In order to increase the credit investment to implement the Agricultural Restructuring Plan with a focus on boosting the linkages and application of high technology in agricultural production, on September 7th, 2018 the Government issued Decree No.116/2018/ND-CP (Decree 116) amending and supplementing several substances of Decree No.55/2015/ND-CP dated June 9th, 2015 (Decree 55) on credit policy for agricultural and rural development.
Decree 116 shall take effect from October 25th, 2018.
The Decree revises and supplements 13 Articles, and abolishes one substance of Decree 55, specifically as follows:
1. For subjects of the credit policy: Decree 116 has revised the subjects of the credit policy to be appropriate with the regulations of the 2015 Civil Code. Accordingly, borrowers are individuals, legal entities; for households, cooperative units and other organizations which do not have a legal entity when participating in the lender – borrower relationship, a member of the household, the cooperative unit or the organization without a legal entity will stand as the person to develop and conduct the borrowing transaction with the bank, or they can delegate a representative to act on their behalf to develop and conduct the borrowing.
2. The maximum amount of a non-guaranteed loan is increased to double from the old loan amount in order to meet the practical capital demands for agricultural production of many individuals and households, specifically:
(i) For individuals and households not living in rural areas but involved in agricultural production and business, the credit line increases from VND 50 million to VND 100 million;
(i) For individuals and households living in rural areas and involved in agricultural production and business, the credit line increases from VND 100 million to VND 200 million.
3. Supplementing an incentive policy for hi-tech agriculture, linkage development in agricultural production in order to support the implementation of the Agriculture Restructuring Plan, specifically:
(i) Incentive for hi-tech agriculture:
- Adding individuals, households, cooperative units having a business or production project or plan in a hi-tech agricultural zone or area; Adding enterprises that have not yet been certified as applying or implementing hi-tech agriculture, but have a business or production project or plan which applies hi-tech in agriculture out of a hi-tech agricultural zone or area.
For above mentioned subjects (beneficiaries), credit institutions are allowed to consider and decide to provide non guaranteed loans at maximum ratio of 70% of their borrowing demand.
- Adding the regulation that credit institutions are allowed to take the assets formulated from the borrowing capital through the implementation of the project or plan of production and business with hi-tech agricultural application as collateral for the loans of the customers, through which customers’ issues of not having a collateral for the loan can be solved, helping to remove the difficulties in guaranteed assets, especially the assets of high value such as green houses, net houses, plastic greenhouses,...
(ii) Supplementing the regulation on credit cash flow management in the linkages of agricultural production in order to mitigate credit risks and formulate a legal foundation to encourage credit institutions to provide credits for agricultural business and production.
4. Supplementing the regulation on documentation, processes and procedures to suspend debt service and the authority to suspend debt service for those customers who are in difficulty under force majeure situations, laying the foundation for the relevant entities in implementing this Decree and to ease off the difficulties for the borrowers.
5. Supplementing the regulation on debt grace for planting perennial trees: the credit institution and the customer shall negotiate and agree on a principal grace period and a principal payment plan which are appropriate with the growing periods of the perennial trees.
Mai Huong