Decision No. 1287/2002/QD-NHNN on Issuing Financial Instruments by Credit Institutions for Domestic Fundraising

DECISION OF THE GOVERNOR OF THE STATE BANK OF VIETNAM

On Issuing the Regulation on Issuance of Valuable Securities by Credit Institutions for Domestic Fundraising

negotiable instruments of credit institutions for domestic capital raising

 

GOVERNOR OF THE STATE BANK OF VIETNAM

Pursuant to the Law on the State Bank of Vietnam No. 01/1997/QH10 and the Law on Credit Institutions No. 02/1997/QH10 dated December 12, 1997;

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

Pursuant to the proposal of the Director of the Monetary Policy Department,

 

DECISION:

Article 1.The accompanying Decision hereby promulgates the Regulation on Issuance of Valuable Securities by Credit Institutions for Domestic Fundraising.

Article 2.This Decision shall take effect from January 1, 2003 and replace the following Decisions of the Governor of the State Bank of Vietnam:

Decision No. 220/QĐ-NH dated November 27, 1991 on allowing foreign commercial banks to issue bank bills with specific purposes; Decision No. 212/QĐ-NH1 dated September 22, 1994 on issuing the Rules for Issuance of Bank Bonds by Commercial Banks and Development Banks; Decision No. 07/QĐ-NH1 dated January 25, 1994 on allowing the Vietnam Commercial Joint Stock Bank to issue bank bills with specific purposes in foreign currency; Decision No. 115/QĐ-NH1 dated June 1, 1994 on allowing the Vietnam Industrial and Commercial Bank to issue bank bills with specific purposes in foreign currency; Decision No. 214/QĐ-NH1 dated September 23, 1994 on allowing the Vietnam Commercial Joint Stock Bank to issue bank bonds; Decision No. 243/QĐ-NH1 dated September 30, 1994 on allowing the Vietnam Industrial and Commercial Bank to issue bank bonds.

Article 3.Heads of units under the State Bank; Branch Governors of the State Bank in provinces and cities; Chairmen of Management Boards, General Directors (Directors) of credit institutions are responsible for implementing this Decision./.

 

REGULATION ON THE ISSUANCE OF VALUABLE SECURITIES

BY CREDIT INSTITUTIONS FOR DOMESTIC FUNDRAISING

(issued together with Decision No. 1287/2002/QĐ-NHNN

dated November 22, 2002 of the Governor of the State Bank of Vietnam).

 

PART I

GENERAL PROVISIONS

Article 1.Scope of Application

Article 1. This Regulation stipulates the issuance of valuable securities by credit institutions to raise funds from organizations and individuals within the territory of Vietnam.

Article 2. The issuance, listing, and trading of valuable securities of credit institutions at the stock market shall be carried out in accordance with laws on securities and the stock market.

Article 2.Issuer of valuable securities.

Clause 1. Credit institutions issuing valuable securities are those established and operating under the Law on Credit Institutions and meeting the conditions prescribed in this Regulation, including:

State-owned credit institutions.

State and people-owned joint-stock credit institutions.

Central People's Credit Fund.

Joint venture credit institutions.

Foreign credit institutions permitted to operate in Vietnam.

Clause 2. Leasing companies may only issue long-term valuable securities with a term exceeding 12 months.

Article 3.Purchaser of valuable securities.

The purchaser of valuable securities includes:

Vietnamese organizations and individuals.

Organizations and individuals from abroad residing and legally operating in Vietnam.

Article 4. Interpretation of terms.

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

Point 1. Valuable securities are certificates issued by credit institutions to raise funds, confirming the obligation to repay a certain amount of money within a specified period, interest payment conditions, and other commitments between the credit institution and the purchaser.

Point 2. Short-term valuable securities are valuable securities with a term of less than 12 months, including bank bills, short-term deposit certificates, discount bills, and other short-term valuable securities.

Point 3. Long-term valuable securities are valuable securities with a term of 12 months or more, including bonds, long-term deposit certificates, and other long-term valuable securities.

Point 4. Registered valuable securities are valuable securities issued in the form of certificates or book entries that record the name of the owner. Credit institutions issuing registered valuable securities must maintain a register of ownership rights and update it when customers request to transfer ownership rights.

Point 5. Unregistered valuable securities are valuable securities issued in the form of certificates without recording the name of the owner. Unregistered valuable securities belong to the person holding the valuable security.

Point 6. Face value is the principal amount printed or recorded on the valuable security issued in the form of a certificate or recorded on the Ownership Certificate for valuable securities issued in the form of book entries.

Point 7. Total face value is the sum of the face values of all valuable securities issued by a credit institution in a year or during a single issuance.

Point 8. Term of valuable securities is the period from the date the credit institution accepts the debt until the final repayment date.

Point 9. Issuance period is the period from the start date of issuance to the end date of a single issuance.

Point 10. Fixed interest rate is an interest rate that does not change throughout the term of the valuable security.

Point 11. Adjustable periodic interest rate is an interest rate that changes periodically according to the market, agreed upon by the credit institution and the purchaser at the time of issuance.

Point 12. Prepaid interest is the sale of valuable securities below face value, with the purchaser receiving the face value amount at maturity.

Point 13. One-time interest payment at maturity is the payment of interest once at maturity along with the principal (face value).

Point 14. Periodic interest payment is the payment of interest based on a periodic interest payment certificate every six months or annually for long-term valuable securities.

Article 5.Form of issuance.

