Joint Circular No. 02/TTLT/NHNN-TC amends and supplements Joint Circular No. 01/NHNN-TC of the State Bank of Vietnam and the Ministry of Finance dated February 10, 1995 on the issuance of Treasury bills through the State Bank.

CIRCULAR

JOINT CIRCULAR OF THE STATE BANK OF VIETNAM AND THE MINISTRY OF FINANCE
AMENDMENTS AND SUPPLEMENTS TO JOINT CIRCULAR NO. 01/NHNN-TC OF FEBRUARY 10, 1995 ON THE ISSUANCE OF TREASURY BILLS

BASED ON DECREE NO. 72/CP OF JULY 26, 1994 OF THE GOVERNMENT ON THE REGULATIONS FOR THE ISSUE OF GOVERNMENT BONDS; IN ORDER TO MEET THE REQUIREMENTS AND TASKS OF FUNDS RAISING FOR THE STATE BUDGET AND FOR DEVELOPMENT INVESTMENT, THE JOINT CIRCULAR OF THE STATE BANK OF VIETNAM AND THE MINISTRY OF FINANCE AMENDS AND SUPPLEMENTS JOINT CIRCULAR NO. 01/NHNN-TC OF FEBRUARY 10, 1995 ON THE ISSUANCE OF TREASURY BILLS THROUGH THE STATE BANK AS FOLLOWS:

I. AMENDMENTS TO CERTAIN POINTS OF JOINT CIRCULAR
NO. 01/NHNN-TC OF FEBRUARY 10, 1995

1. REPLACE THE OLD POINT 7 WITH NEW POINT 7 AS FOLLOWS:

"7. PARTICIPANTS IN THE AUCTION OF TREASURY BILLS AND BONDS INCLUDE:

7.1. CREDIT ORGANIZATIONS OPERATING IN VIETNAM: STATE OWNED COMMERCIAL BANKS, JOINT STOCK COMMERCIAL BANKS, JOINT VENTURE BANKS, FOREIGN BRANCHES OF BANKS AND FINANCIAL COMPANIES;

7.2. INSURANCE COMPANIES, INSURANCE FUNDS, INVESTMENT FUNDS;

7.3. STATE ENTERPRISES ESTABLISHED PURSUANT TO DECISIONS 90/TTg AND 91/TTg OF MARCH 7, 1994 OF THE PRIME MINISTER.

PARTICIPANTS MUST SATISFY THE FOLLOWING CONDITIONS:

- LEGAL PERSON STATUS, ESTABLISHED IN ACCORDANCE WITH CURRENT VIETNAMESE LAW;

- A MINIMUM LEGAL CAPITAL OF 20 BILLION VIETNAMESE DONG FOR PARTICIPANTS UNDER ITEMS 7.1 AND 7.2; A BUSINESS CAPITAL OF AT LEAST 200 BILLION VIETNAMESE DONG FOR PARTICIPANTS UNDER ITEM 7.3;

- A VIETNAMESE DONG ACCOUNT OPEN AT A BANK;

- COMPLIANCE WITH ALL AUCTION PROCEDURES AND REGULATIONS FOR TREASURY BILLS AND BONDS;

- SUBMISSION OF AN APPLICATION TO JOIN THE MARKET TO THE STATE BANK OF VIETNAM.

THE STATE BANK OF VIETNAM WILL REVIEW THE CONDITIONS AND STANDARDS OF PARTICIPANTS TO ISSUE A MEMBER CERTIFICATE AS WELL AS REVOKE SUCH CERTIFICATES FOR AUCTION PARTICIPATION IN TREASURY BILLS AND BONDS."

2. REPLACE THE OLD POINTS 15.1 AND 15.2 WITH NEW POINTS 15.1 AND 15.2 AS FOLLOWS:

"15.1. WITHIN TWO WORKING DAYS FOLLOWING THE AUCTION DATE, WINNING BIDDERS MUST PAY THE FULL AMOUNT FOR THE PURCHASE OF TREASURY BILLS AND BONDS AT THE PRICE DETERMINED IN THE AUCTION NOTICE, AND RECEIVE A CERTIFICATE OR HAVE THEIR TREASURY BILLS AND BONDS ACCOUNT CREDITED (FOR BOOK ENTRY TYPE). IF WINNING BIDDERS DELAY PAYMENT PROCEDURES AFTER THE SPECIFIED PAYMENT DATE, THE STATE BANK WILL DRAWS FUNDS FROM THE WINNING BIDDER'S DEPOSITS (FOR CREDIT ORGANIZATIONS) OR REQUEST THE BANK WHERE THE WINNING BIDDER HAS AN ACCOUNT TO TRANSFER FUNDS TO THE STATE BANK (FOR WINNING BIDDERS LISTED IN ITEMS 7.2 AND 7.3 ABOVE). IF THE BALANCE IN THE WINNING BIDDER'S ACCOUNT IS INSUFFICIENT TO COVER THE PAYMENT, THE UNPAID AUCTION RESULT WILL BE CANCELLED AND THE ENTIRE DEPOSIT OF THE WINNING BIDDER AT THE STATE BANK WILL BE TRANSFERRED TO THE STATE BANK."

"15.2. THE STATE BANK WILL CREDIT THE ACCOUNT OF THE CENTRAL TREASURY OF THE STATE BANK WITH THE TOTAL AMOUNT COLLECTED FROM WINNING BIDDERS' PAYMENTS FOR THE PURCHASE OF TREASURY BILLS AND BONDS ON THE THIRD DAY FOLLOWING THE AUCTION DATE."

