Vietnam: Regulations on the minimum lending interest rate of the local development investment fund

According to Article 34 of the Decree No. 147/2020/NĐ-CP of the Vietnam Government, the minimum lending interest rate of the local development investment fund is determined on the principle of not being lower than the average mobilizing interest rate of mobilized capital sources, taking into account the opportunity cost of equity, ensure to cover management costs, provision for loan risks and other costs related to lending activities.

Concurrently, annually or in each period, based on the principles of determining the minimum lending interest rate mentioned above, the Fund's Director shall calculate and submit it to the Fund Management Council for approval to report to the provincial People’s Committee to issue decisions promulgating the minimum lending interest rate of the Local Development Investment Fund. The local development investment fund shall decide the lending interest rate for each specific project, but not lower than the minimum lending interest rate decided by the provincial People's Committee in accordance with the regulation.

Note: For projects using capital from international donors with regulations on lending interest rates different from those specified in this Decree, the agreement signed with donors shall apply.

Moreover, depending on each specific project, the local development investment fund considers and uses loan security measures in accordance with the law on loan security. The Fund may handle security assets for debt recovery in accordance with the law and the credit contract signed between the local development investment fund and the loan investor.

More details at the Decree No. 147/2020/NĐ-CP of the Vietnam Government, effective from February 05, 2021.

Ty Na

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