Decision No. 03/2008/QD-NHNN on lending and discounting negotiable instruments for investment and trading in securities

Article 1. Credit organizations lending and discounting securities for investment and securities trading shall implement the provisions of the banking credit law, the provisions of this Decision, and other relevant legal regulations.

Article 2. Credit organizations lending and discounting securities for investment and securities trading must meet the following conditions:

1. Issuing regulations on the business of lending and discounting securities for investment and securities trading, including the following contents:

a) Limit on the amount of loans and discounts to a single customer;

b) Limit on the amount of loans and discounts to a related group of customers;

c) Ratio of outstanding loan and discount balances to total credit balance;

d) Maximum term for loans and maximum term for term discounts;

đ) Collateral for borrowed funds;

e) Measures to control and prevent credit risks;

2. Sending the regulations under Clause 1 of this Article to the State Bank of Vietnam's Inspectorate immediately after issuance to serve as a basis for inspecting and supervising lending and discounting activities for investment and securities trading.

3. Ensuring safety ratios in the operation of credit organizations according to the regulations of the State Bank of Vietnam.

4. Having a non-performing loan ratio below 5% compared to the total credit balance.

5. Accurately accounting and statistically reporting all loans and discounts for investment and securities trading; submitting reports to the State Bank of Vietnam within the prescribed time frame according to the forms attached to this Decision.

Article 3. Lending and discounting securities for investment and securities trading include:

1. Lending and discounting securities for securities companies;

2. Lending with collateral in the form of securities and/or other assets for customers using borrowed funds to purchase various types of securities;

3. Advance payment loans for customers who have sold securities and use borrowed funds to purchase securities;

4. Loans to cover shortfalls when securities purchase orders are matched;

5. Loans to employees to purchase shares in initial public offerings when state-owned enterprises are converted into joint-stock companies;

6. Loans for capital contribution and purchase of shares of joint-stock companies and purchase of fund certificates of investment funds;

7. Discounting securities for customers to use the discounted amount to purchase securities;

8. Other types of loans and discounting securities that customers use the proceeds to purchase securities.

Securities include the types of securities specified in Clause 1, Article 6 of the Securities Law, including common stocks and bonds of public companies as stipulated in Clause 1, Article 25 of the Securities Law.

Article 4. Risk coefficients and limits for lending and discounting securities for investment and securities trading are as follows:

1. The risk coefficient for loans and discounting securities for investment and securities trading classified as "Assets" is 250%.

2. Total outstanding loans and discounting securities for investment and securities trading shall not exceed 20% (twenty percent) of the charter capital of credit organizations.

Article 5. Implementation Provisions

1. This Decision takes effect fifteen days from the date of publication in the Official Gazette.

2. The following provisions cease to be effective: Point 1.3 Clause 1 Directive No. 03/2007/CT-NHNN dated May 28, 2007 of the Governor of the State Bank of Vietnam on controlling the scale, quality of credit, and lending for investment and securities trading to control inflation, promote economic growth, and guiding documents of the State Bank of Vietnam implementing this Directive; points a, b Clause 5 Article 6 Regulations on Safety Ratios in the Operation of Credit Organizations issued pursuant to Decision No. 457/2005/QĐ-NHNN dated April 19, 2005 of the Governor of the State Bank of Vietnam (supplemented by Clause 7 Article 1 Decision No. 03/2007/QĐ-NHNN dated January 19, 2007 of the Governor of the State Bank of Vietnam); and other regulations of the State Bank of Vietnam contrary to this Decision.

3. From the date this Decision takes effect, credit organizations meeting the provisions of Article 2 and Clause 2 Article 4 of this Decision shall implement credit according to the provisions of this Decision. Credit organizations that have not met the provisions of Article 2 and Clause 2 Article 4 of this Decision shall not be allowed to lend and discount securities for investment and securities trading; once they meet the provisions of Article 2 and Clause 2 Article 4 of this Decision, they may continue to lend and discount within permitted limits.

Article 6. The Heads of the Office, the Head of the Monetary Policy Department, and the Heads of units under the State Bank of Vietnam, the Governors of the State Bank of Vietnam branches in provinces and centrally-administered cities; the Boards of Directors and General Managers (Directors) of credit organizations are responsible for implementing this Decision./.