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VDB to assure SME bank loans
Viet Nam Development Bank (VDB) is to underwrite capital that small-and-medium sized enterprises and co-operatives raise at commercial banks.
The decision, announced yesterday, is seen as important to the implementation of the Government’s US$1 billion stimulus package that includes helping business access bank loans.
Prime Minister Nguyen Tan Dung’s approval of the scheme allows for the underwriting of any enterprise with maximum charter capital of VND20 billion (US$1.14 million) and less than 500 workers.
Consulting, real estate, securities and services companies – except those in the logistics, health, education and training industries – are excluded.
So too is borrowing to repay loans.
The underwritten loans must be invested in fixed assets or systems to develop commerce and production in accordance with Viet Nam’s laws.
Each project must be worth at least VND100 million ($5,714) of capital and each borrower must have at least 10 per cent equity in any nominated project.
Enterprises overdue in credit repayments and or taxation liabilities are ineligible.
Vietnamese dong or freely-convertible currencies can be used for the loans and the underwriting will cost no more than 0.5 per cent of the total credit.
The VDB is allowed to spend 25 per cent of the fees to meet management costs.
The remaining 75 per cent will be kept in a "risk" fund.
The bank must decide on applications for it to underwrite a loan in no more than 20 days and any rejection must include an explanation for the refusal.
VNS
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