Decision No. 107/QD-NH Issuing the Regulation on Ensuring Safety in Currency and Credit Business for Credit Institutions

Pursuant to …;

DECISION NO. 107/QD-NH ON JUNE 9, 1992 OF THE STATE BANK OF VIETNAM ON THE ISSUANCE OF "REGULATIONS ON SAFETY MEASURES IN CURRENCY AND CREDIT BUSINESS FOR CREDIT ORGANIZATIONS"

GOVERNOR OF THE STATE BANK OF VIETNAM

- BASED ON THE LAW ON THE STRUCTURE OF THE COUNCIL OF MINISTERS ON JULY 4, 1981;

- BASED ON THE ORDINANCES ON THE STATE BANK OF VIETNAM, BANKS, CREDIT COOPERATIVES, AND FINANCIAL COMPANIES AS PER ORDERS NO. 37/LCT-HDNN8 AND NO. 38/LTC-HDNN8 ON MAY 24, 1990;

- BASED ON DECREE NO. 196/HDBT ON DECEMBER 11, 1989 OF THE COUNCIL OF MINISTERS REGULATING THE TASKS, POWERS, AND RESPONSIBILITIES OF STATE MANAGEMENT BY MINISTRIES;

- BASED ON THE PROPOSAL OF THE HEAD OF THE DEPARTMENT OF BANKS AND CREDIT ORGANIZATIONS OF THE STATE BANK OF VIETNAM.

Pursuant to …;

Article 1: ATTACHED TO THIS DECISION IS THE "REGULATIONS ON SAFETY MEASURES IN CURRENCY AND CREDIT BUSINESS FOR CREDIT ORGANIZATIONS," SHORTENED AS "SAFETY REGULATIONS."

Article 2: This Decision shall take effect from the date of signing.

Article 3: THE HEAD OF THE DEPARTMENT OF BANKS AND CREDIT ORGANIZATIONS SHALL ISSUE GUIDELINES FOR IMPLEMENTATION OF THE REGULATIONS ISSUED BY THIS DECISION.

Article 4: THE HEAD OF THE OFFICE, THE HEAD OF INSPECTION, THE HEADS OF UNITS UNDER THE STATE BANK OF VIETNAM, THE DIRECTORS OF PROVINCE AND CITY BRANCHES OF THE STATE BANK OF VIETNAM, THE GENERAL MANAGERS OF STATE COMMERCIAL BANKS AND DEVELOPMENT BANKS, AND THE CHAIRMEN OF THE BOARDS OF MANAGEMENT OF NON-STATE CREDIT ORGANIZATIONS SHALL ENFORCE THIS DECISION.

REGULATION

SAFETY MEASURES IN CURRENCY AND CREDIT BUSINESS
FOR CREDIT ORGANIZATIONS

(ISSUED PURSUANT TO DECISION NO.: 107/QD-NH5 ON JUNE 9, 1992)
of the Governor of the State Bank)

Article 1: TO ENSURE SAFETY IN CURRENCY AND CREDIT BUSINESS, CREDIT ORGANIZATIONS OPERATING IN VIETNAM MUST COMPLY WITH THE FOLLOWING REGULATIONS:

- SAFETY, CAPITAL INCREASE AND DECREASE, AND SHARE TRANSFER;

- MAINTAINING THE MINIMUM RATIO BETWEEN OWN CAPITAL AND THE VALUE OF ASSETS;

- ENSURING LIQUIDITY;

- LIMITS ON FUNDS RAISED;

- LIMITS ON FUNDS USED.

Article 2:

2.1. CREDIT ORGANIZATIONS MUST MAINTAIN A LEVEL OF PAID-IN CAPITAL NOT LESS THAN THE AMOUNT ANNOUNCED OR APPROVED BY THE STATE BANK OF VIETNAM.

2.2. CREDIT ORGANIZATIONS ARE PERMITTED TO INCREASE, DECREASE CAPITAL, OR TRANSFER SHARES ONLY WITH THE APPROVAL OF THE STATE BANK OF VIETNAM.

a) INCREASING CAPITAL THROUGH THE ISSUE OF SHARES OR TRANSFER FROM THE RESERVE FUND FOR CAPITAL SUPPLEMENTATION;

b) DECREASING CAPITAL NOT BELOW THE AMOUNT ANNOUNCED BY THE STATE BANK OF VIETNAM;

c) TRANSFERRING SHARES MORE THAN 15% OF THE CAPITAL.

Article 3:

3.1. CREDIT ORGANIZATIONS MUST MAINTAIN A MINIMUM RATIO OF 5% BETWEEN OWN CAPITAL AND THE TOTAL VALUE OF ASSETS ON A CONTINUOUS BASIS.

3.2. OWN CAPITAL OF CREDIT ORGANIZATIONS INCLUDES:

- Registered capital;

- THE RESERVE FUND FOR CAPITAL SUPPLEMENTATION;

- THE SPECIAL RESERVE FUND FOR RISK PREVENTION;

- UNDIVIDED PROFITS;

- THE INCREASED VALUE DUE TO REVALUATION OF FIXED ASSETS;

- LONG-TERM LOANS PROVIDED BY THE STATE;

- OTHER TYPES OF CAPITAL AND FUNDS, IF ANY.

3.3. THE TOTAL VALUE OF ASSETS OF CREDIT ORGANIZATIONS INCLUDES:

- INTERNAL BALANCE SHEET ASSETS;

- CREDIT GUARANTEES;

- THE VALUE OF CONTRACTS WHERE THEY COMMIT TO LOAN TO OTHER CREDIT ORGANIZATIONS TO COVER SHORTFALLS IN LIQUIDITY.

