit to the provincial People's Committee for consideration and decision to
write off.
        Pursuant to the write-off decision of the provincial People's Committee,
VBSP branch shall conduct accounting by the regulation and simultaneously
send the write off decision to the Headquarters for consolidation and submission
to the Prime Minister.
        7. Restoring loan files
        Total credit files are restored in the accounting department of the bank.
        III. Organization and implementation
        1. Planning
        Annually, the branch coordinates with the Ethnic Committee at the same
level to formulate the plan of loan demand for lending to specially disadvantaged
ethnic households and submit to the senior level bank under the VBSP's
regulation.
        2. Accounting
        Lending to specially disadvantaged ethnic households is accounted and
controlled under the VBSP regulation.
        3. Statistical Report Regime
        3.1. Statistical reporting is conducted according to the instruction of
statistical report regime of the VBSP General Director.
        3.2. Every 6 months, the branches at all levels prepare to report and
evaluate the result of lending to specially disadvantaged ethnic households and
submit to the district and provincial People committee, the Ethnic Committee at
the same level and the senior level bank.
        The report is documented and reflected adequately lending results,
evaluating advantages, disadvantages and recommendations to impove the
credit program of specially disadvantaged ethnic households at locality.
        4. Payment for commission and trusted service
        Payment for commission and entrusted service is conducted once a year
based on average outstanding loans per year as stipulated:
        - Fees for communal mass organization in entrusted service: 0.05%/year;
       - commissions for SCGs: 0.1%/year;
       - That 0.15%/year is removed from the financial assignment of the lending
branches.
       5. The VBSP located in localities where have disadvantaged areas listed
in the category enclosed with Decision 30/2007/Q§-TTg dated 5th March 2007
of the Prime Minister shall take responsibility for reporting to People Committee
and BOD Representative Unit in district and provincial level in order to
implement Decision 32.
       6. To disseminate and train the content of Decision 32 for staff from
VBSP, mass organizations, SCGs and People committee at commune level in
order to conduct the credit program in line with the provision.
       7. To communicate and announce the policy, list of borrowers and
outstanding loans on public to the community so that they know and supervise
the VBSP operation.
       The points not instructed in this document will be conducted by VBSP set
forth at Decision 32. In process of implementation, if there is any problem it
should be reported to the VBSP Headquarters for consideration and settlement

                                                 GENERAL DIRECTOR
                                              VIETNAM BANK FOR SOCIAL
                                                      POLICIES
                                                       signed
                                                     Hµ ThÞ H¹nh

				
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