Decision No. 1085/2002/QD-NHNN on the issuance of the Overdraft and Overnight Loan Regulations applicable in inter-bank electronic payment systems.

Pursuant to …;

Regarding the issuance of the Overdraft and Overnight Loan Regulations for inter-bank electronic payment transactions

trong thanh toán điện tử liên ngân hàng ||| in inter-bank electronic payments

__________________________

GOVERNOR OF THE STATE BANK OF VIETNAM

BASED ON THE LAW ON THE STATE BANK OF VIETNAM AND THE LAW ON CREDIT ORGANIZATIONS dated December 12, 1997;

Pursuant to Decree No. 15/CP dated March 2, 1993 of the Government on the tasks, powers, and responsibilities for state management of Ministries and ministerial-level agencies;

Pursuant to Decree No. 64/2001/NĐ-CP dated September 20, 2001 of the Government on payment activities through service providers;

At the proposal of the Head of the Monetary Policy Department;

DECISION:

Article 1: The Overdraft and Overnight Loan Regulations for application in inter-bank electronic payments are hereby issued together with this Decision.

Article 2: This Decision shall take effect fifteen days from the date of signature.

Article 3: Heads of units under the State Bank of Vietnam, Directors of provincial and centrally-administered city branches of the State Bank of Vietnam, Chairmen of Management Boards and General Directors (Directors) of banks that are direct members of the inter-bank electronic payment system shall be responsible for implementing this Decision.

REGULATIONS

OVERDRAFT AND OVERNIGHT LOANS APPLICABLE IN INTERBANK ELECTRONIC PAYMENTS
(Issued together with Decision No. 1085/2002/QĐ-NHNN dated October 7, 2002 of the Governor of the State Bank of Vietnam)

Article 1: Scope and Applicability

These regulations govern the overdraft and overnight loans provided by the State Bank of Vietnam to banks that are direct participants in the inter-bank electronic payment system (referred to as "banks") to address temporary shortfalls in funds during inter-bank electronic payments.

Construction Technical Specifications

1. Overdraft in inter-bank electronic payments refers to the situation where banks can draw more than their available balance on their settlement accounts at the Trading Center - State Bank of Vietnam on the day of payment.

2. Overnight lending in inter-bank electronic payments is a form of refinancing provided by the State Bank of Vietnam to banks.

Article 3: Purpose of Overdraft and Overnight Loans

1. Banks may use overdrafts to cover temporary shortfalls in payment funds within a day in inter-bank electronic payments.

2. Banks may obtain overnight loans from the State Bank of Vietnam to settle overdrafts at the end of the working day.

Article 4: Conditions for Overdraft and Overnight Loans

To qualify for overdrafts and overnight loans, banks must meet the following conditions:

1. They must have an overdraft and overnight loan request accepted by the State Bank of Vietnam;

2. They must acknowledge and comply with the provisions of these regulations;

3. They must provide collateral assets to secure the loan.

Article 5: Collateral Assets for Overdraft and Overnight Loans

1. The collateral assets for overdrafts and overnight loans of banks include:

a) Treasury bills;

b) Treasury bills of the State Bank;

c) Other negotiable instruments as prescribed by the Governor of the State Bank of Vietnam for each period.

2. Acceptance conditions for collateral assets:

Negotiable instruments shall be accepted by the State Bank of Vietnam as collateral assets when they meet the following conditions:

a) Banks must be the beneficiaries (for registered negotiable instruments) or lawful holders (for bearer negotiable instruments);

b) Negotiable instruments pledged according to Clause 2 of this Article must have a remaining term of at least 10 days;

c) They must be tradable and payable to the State Bank of Vietnam as a third party in accordance with the law and the commitment of the beneficiary;

d) In cases where negotiable instruments are issued in the form of book entries, there must be confirmation and guarantee from the organization responsible for payment of such negotiable instruments that they will pay the State Bank of Vietnam when the banks owe but have not yet settled their debts.

3. The value of the pledged negotiable instruments is determined by discounting at the time of valuation by the Trading Center of the State Bank of Vietnam. The valuation formula for negotiable instruments is as follows:

Where:

- G: Value of the negotiable instrument at the time of valuation;

- GT: Value of the negotiable instrument at maturity:

+ For negotiable instruments issued at face value, GT is the amount payable upon maturity (including principal and interest);

+ For negotiable instruments issued at a discount, GT is the face value of the negotiable instrument;

- Ls: The discount rate applied for valuation is the winning bid rate for treasury bills, central bank bills, and other negotiable instruments at the most recent trading session before the valuation date (as a percentage per annum) determined by the Trading Center of the State Bank of Vietnam depending on the type of negotiable instrument.

- n: Remaining term of the negotiable instrument.

4. If the value of the pledged negotiable instruments at the Trading Center of the State Bank of Vietnam is lower than the actual overdraft amount, the banks must supplement short-term pledged negotiable instruments to ensure that the value of the pledged negotiable instruments is at least 105% of the actual overdraft amount.

Article 6: Overdraft Limit and Overnight Loan Amount

1- The overdraft amount equals the actual shortfall in settlement funds in inter-bank electronic payment transactions, but the total overdraft amount shall not exceed 95% of the value of collateral securities.

2- The overnight loan amount equals the actual overdraft balance at the end of the business day, but shall not exceed 95% of the value of collateral securities.

Article 7: Interest Rate for Overnight Loans

The interest rate for overnight loans is set by the State Bank of Vietnam in accordance with monetary policy objectives during each period.

Article 8: Procedures for Overdraft and Overnight Loans

1- Overdraft Procedure

When a bank lacks funds in its settlement account and cannot replenish funds from its own sources or through money market transactions, the inter-bank electronic payment system automatically increases the maximum amount by 95% of the value of collateral assets in the bank's settlement account to execute payment orders. Once the bank's settlement account is replenished, the payment system automatically deducts the overdraft amount.

2- Overnight Loan Procedure

a) At the end of the business day, if the balance in the settlement account is insufficient to settle the overdraft amount, the inter-bank electronic payment system automatically transfers the unsettled overdraft amount to an overnight loan and the bank must bear the overnight interest.

b) On the following business day, the bank must repay the principal and interest of the overnight loan to the State Bank of Vietnam's Trading Center. If the bank has not fully repaid the overnight loan, the remaining loan amount will be converted into an overdraft amount for that business day.

Article 9: Handling Cases Where Banks Cannot Repay Overnight Loans

In case a bank fails to repay the full amount of the overnight loan within two business days from the date of issuance, the State Bank of Vietnam will notify the bank to repay the debt. If the bank still fails to fully repay the overnight loan within two business days from the notification date, the State Bank of Vietnam will process the collateral securities to recover the overnight loan and consider removing the bank from the inter-bank electronic payment system.

Article 10: Responsibilities of Banks

1- Banks have the obligation to repay the principal and interest of overnight loans on time.

2- Supplement short-term collateral securities to ensure that the value of collateral securities is at least 105% of the actual overdraft amount.

Article 11: Rights and Responsibilities of the State Bank of Vietnam

1- Refuse overdraft and overnight loans to banks that do not meet the conditions stipulated in Article 4 of this Regulation.

2- Hold and preserve the collateral securities of participating banks.

3- Process collateral securities to recover debts if banks fail to repay overnight loans.

Article 12: Implementation Organization

Participating banks in the inter-bank electronic payment system implement this Regulation. Amendments and supplements to this Regulation are decided by the Governor of the State Bank of Vietnam.