On May 20, 2022, Deputy Prime Minister Le Minh Khai signed Decree No. 31 promulgating the policy on interest rate support for loans to enterprises, cooperatives, and business households from the state budget. This Decree stipulates support for loans in Vietnamese Dong arising from lending activities of commercial banks to customers in accordance with Resolution No. 43/2022/QH15 dated January 11, 2022 and Resolution No. 11/NQ-CP dated January 30, 2022.
1. Cases eligible for a loan package with an interest rate of 2%
In 2022, businesses, cooperatives, and household businesses (referred to as customers) eligible for support (borrowing from banks at an interest rate of 2% according to Decree 31) fall under one of the following cases with the purpose of using the borrowed capital:
- Belonging to one of the registered business sectors including: aviation, warehousing and transportation (H), tourism (N79), agriculture, forestry and fisheries (A), accommodation and food services (I), manufacturing and processing industries (C), education and training (P), software publishing (J582), computer programming and related activities (J-62), information service activities (J-63).
- Construction activities that directly serve the aforementioned economic sectors exclude construction activities for real estate business purposes (L) as defined in the economic sector code according to Decision No. 27/2018/QD-TTg.
- Implement social housing projects, worker housing projects, and renovation of old apartment buildings as part of projects compiled and announced by the Ministry of Construction.
2. Conditions for receiving interest rate subsidies on loans
Customers applying for interest rate support must meet the loan conditions regarding lending activities of credit institutions and branches of foreign banks as stipulated by current law.
See more: Bank loan requirements
The loan is denominated in Vietnamese Dong, the funds are used for the intended purpose as stipulated, and it has not received interest rate subsidies from the state budget under other policies. The loan agreement and disbursement must be completed between January 1, 2022, and December 31, 2023.
Loans that are no longer eligible for interest rate subsidies include the following cases:
- The loan is obligated to repay interest at the due date when the repayment falls within the period when the principal balance is overdue and/or the interest is overdue. After the customer has repaid all overdue principal and/or overdue interest, the loan will continue to receive interest rate support for subsequent interest repayment periods.
- If a loan is extended, the extended period will not be eligible for interest rate support.
3. Regulations on interest rate subsidies
3.1. Supported interest rate
The subsidized interest rate for businesses is 2% per annum, calculated on the outstanding loan balance and the actual loan term for which the interest subsidy is applied. At the time of repayment for each installment, commercial banks will reduce the amount of interest payable by the subsidized interest for that period, in accordance with the guidelines of the State Bank of Vietnam.
3.2. Interest rate subsidy period
Interest rate subsidy period The period from the date of disbursement until the time the customer repays the principal and/or interest on the loan in full, as agreed between the bank and the customer, in accordance with the announced interest rate subsidy funding, but not exceeding December 31, 2023.
Interest rate support applies to interest payment obligations arising from the date of this Decree. Effective from May 20, 2022 to December 31, 2023 at the repayment periods. Commercial banks will stop providing interest rate support after December 31, 2023, or when the allocated funds (support limit) are exhausted, whichever comes first.
In addition, the Decree clearly states that support must ensure transparency, be targeted correctly, and serve the intended purpose, preventing policy abuse. Commercial banks must comply with regulations and facilitate transactions for customers.
