Decision No. 101/NH-QĐ Issuing the Rules on Bank Payment Transactions

Pursuant to …;

Issuing the Rules on Bank Payment Transactions

Pursuant to the Ordinance on the State Bank of Vietnam, Credit Cooperatives, and Financial Companies issued by the Chairman of the Council of State on May 23, 1990;

Pursuant to Decree No. 80/HĐBT dated May 27, 1987, of the Chairman of the Council of Ministers on supplementing the rules for non-cash payment transactions through banks;

At the proposal of the Director of the Economic Planning Department,

DECISION:

Article 1.- Issuing the Rules on Bank Payment Transactions applicable to all agencies, units, economic organizations, commercial banks, investment and development banks, and units under the National Treasury system.

Article 2.- The Rules on Bank Payment Transactions issued together with this Decision shall take effect from October 1, 1991.

All previous regulations on payment transactions issued by the State Bank, commercial banks, and investment and development banks shall cease to be effective.

Article 3.- Based on the Rules on Bank Payment Transactions and the Circulars guiding these rules issued by the State Bank, commercial banks, investment and development banks, and the National Treasury Bureau shall be responsible for detailing them appropriately to suit their operational activities and payment systems; organizing implementation and managing strictly to prevent violations that cause losses to the people and the State.

Article 4.- Heads of units under the Central State Bank, Branch Directors of the State Bank in provinces and centrally administered cities, General Directors (Directors) of commercial banks, investment and development banks, and the Director of the National Treasury Bureau within their functional duties, powers, and responsibilities shall be responsible for implementing this Decision.

RULES
PAYMENT THROUGH BANKS
(Issued pursuant to Decision No. 101/NH-QĐ dated July 30, 1991)
of the Governor of the State Bank)

II- SUPPORT MEASURES FOR STATE-OWNED AGRICULTURAL FARMS AND FORESTRY COMPANIES IN THE FIELD OF SCIENCE AND TECHNOLOGY

Article 1. Economic organizations, budgetary units, and individuals having deposit accounts at banks or the National Treasury (referred to as account holders) must follow the provisions of these rules when making payments to each other regarding goods and services through their own accounts.

Article 2. To ensure bank payment transactions ⁽¹⁾ account holders making payments must have sufficient funds in their accounts; any situation where the account does not have enough funds to complete the payment transaction is a violation of the law and must be dealt with accordingly.

Article 3. Banks must ensure convenient, timely, and accurate payment transactions. Banks are responsible for checking the ability of account holders to make payments before processing the transaction; they have the right to refuse payment if the payer's account does not have sufficient funds and will not be held jointly liable for any consequences that may arise. If due to their own negligence during the payment process, causing damage to customers, the bank must compensate for material losses.

II- ORGANIZATION OF PAYMENT TRANSACTIONS THROUGH BANKS BETWEEN CUSTOMERS

Article 4. Payment transactions through banks regarding goods, services, or other payment needs shall apply the following forms:

4.1- Cheque (transfer cheque, guarantee cheque, fixed amount cheque book)

4.2- Standing Order (money transfer)

4.3- Letter of Credit

4.4- Collection Order.

A/ PAYMENT BY CHEQUE

Article 5. Based on the factors and cheque form templates prescribed by the Central State Bank (see Appendix No. 1), commercial banks, investment and development banks, and the National Treasury Bureau must select and register the cheque forms with the State Bank, sign contracts for printing at the Bank Printing House, and provide them to their clients for use.

Article 6. Units, organizations, and individuals opening deposit accounts at banks and budgetary units opening deposit accounts at the National Treasury can only purchase cheques from the bank or the National Treasury where they opened their deposit accounts.

Banks and the National Treasury shall not provide cheques to clients who have not opened deposit accounts or who have opened but whose initial accounts have zero balances.

Article 7. A transfer cheque is a special printed authorization form issued by the account holder and directly handed over to the beneficiary unit to pay for goods or services immediately upon receipt. Transfer cheques can only be used for payment transactions between customers with accounts at the same bank, or different banks that participate in direct clearing transactions with each other.

