Circular No. 01/2013/TT-NHNN amending and supplementing certain articles of Circular No. 21/2012/TT-NHNN dated June 18, 2012, issued by the Governor of the State Bank of Vietnam on lending, borrowing; and buying and selling with terms for securities between credit institutions and foreign bank branches.

CIRCULAR

Provincial People's Committees set specific pricesamending and supplementing some articles in Tircular No. 21/2012/TT-NHNNdated June 18, 2012 of TGovernor N |||the cooperative N |||he State Bank of Vietnam on lending and borrowing activities;ecurities purchase and sale with maturity periods among credit institutions and foreign bank branches

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Pursuant to the Law on the State Bank of Vietnam No. 46/2010/QH12 dated June 16, 2010;

Pursuant to the Law on Credit Organizations No. 47/2010/QH12 dated June 16, 2010;

Pursuant to Decree No. 96/2008/NĐ-CP dated August 26, 2008 of the Government stipulating the functions, tasks, powers, and organizational structure of the State Bank of Vietnam;

Upon the proposal of the Credit Department Director;

he Governor of the State Bank of Vietnam amends and supplements some provisions of Circular No. 21/2012/TT-NHNN dated June 18, 2012 on lending and borrowing activities; securities purchase and sale with maturity periods among credit institutions and foreign bank branches (hereinafter referred to as Circular 21).

Article 1. Amending and supplementing some Articles of Circular 21:

1. Amend and supplement Article 1 as follows:

"Article 1. Scope of Regulation

1. This Circular stipulates lending and borrowing activities; securities purchase and sale with maturity periods among credit institutions and foreign bank branches.

2. Capital adjustment activities between cooperative banks and people's credit funds; lending and borrowing activities among people's credit funds; lending and borrowing activities among foreign bank branches in Vietnam of the same foreign bank; overdraft activities on settlement accounts among credit institutions and foreign bank branches; and lending activities ensuring transaction settlement capability on the stock exchange between payment banks selected by the Securities Commission and members of the Securities Depository Center that are credit institutions and foreign bank branches are not within the scope of regulation of this Circular.

2. Amending and supplementing Article 3 as follows:

a) Amend Clause 1 as follows:

“1. Lending and borrowing transactionsre transactions where credit institutions and foreign bank branches (lenders) provide or commit to provide another credit institution or foreign bank branch (borrower) with a certain amount of money for use during a specified period with the principle of repayment of both principal and interest.

b) Supplementing paragraphs 16, 17, 18 as follows:

“16. Loan extensions the act of the lender agreeing to extend the loan term beyond the originally agreed term in the loan contract when the borrower requests an extension due to inability to repay the full or partial principal and/or interest on time and the lender assesses that the borrower has the ability to repay during the extended period.

17. Adjustment of debt repayment termss the act of the lender and borrower agreeing to change the repayment terms of principal and/or interest stipulated in the loan contract based on the borrower's request and the lender's assessment that the borrower has the ability to repay according to the adjusted terms agreed upon by both parties.

18. Overdue debt transfers the act of the lender transferring all or part of the outstanding principal of a loan to overdue status due to the borrower's failure to repay the full or partial principal and/or interest on time without obtaining the lender's approval for loan extension or repayment term adjustment.

"In addition to the conditions stipulated in paragraph 1 of this Article, at the time of executing borrowing transactions, credit institutions and foreign bank branches shall not have overdue debts exceeding 10 days from other credit institutions and foreign bank branches, except in cases where permission to borrow is granted by the Governor of the State Bank of Vietnam."

4. Amending and supplementing paragraph 3 of Article 5 as follows:

"3. Transactions in Vietnamese dong between credit institutions and foreign bank branches that are members of the Interbank Electronic Payment System must be settled through the Interbank Electronic Payment System, except for the following cases:

a) Transactions outside the operating hours of the Interbank Electronic Payment System;

b) Transactions involving repayment of principal and interest on loans;

c) Transactions not involving the transfer of loan principal;

d) The transfer of funds to execute transactions for the purchase and sale of bonds listed on the stock exchange shall be carried out in accordance with current securities laws."

5. Amend and supplement Clause 2 of Article 6 as follows:

"2. All agreements to implement transactions must be confirmed in writing (called transaction confirmation) or other forms of confirmation agreed upon by both parties in compliance with the law."

6. Amending and supplementing paragraph 2 and paragraph 3 of Article 8 as follows:

"2. Can only be conducted at the headquarters of the credit institution or foreign bank branch in Vietnam.

