Adjusting lending policies for agriculture and rural areas

Currently, the State Bank of Vietnam (SBV) is consulting with ministries and branches to complete the Draft Decree 41/2010/ND-CP (Decree 41) on credit policy for agricultural and rural development, amended to further expand lending conditions.

Expanding lending scope

After 3 years of implementing Decree 41, limitations and shortcomings have gradually been revealed, especially in the context of agriculture not only producing for self-sufficiency but also producing agricultural commodities. One of the issues that farmers who borrow capital have been concerned about recently and hope to have adjusted is the difference between Decree 41 and Decree 61/2010/ND-CP (Decree 61) regulating rural areas. According to Decree 61, rural areas are wider, excluding wards in towns and cities; but according to Decree 41, rural areas only include communes, not towns.

“The subjects are farming households and farm owners who are entitled to the policy of Decree 41 and must reside and have production and business establishments in rural areas. However, there are many units that are towns, but in essence, these towns still operate mainly in the field of agricultural production. Therefore, there are still subjects producing and doing business in the agricultural sector that are not entitled to the policy according to Decree 41. We propose that the Government and relevant agencies consider adding subjects entitled to this policy.” - Nguyen Thanh Long - Vice Chairman of the Farmers' Association of Nam Dinh province proposed.

The large-scale field model in An Tien commune, An Lao district is supported by Hai Phong city with 100% capital investment for buying seeds, 30% for essential materials and 50% for hiring other services.

Many comments on the revised Decree 41 also suggested adding: individuals and households residing in rural areas, towns, townships... with production and business activities in the agricultural sector are all eligible to borrow capital to expand the scope of subjects.

Relaxed loan conditions

Another issue of particular concern is the loan guarantee mechanism for both banks and customers.

According to the State Bank, the draft revised Decree 41 still retains the regulation that borrowers without collateral must submit a land use right certificate or have their land use right confirmed by the People's Committee of the commune level and that the land is not in dispute, which in reality causes many difficulties for individuals and households who borrow small loans for consumption or to develop production, industries, etc. This is a controversial issue, because farmers who borrow capital believe that if the bank holds the land use right certificate, it is no different from lending with collateral or lending on mortgage.

The representative of the Ministry of Natural Resources and Environment said that, according to the provisions of the 2013 Land Law (Clause 16, Article 13), the Certificate of land use rights, house ownership rights, residential land, and other assets attached to land is a legal document for the State to confirm the right to use land, house ownership rights, and other assets attached to land. On the other hand, according to the provisions of the Civil Code (Article 163, Article 322), land use rights are considered a type of property used to secure the performance of civil obligations. Therefore, the regulation on lending without collateral but requiring the submission of a Certificate of land use rights or a certificate confirming that a Certificate of land use rights has not been granted (which is the collateral) is contradictory and inappropriate.

However, the argument from the banks is that they always have to hold the handle when lending. If the bank does not keep the Land Use Rights Certificate or the certificate of land use rights that has not been granted, then after the customer borrows money from this bank, they can use the above documents to borrow money from other places, making it difficult to control the customer. In addition, there is also the phenomenon of people lending their red books, which is happening in many rural areas today.

Regarding the loan amount, while the current Decree 41 stipulates 3 loan amounts of 50 million VND, 300 million VND and 500 million VND, the new draft maintains the level of 50 million VND to meet the needs of many borrowers. However, the draft of the revised Decree 41 provides some loan amounts of up to 1 billion VND and 2 billion VND for farm owners, cooperatives and cooperative unions.

According to News