Cheques are recorded according to the principle of debiting first, then crediting: based on the issued cheque, the bank must debit the account of the cheque issuer before crediting the account of the beneficiary. In cases where the cheque value is 1 million dong or less - or between two banks within the same system capable of verifying the payment capacity of the cheque issuer, the serving bank may credit the beneficiary's account. These cases are reviewed and decided specifically by the General Directors of commercial banks and investment and development banks and bear full responsibility before the Governor of the State Bank for any errors or abuse.

Article 8. Account holders may issue cheques within the scope of: deposit balance, fixed amount cheque book balance deposited at the bank. Account holders are responsible for safeguarding cheque forms (including blank cheques) and fixed amount cheque books as they would money, and must manage and use cheques strictly and bear full legal responsibility for any violations (fraud, abuse, etc.) and for all damages and consequences caused by such violations.

Article 9. When a check issued exceeds the account balance upon reaching the buyer's bank, the check issuer shall be fined an amount equal to 20% (twenty percent) of the excess amount; and shall also be subject to late payment penalties from the date the check arrives at the buyer's bank until the date of payment, with the late payment penalty calculated as the amount on the check multiplied by the current overdue interest rate for short-term loans of the same type, multiplied by the number of days delayed, and the late payment fine shall be transferred to the beneficiary. The fine for issuing a check that exceeds the account balance shall be recorded as a business income of the bank. If within three months the account holder issues two (2) checks that exceed the account balance, the bank will reclaim any remaining blank checks, compelling the account holder to switch to using guaranteed checks, fixed-amount checkbooks, or other payment methods. The minimum period for suspending the use of checks is three (3) months, after which the account holder must provide a commitment not to repeat the offense before being allowed to resume the use of ordinary transfer checks. In cases where the amount of an overdrawn check is ten million dong or more, or if the overdrawn amount is not replenished within thirty days, the bank may request prosecution under current laws.

Article 10. The beneficiary of the check (the seller) directly receives the check from the issuer and must verify its validity (all elements prescribed on the check are fully, accurately, and clearly filled out without alterations or erasures) and submit it to the serving bank (either the seller's or the buyer's bank) within the maximum validity period of ten (10) working days from the date of issuance of the check.

The bank has the right to refuse payment and handle the situation according to the provisions in the following cases:

a) The check beneficiary does not have an account with the bank (in the case of submitting the check to the serving bank of the check issuer): return the check to the person who submitted it;

b) An invalid check: return the check to the person who submitted it;

c) A check submitted to the bank beyond the aforementioned validity period: return the check to the person who submitted it;

d) A counterfeit check or a check suspected of being counterfeit: retain the check and the identification of the person who submitted the check, report to the police for handling and resolution.

Article 11. A guaranteed check is a regular transfer check but is guaranteed by the serving bank of the check issuer through pre-deducting the amount stated on the check from the payer's deposit account (or loan) and placing it into a separate account (guaranteed check deposit and fixed-amount checkbook), with the bank processing the guarantee and stamping "guaranteed" on the check before delivering it to the customer.

Guaranteed checks are used in units that are customers of the State Treasury system and bank customers when requested by the seller or as a penalty decision by the bank against account holders who issue checks exceeding the account balance as stipulated in Article 9.

The content and elements of guaranteed checks are implemented according to Article 10. Guaranteed checks can be used for payments between customers who have accounts at the same bank or different banks participating in direct clearing; in cases involving different banks not participating in direct clearing (outside the province), they can only be applied within the same banking system. The maximum validity period is fifteen days from the date of the guaranteed check.

Article 12. A fixed-amount checkbook (see Appendix No. 2) is used to pay for purchases, transportation fees, postal charges, or as a penalty decision by the bank.

Fixed-amount checkbooks are applicable for payments within the province; in cases outside the province, they can only be applied within the same banking system.

The minimum amount required to open a fixed-amount checkbook is twenty (20) million dong.

Each fixed-amount check can only be used to pay a single customer or a group of customers under the same management unit.

