Guidance on lending to guest workers whose land is expropriated in Vietnam

Guidance on lending to guest workers whose land is expropriated in Vietnam (Image from the internet)

On August 1, 2024, the Vietnam Bank for Social Policies issued Official Dispatch 4530/NHCS-TDNN regarding lending to guest workers whose land is expropriated as prescribed in Decision 12/2024/QD-TTg.

Guidance on lending to guest workers whose land is expropriated in Vietnam

(1) Scope of Regulation

This document regulates the lending operation forguest workers whose land is expropriated as prescribed in Decision 12/2024/QD-TTg.

(2) Loan Recipients

Individuals with reclaimed land seeking loans for working abroad under contract as prescribed in Decision 12/2024/QD-TTg listed in the training, occupation change, and job search plan developed and implemented by the people’s committees of districts, towns, provincial cities, and centrally affiliated cities, including:

- Individuals or households supported under the provisions of Clause 2, Article 109 of the Land Law 2024 and its guiding documents (collectively referred to as individuals with reclaimed agricultural land), include:

+ Individuals or households directly engaged in agricultural production using agricultural land granted by the state or acquired through transfer, inheritance, gifting, recognized land use rights when the state acquires land without compensation in land, who have been compensated in cash, specifically, individuals or households using agricultural land at the time of approval of compensation, support, resettlement plans, earning income from agricultural production on that land, excluding cases provided in Clause 1, Article 22 of Decree 88/2024/ND-CP;

+ Individuals belonging to social protection groups, recipients of monthly social assistance policies as per law, wounded soldiers, diseased soldiers, martyr families when the state acquires agricultural land without compensation in land, compensated in cash;

+ Individuals or households using land allocated for agricultural, forestry, aquaculture purposes from state-owned farms or forestry enterprises or companies converted from such enterprises directly engaged in agricultural production and have stable agricultural production income on that land, excluding cases where individuals are retirees, individuals receiving loss of working capacity benefits, or job leavers receiving allowances from the above-stated enterprises;

+ Individuals or households using land allocated by agricultural production collectives or agricultural cooperatives directly engaged in agricultural production and maintaining stable agricultural production income on that land.

- Individuals or households as per Clause 3, Article 109 of the Land Law 2024 (collectively referred to as individuals with reclaimed business land), are:

Households or individuals using homestead land combined with service business with stable income from service business activities when the state requires relocation.

(3) Loan Conditions

The borrower must meet the following conditions:

- Have full civil act capacity;

- Signed a contract with a service enterprise or professional organization sending workers abroad under contract;

- Have permanent residence registration in the area where the Vietnam Bank for Social Policies processes loan applications for individuals with reclaimed land;

- Have loan security as prescribed for loan amounts over 100 million VND;

- Have a land acquisition decision within 5 years from the decision date.

(4) Loan Amount

Maximum loan amount is 100% of the working abroad costs as per the contract between the worker and the service enterprise or sending organization.

(5) Loan Interest Rate

- The loan interest rate equals the lending rate for poor households according to each period set by the Prime Minister of the Government of Vietnam (currently, the loan interest rate for poor households is 6.6% per annum).

- The overdue interest rate is 130% of the lending interest rate.

(6) Loan Term

The loan term is at most equivalent to the term of the contract for sending Vietnamese workers abroad, excluding any contract extension period.

(7) Loan Security

For loan amounts over 100 million VND, borrowers must provide loan security assets as prescribed by law and in accordance with the Vietnam Bank for Social Policies' loan security guidelines.

(8) Handling Risk Debt

Implemented according to the Government of Vietnam’s regulations on risk debt handling mechanisms at the Vietnam Bank for Social Policies.

More details can be found in Official Dispatch 4530/NHCS-TDNN dated August 1, 2024.

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE