Circular No. 07/2012/TT-NHNN on the foreign currency status of credit institutions and branches of foreign banks operating in Vietnam

CIRCULAR

Regulations on foreign currency status of credit institutions,

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 the Foreign Exchange Ordinance No. 28/2005/PL-UBTVQH11 dated December 13, 2005;

Pursuant to Decree No. 160/2006/NĐ-CP dated December 28, 2006 of the Government detailing the implementation of the Foreign Exchange Law;

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;

Considering the proposal of the Director of the Foreign Exchange Management Department;

The State Bank of Vietnam issues this Circular regulating the foreign currency status of credit institutions and branches of foreign banks operating in Vietnam that are permitted to conduct foreign exchange activities.

Article 1. Scope and subject matter regulated

This Circular regulates the foreign currency status of credit institutions and branches of foreign banks operating in Vietnam that are permitted to conduct foreign exchange activities.

Article 2. Interpretation of Terms

In this Circular, the following terms are understood as follows:

1. Foreign currency means the currency of another country or territory or the common European currency and other common currencies used in international and regional payments.

2. The original foreign currency status of a foreign currency is the difference between the total Assets and total Liabilities in that foreign currency, including corresponding off-balance sheet commitments.

3. The conversion rate for foreign currency status shall be applied as follows:

a) The exchange rate between the Vietnamese dong and the US dollar: the interbank average rate published by the State Bank on the reporting date.

b) The exchange rate between the Vietnamese dong and other foreign currencies: the spot transfer selling rate of credit institutions and branches of foreign banks at the end of the reporting date.

4. The foreign currency status of credit institutions and branches of foreign banks is the original foreign currency status converted into Vietnamese dong according to the conversion rate for foreign currency status.

5. Total positive foreign currency status is the sum of the positive statuses of all foreign currencies.

6. Total negative foreign currency status is the sum of the negative statuses of all foreign currencies.

Article 3. Principles for calculating foreign currency status

1. The foreign currency status of credit institutions and branches of foreign banks is determined at the end of the working day.

2. The original foreign currency status is calculated based on the balances of relevant accounts as specified in the attached Appendix to this Circular.

3. Convert the original foreign currency status of each foreign currency into Vietnamese dong according to the conversion rate for foreign currency status.

4. Sum up the positive foreign currency statuses to calculate the total positive foreign currency status. Sum up the negative foreign currency statuses to calculate the total negative foreign currency status.

Article 4. Limit on total foreign currency status

1. The limit on total foreign currency status is calculated as the ratio of the total positive foreign currency status or the total negative foreign currency status divided by the capital of credit institutions and branches of foreign banks.

The capital for calculating the limit on total foreign currency status of credit institutions and branches of foreign banks is the capital of the month immediately preceding the reporting period of the credit institution or branch of foreign bank.

2. The total positive foreign currency status at the end of the day of credit institutions and branches of foreign banks must not exceed 20% of the capital of the credit institution or branch of foreign bank.

3. The total negative foreign currency status at the end of the day of credit institutions and branches of foreign banks must not exceed 20% of the capital of the credit institution or branch of foreign bank.

4. Branches of foreign banks in Vietnam with capital of up to 25 (twenty-five) million US dollars may apply the following limits on total foreign currency status:

The total positive foreign currency status at the end of the day converted into US dollars must not exceed 5 (five) million US dollars.

The total negative foreign currency status at the end of the day converted into US dollars must not exceed 5 (five) million US dollars.

5. In cases where necessary, credit institutions and branches of foreign banks may maintain foreign currency status exceeding the limits set forth in Clause 2, Clause 3, and Clause 4 of this Article upon approval by the Governor of the State Bank of Vietnam.

Article 5. Reporting System

By no later than 14:00 on the working day, credit institutions and branches of foreign banks shall submit reports on the foreign currency status of the previous working day to the State Bank of Vietnam (Foreign Exchange Management Department) using the form attached to this Circular.

Article 6. Implementation Provisions

1. This Circular takes effect from May 2, 2012, and replaces Decision No. 1081/2002/QĐ-NHNN dated October 7, 2002 of the Governor of the State Bank of Vietnam promulgating regulations on foreign currency status for credit institutions permitted to conduct foreign exchange activities, and Decision No. 1168/2003/QĐ-NHNN dated October 2, 2003 of the Governor of the State Bank of Vietnam amending Article 1 of Decision No. 1081/2002/QĐ-NHNN dated October 7, 2002.

2. The Financial Accounting Department is responsible for guiding credit institutions and branches of foreign banks permitted to conduct foreign exchange activities on how to calculate foreign currency status based on the accounting account system.

3. The Information Technology Department within its functions and responsibilities is responsible for guiding credit institutions and branches of foreign banks permitted to conduct foreign exchange activities on how to report foreign currency status electronically when reporting electronically.

4. The Head of Banking Inspection and Supervision, the Director of the State Bank of Vietnam branch in provinces and centrally-administered cities are responsible for inspecting, supervising the implementation of the provisions of this Circular and handling violations according to the law.

5. The Heads of the Office, the Director of the Foreign Exchange Management Department, and the Heads of units under the State Bank of Vietnam; the Chairmen of the Board of Directors, the Chairmen of the Board of Members, the General Managers (Directors) of credit institutions, and the General Managers (Directors) of branches of foreign banks are responsible for implementing this Circular./.