3/ REPLACE THE PHRASE "AUCTION COMMITTEE...OF THE STATE BANK" IN POINT 17 WITH THE PHRASE "THE JOINT AUCTION COMMITTEE CONSISTS OF SIX MEMBERS: THREE FROM THE STATE BANK INCLUDING ONE DEPARTMENT HEAD OF THE STATE BANK AS CHAIRMAN AND ONE DEPUTY DEPARTMENT HEAD; THREE FROM THE MINISTRY OF FINANCE (CENTRAL TREASURY) INCLUDING ONE OR TWO LEADERS OF THE CENTRAL TREASURY."

4/ REPLACE THE PHRASE "STATE TREASURY CULTURAL AFFAIRS DEPARTMENT" WITH THE PHRASE "CENTRAL TREASURY" IN POINTS 14 AND 15.3.

5/ REPLACE THE PHRASE "TREASURY BILLS" WITH THE PHRASE "TREASURY BONDS" IN POINT 19.

II. ADDITIONAL PROVISIONS TO JOINT CIRCULAR NO. 01/NHNN-TC
OF FEBRUARY 10, 1995

1/ ADD THE PHRASE "DIRECTIVE INTEREST RATES MAY BE ANNOUNCED IN THE AUCTION NOTICE" TO THE END OF THE FIRST SENTENCE OF POINT 9.

2/ ADD THE FOLLOWING TO THE END OF POINT 11: THE AUCTION START TIME IS SET AT 13:30 ON THE AUCTION DAY. THE AUCTION MAY BE CONDUCTED VIA COMPUTER NETWORKS, WITH THE STATE BANK PROVIDING GUIDELINES ON THE PROCEDURES AND FORMALITIES FOR ONLINE AUCTIONS TO ENSURE ACCURACY, SECURITY, AND HIGH LEVEL OF CONFIDENTIALITY.

3/ ADD THE ISSUANCE OF TREASURY BONDS THROUGH THE STATE BANK:

3.1- TREASURY BONDS ARE GOVERNMENT BONDS WITH A MATURITY OF ONE YEAR OR MORE ISSUED BY THE MINISTRY OF FINANCE IN THE FORM OF BOOK ENTRY AND CERTIFICATES TO OFFSET THE DEFICIT OF THE STATE BUDGET AND FOR DEVELOPMENT INVESTMENT.

3.2- THE SALE PRICE OF TREASURY BONDS APPLIED TO WINNING BIDDERS IS CALCULATED AS FOLLOWS:

3.2.1- FOR DISCOUNT BONDS: APPLY THE DISCOUNT RATE FORMULA FOR TREASURY BILLS AS PROVIDED IN POINT 13 OF JOINT CIRCULAR NO. 01/NHNN-TC OF FEBRUARY 10, 1995.

3.2.2 FOR BONDS THAT PAY PRINCIPAL AND INTEREST ON MATURITY:

- THE SALE PRICE OF THE BOND IS 100% OF ITS FACE VALUE;

- THE TOTAL AMOUNT PAID ON MATURITY IS CALCULATED AS FOLLOWS:

T = G + (G x Ls x t)

Where:

T: TOTAL AMOUNT (PRINCIPAL + INTEREST) OF THE TREASURY BOND TO BE PAID ON MATURITY.

G: THE SALE PRICE (FACE VALUE OR PRINCIPAL) OF THE TREASURY BOND.

Ls: THE INTEREST RATE OF THE AUCTIONED TREASURY BOND (AS A PERCENTAGE PER YEAR).

t: THE MATURITY PERIOD OF THE BOND (IN YEARS).

3.2.3 FOR BONDS THAT PAY INTEREST PERIODICALLY.

- THE SALE PRICE OF THE BOND IS 100% OF ITS FACE VALUE;

- PERIODIC INTEREST IS CALCULATED AS FOLLOWS:

Ls

L = G x

k

Where:

L: THE AMOUNT OF PERIODIC INTEREST.

G: THE SALE PRICE (FACE VALUE OR PRINCIPAL) OF THE BOND.

Ls: THE INTEREST RATE OF THE AUCTIONED TREASURY BOND (PERCENTAGE PER YEAR).

k: THE NUMBER OF INTEREST PAYMENTS PER YEAR.

ONE DAY BEFORE THE INTEREST PAYMENT DATE, THE MINISTRY OF FINANCE (CENTRAL TREASURY) TRANSFERS THE TOTAL AMOUNT OF INTEREST TO BE PAID IN THE PERIOD TO THE STATE BANK FOR PAYMENT TO THE HOLDER OF THE BOND. ON THE MATURITY DATE, THE HOLDER OF THE BOND IS PAID THE FULL AMOUNT OF PRINCIPAL AND INTEREST OF THE FINAL INTEREST PERIOD (= G + L).

3.3. All general provisions and specific regulations concerning the characteristics, procedures, formalities... for the issuance and payment of Treasury bonds shall be applied similarly to those for Treasury bills (as stipulated in Circular Joint No. 01/NHNN-TC dated February 10, 1995 and its subsequent amendments and supplements).

III. IMPLEMENTATION

This Circular shall take effect fifteen days from the date of signature. The State Bank shall amend and supplement related documents after reaching a consensus with the Ministry of Finance.