The headquarters of the credit institution shall approve, set transaction limits, sign transaction contracts with customers, and authorize in writing branches to disburse funds, transfer payment funds, manage loan and borrowing transactions.

3. Shall bear responsibility for its own lending and borrowing decisions (except in cases where the borrower violates the provisions of paragraph 2 of Article 4 of this Circular)."

6 ||| 7. Amend and supplement Article 9 as follows:

"Article 9. Purpose of lending and borrowing

Credit institutions and foreign bank branches may lend and borrow from each other to temporarily cover reserve requirements, liquidity, and capital needs based on balanced sources and uses of funds, ensuring business efficiency and operational safety for credit institutions and foreign bank branches."

8. Amending and supplementing Article 10 as follows:

"Article 10. Term of lending

The maximum term of lending between credit institutions and foreign bank branches is less than one year, except in cases where a credit institution lends to a leasing company that is a subsidiary of that credit institution."

9. Amending and supplementing paragraph 3 of Article 15 as follows:

a) Removing the fourth bullet point.

b) Amending and supplementing the fifth bullet point as follows:

"- Loan method;"

c) Supplementing after the fifth bullet point as follows:

"- Due date;"

10. Amending and supplementing point c of paragraph 1 of Article 16 as follows:

"Loan extension; repayment term adjustment; interest waiver, interest rate adjustment; overdue debt transfer;"

11. Removing point d of paragraph 2 of Article 17.

12. Sửa đổi, bổ sung Điều 22 như sau:

"Article 22. Term of Purchase and Sale

The minimum term for securities purchase and sale with maturity periods between credit institutions and foreign bank branches is one day and the maximum is less than one year, except in cases where a credit institution purchases securities with a maturity period from a leasing company that is a subsidiary of that credit institution."

13. Amending and supplementing Article 28 as follows:

a) Amending and supplementing the introductory sentence of paragraph 1 as follows:

"1. This Circular shall take effect from September 1, 2012. Credit institutions and foreign bank branches may delay the implementation of the provisions of Article 10 and Article 22 of this Circular for financial leasing companies and consumer finance companies until June 30, 2013 (credit institutions and foreign bank branches may provide loans and purchase securities with terms of one year or longer to financial leasing companies and consumer finance companies until June 30, 2013). The following documents and regulations shall cease to be effective from the date this Circular takes effect:"

"3. Credit institutions and foreign bank branches shall not carry out depositing and receiving deposits (except for demand deposits and deposit transactions with terms up to three months) at other credit institutions and foreign bank branches from the date this Circular takes effect. Deposit transactions with terms up to three months between credit institutions and foreign bank branches must comply with the following provisions:"

a) There must be internal regulations on business procedures and risk management processes for depositing and receiving deposits (including customer credit rating regulations, procedures for determining deposit limits, and procedures for executing deposit transactions) ensuring safety and compliance with regulations.

b) At the time of executing deposit receipt transactions, credit institutions and foreign bank branches shall not have overdue debts exceeding ten days at other credit institutions and foreign bank branches, except where permission to receive deposits has been granted by the Governor of the State Bank of Vietnam.

c) Such activities can only be conducted at the main office of the credit institution or foreign bank branch in Vietnam.

The main office of the credit institution shall approve, set deposit limits, sign transaction contracts with customers, and authorize branches in writing to handle deposit/receipt transactions and manage deposit funds.

d) Transfers to execute term deposit transactions in Vietnamese dong (excluding transactions for repayment of deposits and interest payments) between credit institutions and foreign bank branches that are members of the Interbank Electronic Payment System must be settled through the Interbank Electronic Payment System, except during periods when the system is not operational.

đ) Credit institutions and foreign bank branches shall independently examine and agree on methods of single deposit transactions, within limits, or other methods that ensure safe and efficient execution of transactions in accordance with current laws."

c) Amending Clause 4 as follows:

"4. Transactions carried out before the date this Circular takes effect based on loan agreements, borrowing agreements, securities purchase and sale agreements with terms, and deposit and receipt agreements signed between credit institutions and foreign bank branches shall continue to be executed according to the agreed terms. For deposit and receipt transactions maturing after the date this Circular takes effect, if extended, the maximum extension period shall be three months."

Article 2. Effective Date

"1. This Circular shall take effect from January 7, 2013."

"2. The Director of the Office, Heads of the Credit Department, Heads of relevant units under the State Bank of Vietnam, Governors of the State Bank of Vietnam branches in provinces and centrally-administered cities, Chairmen of the Board of Directors, Chairmen of the Board of Members, and General Directors (Directors) of credit institutions and foreign bank branches are responsible for implementing this Circular./."