How to get 2% interest rate support from the state budget?

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Deposit interest rates increased at many banks from the beginning of February.

The draft Decree stipulates the following contents, including subjects of application, principles of interest rate support, conditions for interest rate support, term and interest rate support, and methods of interest rate support as well as the order and procedures for provisional granting of interest rate compensation and settlement of interest rate compensation.

On that basis, the Draft Decree also clearly defines the responsibilities of relevant agencies in implementing the Decree.

Accordingly, the most concerning issue is the object of interest rate support of 2%/year for the two years of 2022-2023 through the system of commercial banks.

The draft Decree stipulates that loan borrowers eligible for interest rate support are enterprises, cooperatives, and business households with the purpose of using loan capital in one of the registered business sectors specified in Decision No. No. 27/2018/QD-TTg dated July 6, 2018 of the Prime Minister promulgating the system of Vietnam's economic sectors, including aviation, transportation, warehousing, tourism, accommodation and catering services, education, software publishing, computer programming and related activities, and information service activities.

Along with that, customers have the purpose of using loans to build houses for workers to buy, rent and hire-purchase; construction of social housing; renovating old apartment buildings on the list of projects announced by the Ministry of Construction.

The draft stipulates that the interest rate support applies to interest payment obligations arising from the effective date of this Decree to December 31, 2023.

Commercial banks will stop providing interest rate support for disbursements after December 31, 2023, or when the State Bank and the Ministry of Finance announce that the total amount of interest rate support for customers reaches a maximum of VND40,000 billion, whichever comes first.

The support interest rate for customers is 2%/year, calculated on the loan balance and the actual interest rate support loan term is within the prescribed period.

However, the Draft also stipulates that customers will not be supported with interest rates if their loans have overdue principal balance and/or late payment interest balance, customers will continue to receive interest rate support after the overdue principal balance and/or late payment interest balance has been paid in full.

The draft Decree also stipulates the order and procedures for temporary granting of interest rate compensation and settlement of interest rate compensation.

Accordingly, the Ministry of Planning and Investment shall submit to the Government a state budget estimate of VND40,000 billion to spend on development investment to the Ministry of Finance for provision of interest rate compensation and settlement of interest rate compensation for the State budget.

Within five days from the end of the quarter, the commercial bank shall send the Ministry of Finance a dossier of request for provisional granting of quarterly interest rate compensation.

Within 20 days from the date of receipt of the commercial bank's application for temporary provision of quarterly interest rate compensation, the Ministry of Finance shall temporarily grant interest rate compensation to the commercial bank. The amount of temporary provision for interest rate compensation is equal to 90% of the amount commercial banks have provided in interest rate support to customers in the quarter as prescribed.

The draft Decree requires the State Bank and the Ministry of Finance to monitor the results of commercial banks' implementation of interest rate support and provisional interest rate compensation.

When the total amount of interest support for customers (including the loan interest amount already supported by the customer and the expected amount of loan interest that still needs to be provided to these customers until the 31st of December), reaches about VND35,000 billion, the State Bank of Vietnam coordinated with the Ministry of Finance to take management measures by allocating the remaining amount of interest rate support to each commercial bank and notify the bank to ensure that the total amount of interest rate support under this Decree does not exceed VND40,000 billion. The limit is based on the results of each commercial bank's interest rate support.

Previously, on February 22, the State Bank of Vietnam had a meeting with leaders of agencies, associations, banks, etc., to collect opinions on the draft Decree on interest rate support from the state budget for loans from enterprises, cooperatives, business households and the Circular guiding the Decree.

According to Standing Deputy Governor of the State Bank of Vietnam Dao Minh Tu, the early collection of comments not only helps Decrees and Circulars be issued soon, but also ensures uniform, clear, specific, and comprehensive solutions, minimize problems arising, especially the right beneficiaries to ensure fairness.

The SBV Deputy Governor said that the Draft Decree is based on the Resolution of the National Assembly and the Government, on the principles of credit regulation and from the experience of implementing the 2009 support package.