Circular No. 100/2002/TT-BTC guiding the additional issuance of charter capital for State-owned commercial banks

CIRCULAR

GUIDELINES FOR SUPPLEMENTING CHARTER CAPITAL 

FOR STATE COMMERCIAL BANKS
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Pursuant to Decision Decision No. 453/QD-TTg dated June 14, 2002 on issuing government bonds to supplement charter capital for state commercial banks and Government's Circular No. 36/CP-KTTH dated July 15, 2002 on the plan to supplement charter capital for state commercial banks during the period 2002-2004, the Ministry of Finance guides the implementation of certain contents as follows:  1. State commercial banks receiving supplementary charter capital during the period 2002-2004 according to Circular No. 36/CP-KTTH dated July 15, 2002 of the Government include: Vietnam Bank for Foreign Trade, Vietnam Industrial and Commercial Bank, Vietnam Development Bank, Vietnam Agricultural and Rural Development Bank, and Southern Key Economic Region Development Bank.

I. GENERAL PROVISIONS

2. The source of supplementary charter capital shall be implemented in accordance with point 1.b of Circular No. 36/CP-KTTH dated July 15, 2002 of the Government regarding the plan to supplement charter capital for state commercial banks.

3. Special bonds are government bonds issued in Vietnamese dong through book-entry securities to supplement charter capital for state commercial banks pursuant to Decision No. 453/QD-TTg dated June 14, 2002 of the Prime Minister. The special bonds held by state commercial banks shall be considered as their own assets and permitted to be pledged in credit relations with the State Bank.

1. Conditions for supplementary charter capital:

II. SPECIFIC PROVISIONS

To be eligible for supplementary charter capital according to the approved schedule by the Prime Minister, the state commercial banks must ensure the following conditions:

1.1. Implement the prescribed schedule for handling overdue debts as approved by the Governor of the State Bank. 1.2. Implement the restructuring program at each state commercial bank as approved by the Prime Minister according to the approved schedule. 1.3. The overdue debt ratio at the reporting date of debts arising from January 1, 2002 must be lower than 5%.

1.4. By the end of June 2002, thoroughly address issues identified from the 2000 audit; by the end of December 2002, complete independent auditing for 2001 and thoroughly address issues identified from the 2001 audit; by the end of December 2003, complete independent auditing for 2002 and thoroughly address issues identified from the 2002 audit.

1.5. Quarterly (before the 10th day of the first month of each quarter), the banks must submit written reports evaluating the progress of implementing the contents from point 1.1 to 1.4 to the Steering Committee for Financial Restructuring of Commercial Banks, the Ministry of Finance, the State Bank, and the Ministry of Planning and Investment.

1.6. In cases where state commercial banks fail to meet all the conditions specified from point 1.1 to 1.5, the supplementary charter capital issuance will be suspended until all conditions are fully met.

2. Supplementing Charter Capital:

2.1. Based on the report of state commercial banks on meeting the conditions for supplementary charter capital, after coordinating with the State Bank and the Ministry of Planning and Investment to conduct an assessment, the Ministry of Finance will issue a Decision to supplement charter capital for state commercial banks that meet the required conditions.

2.2. In cases where supplementary charter capital is provided through government bonds, the Central Treasury will issue special bonds based on the Decision of the Minister of Finance according to the book-entry method.

The book-entry record will be made in two copies: copy 1 retained by the Central Treasury, and copy 2 handed over to the bank receiving supplementary charter capital.

3. Regulations on managing special bonds:

3.1. Within the first five years, state commercial banks are not allowed to transfer special bonds. After this period, the Ministry of Finance will coordinate with the State Bank to review this regulation and propose recommendations to the Prime Minister for decision.

3.2. Collateral transactions involving special bonds can only be conducted between state commercial banks and the State Bank. State commercial banks will use copy 2 of the book-entry record to pledge in credit relations with the State Bank.

3.3. Procedures and volume of collateral transactions involving special bonds shall be carried out in accordance with the regulations of the State Bank, consistent with monetary policy operations in each period.

3.4. Monthly (before the 10th day of the following month), state commercial banks must submit reports to the Ministry of Finance on special bond collateral transactions in the previous month.

4. Payment and accounting of supplementary charter capital:

4.1. Upon receiving supplementary charter capital, state commercial banks shall increase their charter capital and account for it in a separate sub-account.

4.2. Interest on special bonds will be paid annually by the state budget on the anniversary date of the issuance of special bonds at the Central Treasury. The first payment will be made one year after the issuance of special bonds.

4.3. State commercial banks may use the interest received from special bonds to increase their charter capital and account for it in a separate sub-account.

This Circular takes effect 15 days after its signing. Any difficulties encountered during implementation should be reported to the Ministry of Finance for study, consideration, and resolution./.

4.2. The interest on special bonds shall be paid annually by the state budget on the date when the special bonds are issued at the Central Treasury. The first payment shall be made one year after the issuance date of the special bonds.

4.3. The commercial bank using the interest from the special bonds received shall use it to increase its charter capital and record it in a separate sub-account.

III. IMPLEMENTATION

This Circular shall take effect fifteen days after the date of signature. Any difficulties encountered during implementation should be reported to the Ministry of Finance for study, consideration, and resolution./.