Conditions to apply for a loan from the Support Fund for Farmers in Vietnam

Conditions to apply for a loan from the Support Fund for Farmers in Vietnam (Internet image)

On June 24, 2023, the Government issued Decree 37/2023/ND-CP on the establishment, organization, and operation of the Support Fund for Farmers in Vietnam.

1. Who are the borrowers of the Support Fund for Farmers?

According to Clause 1, Article 3 of Decree 37/2023/ND-CP, the Support Fund for Farmers is an off-budget state financial fund, directly under the Farmer's Union agencies at all levels; operating not for profit, preserving and developing capital; and performing functions and tasks as prescribed in Decree 37/2023/ND-CP.

The borrowers of the Support Fund for Farmers are members of the Vietnam Farmers' Union who need to borrow capital to develop production and business in the agricultural sector.

(Clause 1, Article 14 of Decree 37/2023/ND-CP)

2. Conditions to apply for a loan from the Support Fund for Farmers in Vietnam

According to Clause 2, Article 14 of Decree 37/2023/ND-CP, in order to apply for a loan from the Support Fund for Farmers, the following conditions must be met:

- Borrowers must belong to the borrower as prescribed in Section 1, have full civil act capacity as prescribed by law;

- Borrowers are certified by the commune-level People's Committee to reside in the locality where the Support Fund for Farmers provides loans at the time of applying for a loan from the Support Fund for Farmers;

- The purpose of using the loan is lawful;

- The customer's loan plan must be aggregated into a common plan of a group of members of the Farmers' Union who produce and trade in the same type of product, in the same commune-level area.

The loan plan of each customer and the general plan of the group of members of the Farmers' Union were assessed by the Support Fund for Farmers as feasible and capable of repaying the loan;

- At a time, a customer is only allowed to borrow money at 01 general plan of the group of members of the Farmers' Union from the Support Fund for Farmers;

- Members of the same household cannot have outstanding loans at the Support Fund for Farmers at the same time;

- Other loan conditions specified in the internal regulations on lending and debt management of the Support Fund for Farmers issued by the Management Councils of the Support Fund for Farmers at all levels in accordance with Decree 37/2023/ND-CP.

3. What is the maturity date and interest rate of the loans from the Support Fund for Farmers in Vietnam?

3.1. Loan maturity date

Specifically, in Article 15 of Decree 37/2023/ND-CP, the loan term of the Support Fund for Farmers is as follows:

- The loan term for each customer's plan and the general plan of the group of members of the Vietnam Farmers' Union at the Support Fund for Farmers is determined on the basis of the ability to recover capital, in accordance with the production and business cycle, and the debt repayment ability of the customer, but not exceeding 05 years (excluding the debt extension period).

- The specific loan period for each customer's plan and the general plan of the group of members of the Farmers' Union shall be considered and decided by the Support Fund for Farmers.

- The maximum loan extension time is not more than 1/2 of the loan period in the first signed credit contract.

3.2. Interest rates

The loan interest rate of the Support Fund for Farmers is regulated as follows:

- The lending interest rate of the Support Fund for Farmers is determined from time to time, on the principle of ensuring adequate compensation for management costs and other expenses related to lending activities;

- Based on the principles of determining lending interest rates specified at Point a of this Clause, the Management Council shall decide on the specific lending interest rates of the Support Fund for Farmers in each period;

- For loan plans using entrusted capital sources with regulations on lending interest rates different from those in this Decree, the agreement signed with the entrusting party shall be followed.

(Clause 1, Article 16 of Decree 37/2023/ND-CP)

Decree 37/2023/ND-CP takes effect as of August 8, 2023.

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