Vietnam: Process of establishment of credit guarantee fund

A notable content of Decree No. 34/2018/ND-CP of Vietnam’s Government is the process of establishment of a credit guarantee fund. According to Decree No. 34/2018/ND-CP, when there is a need to establish a credit guarantee fund, the People's Committee of the province shall formulate a scheme for establishment of a credit guarantee fund and then submit it to the People's Council of province for approval.

The scheme for establishment of credit guarantee fund shall at least contain:

- The need for establishment of credit guarantee fund, its contribution to the provincial socio-economic development; scale, scope, operation and its impact on provincial socio-economic development;

- Its operational plan and sources of funds, representing sources of charter capital allocated in the capital expenditures of local government budget (in the mid-term public investment plan approved by the competent authority);

- A draft of charter of organization and operation of credit guarantee fund in conformity with Vietnam’s regulations;

- A list of expected members including President, Controller, Director, Deputy Director and Chief Accountant of credit guarantee fund who are qualified as prescribed in this Decree;

- Demonstration of organizational structure and operating mechanism of credit guarantee fund;

- Operation plan of credit guarantee fund;

- Financial and operational plan of credit guarantee fund for 5 years since establishment and estimated performance to prove the feasibility of the establishment.

If the establishment conditions are satisfied and the establishment is considered feasible, the People’s Council of province shall consider the following matters related to the establishment of credit guarantee fund: charter capital and sources of charter capital, called-up capital, model and organizational apparatus and other matters related to the credit guarantee fund under requirements of the People’s Council of province.

According to the scheme for establishment of credit guarantee fund approved by the People’s Council of province, the People's Committee of province issues an establishment decision and a decision on approval for charter of organization and operation of the credit guarantee fund.

Within 30 days from issuance of the decision on establishment of credit guarantee fund, the People's Committee of province shall give notices to the Ministry of Finance, the State Bank of Vietnam, the Ministry of Planning and Investment together with the establishment decision and the decision on approval for charter of organization and operation of the credit guarantee fund.

Within 30 days from issuance of the decision on establishment of credit guarantee fund, the credit guarantee fund shall publish its establishment on means of mass media.

Within 90 days from issuance of establishment decision of credit guarantee fund, the local government budget shall allocate full charter capital as prescribed.

Decree No. 34/2018/ND-CP of Vietnam’s Government takes effect from March 08, 2018.

-Thao Uyen-

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