Article 4:

4.1. CREDIT ORGANIZATIONS (HEAD OFFICES AND SUB-BRANCHES) MUST ENSURE LIQUIDITY BY MAINTAINING THE VALUE OF LIQUID ASSETS EQUIVALENT TO PAYABLE AMOUNTS IN THE NEXT THREE WORKING DAYS.

4.2. LIQUID ASSETS INCLUDE:

- CASH IN THE SAFE;

- FREELY CONVERTIBLE FOREIGN CURRENCY IN THE SAFE;

- DEPOSITS AT THE STATE BANK OF VIETNAM;

- GOLD, SILVER, AND PRECIOUS STONES;

- BONDS AND SHARES THAT CAN BE SOLD IMMEDIATELY;

- ACCEPTANCE PAPERS MEETING THE CONDITIONS FOR IMMEDIATE DISCOUNTING;

- THE VALUE OF CONTRACTS WHERE OTHER CREDIT ORGANIZATIONS COMMIT TO LOAN TO COVER SHORTFALLS IN LIQUIDITY;

- AMOUNTS THAT CAN BE COLLECTED WITHIN THE NEXT THREE WORKING DAYS.

4.3. PAYABLE AMOUNTS IN THE NEXT THREE WORKING DAYS INCLUDE:

- THE AMOUNT OF DEMAND DEPOSITS AND SAVINGS ACCOUNTS PROJECTED TO BE WITHDRAWN;

- THE AMOUNT OF TIME DEPOSITS AND SAVINGS ACCOUNTS DUE FOR REPAYMENT;

- MATURING BONDS AND PROMISSORY NOTES;

- OTHER PAYABLE AMOUNTS.

Article 5:

5.1. CREDIT ORGANIZATIONS MAY NOT RAISE FUNDS MORE THAN 20 TIMES THEIR TOTAL OWN CAPITAL (EXCLUDING FUNDS RAISED AT THE REQUEST OF THE GOVERNMENT OR THE STATE BANK OF VIETNAM). COOPERATIVE CREDIT ORGANIZATIONS MAY ONLY RAISE FUNDS FROM MEMBERS AND NOT MORE THAN 10 TIMES THEIR OWN CAPITAL.

5.2. DEVELOPMENT BANKS MAY ONLY RAISE FUNDS WITH A TERM OF LESS THAN ONE YEAR WITH THE APPROVAL OF THE GOVERNOR OF THE STATE BANK OF VIETNAM.

5.3. FINANCIAL COMPANIES MAY NOT ACCEPT DEPOSITS FROM ORGANIZATIONS AND INDIVIDUALS.

Article 6:

6.1. CREDIT ORGANIZATIONS MAY NOT LOAN MORE THAN 10% OF THEIR OWN CAPITAL TO ANY SINGLE CUSTOMER: THE TOTAL AMOUNT LOANED TO THE TEN LARGEST CUSTOMERS MAY NOT EXCEED 30% OF THE TOTAL LOAN PORTFOLIO OF THE CREDIT ORGANIZATION, EXCEPT IN CASES WHERE THE STATE BANK OF VIETNAM PERMITS TEMPORARY APPLICATION.

6.2. CREDIT ORGANIZATIONS MAY NOT LOAN MORE THAN 5% OF THEIR OWN CAPITAL TO ELIGIBLE ENTITIES AS STATED IN CLAUSE 2, ARTICLE 30 OF THE ORDINANCE ON BANKS, CREDIT COOPERATIVES, AND FINANCIAL COMPANIES.

6.3. CREDIT COOPERATIVES MAY NOT LOAN TO STATE ENTERPRISES AND COLLECTIVE ECONOMIC ORGANIZATIONS; THEY MAY NOT ENGAGE IN JOINT VENTURES, PARTNERSHIPS, OR PURCHASE OF SHARES.

Article 7: CREDIT ORGANIZATIONS MAY USE OWN CAPITAL FOR JOINT VENTURES, PARTNERSHIPS, AND SHARE PURCHASES AND MUST COMPLY WITH THE FOLLOWING REQUIREMENTS:

- THE AMOUNT OF CAPITAL NOT EXCEEDING 10% OF THE CAPITAL OF THE COMPANY OR ENTERPRISE IN WHICH THEY PARTICIPATE;

- THE TOTAL AMOUNT OF JOINT VENTURES, PARTNERSHIPS, AND SHARE PURCHASES MUST BE LESS THAN 50% OF THEIR OWN CAPITAL.

Article 8: PROVINCIAL AND CITY BRANCHES OF THE STATE BANK OF VIETNAM, THE DEPARTMENT OF BANKS AND CREDIT ORGANIZATIONS, AND CREDIT ORGANIZATIONS MUST COMPLY WITH REGULAR REPORTING AS DIRECTED BY THE HEAD OF THE DEPARTMENT OF BANKS AND CREDIT ORGANIZATIONS.

Article 9: VIOLATIONS OF THESE REGULATIONS WILL BE HANDLED ACCORDING TO THE PENALTY REGULATIONS FOR VIOLATIONS ISSUED BY THE GOVERNOR OF THE STATE BANK OF VIETNAM.

Article 10: ANY MODIFICATIONS OR ADDITIONS TO THE REGULATIONS HEREIN SHALL BE DECIDED BY THE GOVERNOR OF THE STATE BANK OF VIETNAM.