State investment credit loan interest rate from December 22, 2023 in Vietnam

State investment credit loan interest rate from December 22, 2023 in Vietnam (Internet image) 

On November 7, 2023, the Government issued Decree 78/2023/ND-CP amending a number of articles of Decree 32/2017/ND-CP on State investment credit.

1. State investment credit loan interest rate from December 22, 2023 in Vietnam

Specifically, Decree 78/2023/ND-CP amends Article 9 of Decree 32/2017/ND-CP on interest rates for State investment credit loans as follows:

- The State investment credit interest rate shall be decided by VDB on the principle that it is sufficient to offset the cost of capital raising, operating costs and the cost of setting up provisions for loan losses under credit contracts from December 22, 2023, but is not lower than 85% of the average lending interest rate of domestic commercial banks in the same period; the subsidies on interest rates and management costs for these loans will not be covered by the state budget.

- Procedures for deciding State investment credit interest rate

+ Before January 25 every year, the State Bank of Vietnam shall send the Ministry of Finance a document specifying average loan interest rates of domestic commercial banks in the same period so as for the Ministry of Finance to provide it to VDB;

+ 03 working days after receiving the document in point a of Clause 2 of Article 9 of Decree 32/2017/ND-CP from the State Bank of Vietnam, the Ministry of Finance shall send VDB the document specifying average loan interest rates of domestic commercial banks in the same period issued by the State Bank of Vietnam;

+ 03 working days after receiving the document in point b of Clause 2 of Article 9 of Decree 32/2017/ND-CP from the Ministry of Finance, VDB shall rely on the principle of determining the loan interest rate specified in clause 1 of Article 9 of Decree 32/2017/ND-CP to decide the State investment credit interest rate;

+ In case there are large fluctuations in the loan interest rates of domestic commercial banks during the year, VDB shall report them to the Ministry of Finance, which will request the State Bank of Vietnam in writing to determine the loan interest rates of domestic commercial banks at the time of submitting the request so as for VDB to decide the State investment credit interest rate;

- The State investment credit interest rate decided by VDB as prescribed in clause 2 of Article 9 of Decree 32/2017/ND-CP is applicable to all undue outstanding debt and new disbursements under credit contracts signed from December 22, 2023.

- For all outstanding principal recorded as overdue debts of each loan:

+ Overdue interest rates shall be considered and decided by VDB but not exceed 150% of the undue interest rates;

+ The undue interest rates specified in point a of this clause shall be adjusted at the State investment credit interest rate decided by VDB as prescribed in clause 2 of Article 9 of Decree 32/2017/ND-CP.

2. State investment credit loan term from December 22, 2023 in Vietnam

According to Article 8 of Decree 32/2017/ND-CP amended in Decree 78/2023/ND-CP on the term of State investment credit loans in Vietnam as follows:

VDB shall rely on project assessment results, production and business characteristics, and capital recovery ability of each project and client’s solvency to decide the loan term for each project.

More details can be found in Decree 78/2023/ND-CP taking effect on December 22, 2023.

Ho Quoc Tuan

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