Vietnam: Rights and obligations of the National Science and Technology Development Fund in the guarantee of loans used for project execution

Vietnam: Rights and obligations of the National Science and Technology Development Fund in the guarantee of loans used for project execution (Illustrative image)

Article 16 Circular 06/2011/TT-BKHCN stipulates the rights and obligations of the National Foundation for Science and Technology Development in the guarantee of loans used for project execution as follows:

1. The National Foundation for Science and Technology Development in Vietnam has the right to:

- Entrust commercial banks to perform the tasks of guaranteeing, recovering, and handling debts, and other tasks in the management of the loan guarantee fund

- Request enterprises to provide documents and information related to the appraisal of loan guarantees and measures to ensure guarantee obligations.

- Accept or reject the proposal for loan guarantees, amend, supplement, extend, or cancel loan guarantees for the principal debtor.

- Collect fees or entrust the collection of loan guarantee fees as prescribed.

- Request the guarantor to give opinions to the creditor to terminate the loan and recover debts ahead of schedule if the principal debtor breaches the guarantee contract, the credit agreement, or violates the law.

- Coordinate with the guarantor and the creditor to inspect and supervise the use of loan capital and assets formed from the loan capital of the principal debtor.

- Refuse to perform substitute repayment obligations in the following cases:

• -The creditor does not conduct inspections and supervision as prescribed by the guarantor regarding the use of loan capital and assets formed from the loan capital not being used for the purposes stated in the credit agreement of the principal debtor.
• -The creditor has not fully implemented the contents specified in the guarantee certificate.

2. The National Foundation for Science and Technology Development in Vietnam has the obligation to:

- Perform substitute repayment obligations as agreed with the guarantor.

- Pay entrusting fees to the commercial bank entrusted by The National Foundation for Science and Technology Development under the Entrust Contract.

- Report annually or unexpectedly upon request on the performance results of the loan guarantee fund to competent authorities.

More details can be found in Circular 06/2011/TT-BKHCN effective from July 1, 2011.

Thuy Tram

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