Indirect lending principles of the Small and Medium Enterprise Development Fund in Vietnam as of June 10, 2024

Indirect lending principles of the Small and Medium Enterprise Development Fund in Vietnam as of June 10, 2024

From June 10, 2024, indirect lending by the Small and Medium Enterprise Development Fund in Vietnam must comply with the following principles:

(1) The Fund may choose a commercial bank (hereinafter referred to as bank) with which an indirect lending agreement is signed.

(2) The bank shall receive funds from the Fund and carry out indirect lending activities in accordance with regulations on loans granted by credit institutions and foreign bank branches to their clients and provisions of Decree 39/2019/ND-CP.

(3) The bank shall itself carry out appraisal of loan applications and make decisions to grant loans to small and medium-sized enterprise when meeting the conditions set out in regulations of law on loans granted by credit institutions to their clients, and lending requirements set out in Article 23 of Decree 39/2019/ND-CP (amended in Decree 45/2024/ND-CP); assume responsibility for their lending decisions and incur all relevant risks.

(4)  The designated bank shall be held responsible for repaying indirect lending principal and interest in full to the Fund by the maturity date agreed upon with the Fund.

(5) The currency unit used for lending and debt repayment must be Vietnamese dong.

(6) Small and medium-sized enterprises that have got loans from the Fund but fully paid off principal and interest amounts on the agreed schedule (except force majeure events) may be eligible to get new loans from the Fund.

Small and medium enterprise development fund is an out-of-budget state financial fund operating for not-for-profit purposes which is established by the Prime Minister.

The Fund shall adopt the operational structure of single-member limited company whose chartered capital is wholly owned by the State; have legal personality, chartered capital, independent financial report and seal and may open an account at the State Treasury and other commercial banks operating legally in Vietnam in accordance with law.

More details can be found in Decree 45/2024/ND-CP which comes into force from June 10, 2024.

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