To open a fixed-amount checkbook, the account holder requests the serving bank to deduct funds from their deposit account (or loan) to reserve the required amount for the fixed-amount checkbook into a separate account (guaranteed check deposit and fixed-amount checkbook) at the bank, and receive a fixed-amount checkbook with the predetermined amount already recorded on the cover page. Each check in the fixed-amount checkbook is valid for up to fifteen (15) days from the date of opening the fixed-amount checkbook. When making a payment (delivering the check), the check issuer must present the entire fixed-amount checkbook for the seller to verify the balance before detaching the check from the book to hand over to the seller (beneficiary).

The beneficiary must monitor the balance; if they receive checks exceeding the balance, they will not be paid and will bear all losses.

The balance in the guaranteed check deposit and fixed-amount checkbook accounts does not accrue interest. Guaranteed checks and checks issued from the fixed-amount checkbook are immediately credited to the beneficiary's account. Checks in the fixed-amount checkbook that exceed the limit are subject to fines for issuing checks exceeding the account balance and late payment as stipulated in Article 9, with the remaining checks in the fixed-amount checkbook immediately recalled, and the fine recorded as a business income of the bank.

B/ PAYMENT BY STANDING ORDER

Article 13. A standing order (Appendix No. 4) is a payment instruction established by the account holder based on the bank's model, requesting the serving bank (where the deposit account is opened) to deduct funds from the account to pay the beneficiary.

Standing orders are used for transferring funds for goods, services, or capital transfers within the same banking system or different banking systems within the province and outside the province.

Within one working day, the serving bank of the paying entity must complete the payment instruction or reject it if the account balance is insufficient or the payment instruction is invalid. The serving bank of the beneficiary must immediately credit the account and notify the entity after receiving valid documentation.

Article 14. Inter-regional fund transfers ⁽²⁾ may be carried out by means of a money transfer check (hand-delivered) - Appendix No. 3 - in cases where the customer requires urgent need. Money transfer checks must be issued by the serving bank of the entity requesting the transfer and handed over to the customer after debiting the account of the entity requesting the transfer. The validity period of the money transfer check is thirty days from the date of issuance. Money transfer checks can be used for transfers or cash withdrawal at the paying bank.

C/ PAYMENT BY LETTER OF CREDIT

Article 15. A letter of credit (Annex 5) shall be used for payment of goods when the seller requires immediate funds to cover the total value of goods delivered under the contract or purchase order.

Article 16. Upon request, the buyer shall issue a letter of credit application requesting the bank serving them to transfer from their deposit account (or loan from the bank) an amount equal to the total value of purchased goods to be held in a separate account (letter of credit deposit account). The buyer's bank must immediately send the letter of credit to the seller's bank to inform the seller. The minimum amount of a letter of credit is five million dong. Letter of credit deposits do not earn interest.

Each letter of credit shall only be used to pay one selling entity.

The validity period of a letter of credit is three months from the date the buyer's bank receives the letter of credit opening request.

A letter of credit can only be applied for payments within the same banking system but in different locations and with coded identification. In cases of payments between different banking systems, they must go through the State Bank.

Article 17. The seller has the responsibility to deliver goods to the buyer after receiving notification that the letter of credit has been opened.

The bank serving the seller shall pay the seller based on invoices, waybills, or other delivery documents bearing the signature of the buyer's representative accompanied by a power of attorney from the buyer, presented by the seller to the bank, in accordance with the agreed terms recorded on the letter of credit.

Payment under a letter of credit shall be made by bank transfer, credited to the seller's account.

Any disputes regarding delivered goods and paid amounts (if any) shall be resolved by the two parties, the buyer and the seller.

Upon receipt of the debt notice from the seller's bank regarding payment to the seller, the buyer's bank shall settle the letter of credit deposit account of the buyer.

D/ PAYMENT BY COLLECTION ORDER

Article 18. The collection order payment method (Annex 6) shall be applied for local or inter-regional payments within the same banking system or outside the system for amounts due for delivered goods or services, as mutually agreed upon by both the buyer and seller with specific payment conditions recorded in the economic contract or purchase order and confirmed by the buyer on payment documents (invoices, waybills, etc.). The buyer must notify their bank in writing about the agreement to use the collection order payment method.

