To :

- State Commercial banks
- Joint stock commercial banks
- Joint venture banks
- Branches of foreign banks
- The Central People's credit fund
- The local People's credit funds
- Finance companies
- Finance leasing companies

Pursuant to the Decision No. 994/QD - NHNN dated 28 August, 2003 of the Governor of the State Bank on the approval of the plan for the adjustment of legal documents applicable to the sub- projects of Commercial Banks as part of the modernization project and upon the proposal of some State Bank branches in provinces, cities, Credit Institutions, the State Bank of Vietnam provides guidelines on the application of overdue interest to borrowing customers failing to duly pay the loan interest and the timing for the calculation of interest on overdue principals in accordance with provisions in the Lending Regulation issued in conjunction with the Decision No. 1627/2001/QD-NHNN dated 31 December, 2001 as follows:

1. In respect of the application of interest rate to overdue principal to borrowing customers who fail to duly pay loan interest:

Credit institutions shall not apply overdue interest rate to the outstanding principals that have not become due, but shall classify them as overdue debts due to the failure of borrowing customers in duly paying the loan interest. Credit institutions may agree with borrowing customers in the credit agreement on the punishment for the violations of the term of loan interest repayment in accordance with the guidelines of the Official Dispatch No. 242/CV-NHNN1 dated 25 March, 1999 of the State Bank of Vietnam.

2. In respect of the timing for the calculation of overdue interest on outstanding principals classified as overdue debts within a period of 10 working day at the maximum from the repayment date:

Credit institutions shall agree with borrowing customers in the credit agreement on the timing for the calculation of overdue interest on the outstanding principals classified as overdue debts from the date where outstanding principals are classified as overdue debts or the day following the date where that loan becomes due for repayment. For the credit agreement in which the timing for the calculation of overdue interest is not agreed, it shall be the date where that loan is classified as overdue.

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FOR THE GOVERNOR OF THE STATE BANK
DEPUTY GOVERNOR




Phung Khac Ke