Article 19. After delivering goods or completing service provision, the seller shall issue a collection order form according to the bank's template along with the invoice and waybill to their serving bank to request collection.

To expedite payment for goods or services under a collection order, the seller may clearly state on the collection order form a request for the buyer's bank to transfer funds via telegraphic transfer at the buyer's expense.

Article 20. Upon receipt of the collection order, within one working day, the buyer's bank shall debit the buyer's account to immediately pay the seller, thus completing the transaction. If the buyer's account lacks sufficient funds, the buyer will be subject to late payment penalties as stipulated in Article 9 above.

Any disputes regarding false documentation, discrepancies between paid amounts and received goods/services shall be resolved by the two parties, the buyer and the seller.

III- INTERNAL PAYMENTS WITHIN COMMERCIAL BANKS, INVESTMENT AND DEVELOPMENT BANKS, AND THE STATE TREASURY

Article 21. Based on the provisions of this regulation concerning the templates of payment stamps for various payment methods prescribed by the Central State Bank, each commercial bank, investment and development bank, and the State Treasury Branch shall issue various types of payment stamps, which they may grant to customers and subordinate banking institutions for use. These payment stamp templates must be approved and registered with the Central State Bank.

Article 22. Each commercial bank, investment and development bank, and the State Treasury Branch constitutes a system, therefore, transactions such as fund transfers between branches or bureaus within the system are internal system payments.

Commercial banks, investment and development banks, and the State Treasury Branch have the responsibility to guide internal system payments to ensure compliance with these regulations, rapid and accurate capital flow, and strict and safe management of capital within the system.

Article 23. To ensure convenient and swift payments, banks may choose to apply the following payment methods:

23.1- They may adopt the intra-system linked payment method.

23.2- They may open a deposit account with another bank, authorize the bank where the account is held to deduct from their account to make payments or record credits to their account for amounts due; after a specified period (as agreed by both parties), the holding bank is responsible for summarizing and reporting to the main account holder any changes or balances on the deposit account.

23.3- They may authorize another bank to collect or pay on behalf of their customers within agreed limits; after a specified period (as agreed by both parties), they shall reconcile and settle accounts with each other regarding collected or paid amounts.

23.4- Organize system-wide or regional clearing operations, or clearing between certain branches with regular business relationships, under the guidance and implementation organization of the main commercial bank or according to agreements already made between branches involved in clearing.

IV- PAYMENTS BETWEEN BANKS OUTSIDE THE SYSTEM

(Inter-bank Payments)

Article 24. Payments between banks outside the system shall be carried out using the following methods:

24.1-Payment through accounts opened at the State Bank.

For single transfers: The bank requesting the transfer (Bank A) shall issue a payment document sent to the State Bank branch or representative office (if any) requesting a deduction from its account at the State Bank branch or representative office (if any) to transfer to Bank B.

24.2- Bilateral or multilateral bank clearing among participating parties as agreed.

Clearing within the same province shall be organized by the State Bank branch in that province.

On a daily basis, the State Bank aggregates the debit and credit entries of each participating bank for netting off and recording debits and credits in the accounts of each related bank.

The organization of netting off payments and lending to cover shortfalls in netting off payments for commercial banks shall be governed by separate regulations.

24.3- Various methods may be employed:

Opening deposit accounts with other banks to conduct payment transactions.

Mandating collection and payment agency services between banks that have established payment relationships, settling periodically within agreed limits on the amounts collected and paid on behalf of others.

V- IMPLEMENTATION PROVISIONS

Article 25. Commercial banks, development banks, and the National Treasury Department shall base their payment service operations serving customers on the payment rules through banks and the circulars issued by the State Bank to specifically implement payment services, and provide guidance on proper implementation.

The State Bank is responsible for directing and supervising the implementation of payment activities through banks in the national economy, continuously improving payment procedures in accordance with the state's financial management mechanisms.

Article 26. These rules take effect from October 1, 1991. Any amendments or supplements to these payment rules through banks are within the purview of the Governor of the State Bank.

(1) The term "bank" in these rules refers to banking organizations or the National Treasury.

(2) The term "different locality" is understood to mean different counties, districts, or towns./.