Credit institutions issue valuable securities in the form of certificates and book entries.

Point 1. The registered certificate form applies to individual purchasers. The unregistered certificate form applies to both individual and organizational purchasers.

Point 2. The book entry form applies to organizational purchasers who have accounts with the issuing credit institution. When issuing in the form of book entries, the credit institution issues an ownership certificate for the valuable security to the purchaser.

Article 6.Form and elements of valuable securities.

Point 1. Valuable securities issued in the form of certificates must include the following elements: Name of the issuing credit institution.

Name of the valuable security (bank bill, discount bill, short-term deposit certificate, long-term deposit certificate, bond...).

Face value.

Term.

Issue date.

Due date.

Interest rate; method of interest payment; interest payment date and location.

Redemption method.

Place of payment for the principal of negotiable instruments.

Name of the buyer of the negotiable instrument, the ID card number of the individualbuyer, address of the buyer of the negotiable instrument (if it is a registerednegotiable instrument); or indicate that it is an unregistered negotiableinstrument.

Other elements such as: symbol, issuance series number, signature of the GeneralDirector or authorized representative, signature of the accountant and cashierof the issuing credit organization.

Conditions and terms regarding the transfer, discounting, pledge of negotiableinstruments at the issuing credit organization; handling of risk cases (damage,tear, loss...); cases not eligible for payment.

2.In addition to the factors prescribed in Clause 1 of this Article, the creditorganization may specify additional contents of notes and instructions issued bythe credit organization.

3.For negotiable instruments issued in the form of book entries, the factorsprescribed in Clause 1 of this Article must be recorded in the Certificate ofOwnership of Negotiable Instruments for the buyer, except for the factorsregarding the ID card number, symbol, issuance series number.

4.For negotiable instruments paying interest periodically, the interest collectionvoucher accompanying the negotiable instrument must include details related tothe negotiable instrument (series number, face value), interest rate, amount tobe collected, interest collection period.

5.Negotiable instruments issued in the form of certificates must be designed andprinted to ensure high anti-counterfeiting capability.

Article 7.Currency of issue and payment.

1.Negotiable instruments are issued in Vietnamese Dong or foreign currency.

2.The issuance, payment, and transfer of negotiable instruments in foreigncurrency must comply with the regulations on foreign exchange management of theSocialist Republic of Vietnam.

Article 8. Methods of issuance.

Credit organizations implement the issuance of negotiable instruments through thefollowing methods:

1.Direct issuance of negotiable instruments.

2.Issuance through credit organizations acting as agents or entrusted to issuenegetiable instruments.

Article 9.Issuance period.

The issuance period of one issuance round shall not exceed 60 days, includingweekends and holidays as prescribed by law.

Credit organizations may only issue beyond this period upon approval of theState Bank of Vietnam.

Article 10.Interest rate.

The interest rate of negotiable instruments issued by credit organizations shallbe set in accordance with market interest rates, ensuring business efficiency andsafe operation of the credit organization.

Article 11. Principal and interest payment.

1.The credit organization pays the principal to the buyer of the negotiableinstrument when the negotiable instrument reaches its maturity date. The creditorganization may pay before maturity if there is an agreement with the buyer.

2.The credit organization agrees to pay interest at a fixed rate or an adjustablerate.

3.The credit organization implements interest payment either in advance, oncereaching maturity, or periodically.

Article 12.Conditions for considering issuance permission.

Credit organizations are considered for permission to issue negotiableinstruments when they meet all of the following conditions:

1.Compliance with restrictions to ensure safety in operations as prescribed bythe Law on Credit Organizations and guidelines of the State Bank of Vietnam.

2.Having sound financial status as assessed by the Banking Inspectorate.

Article 13. Authority to approve issuance requests.

1.The Governor of the State Bank of Vietnam approves issuance requests for short-term and long-term negotiable instruments from state-owned creditorganizations, joint venture credit organizations, foreign creditorganizations, Central People's Credit Funds, and long-term issuance requestsfrom state-owned and people's joint stock credit organizations.

2.The Governor of the State Bank of Vietnam delegates authority to the Directorsof Provincial Branches of the State Bank of Vietnam to approve issuancerequests for short-term negotiable instruments from state-owned and people'sjoint stock credit organizations headquartered in their respective provinces.

3.Within fifteen working days from the date of receipt of the complete issuancerequest dossier from the credit organization, the State Bank of Vietnam shallissue a decision to approve or reject the issuance request of the creditorganization.

Article 14. Submission of issuance request dossier.

1.State-owned credit organizations, joint venture credit organizations, foreigncredit organizations, Central People's Credit Funds submit short-term andlong-term issuance request dossiers to the Central State Bank of Vietnam.

2.State-owned and people's joint stock credit organizations submit long-termissuance request dossiers to the Central State Bank of Vietnam, and short-termissuance request dossiers to the provincial branch of the State Bank of Vietnamin the province where their headquarters are located.

Article 15.Transfer of negotiable instruments.

1.Negotiable instruments can be transferred through purchase, sale, gift,exchange, and inheritance according to the provisions of the law.

2.Transfer procedures:

a)For registered negotiable instruments: The owner of the registered negotiableinstrument writes the name, address, and ID card number of the transferee on thefront side of the negotiable instrument and then transfers it to the transferee.

The transferee goes to the issuing credit organization to request a change ofregistered ownership.

b)For bearer negotiable instruments: Bearer negotiable instruments can be freelytransferred.

Article 16.Handling of risk cases and non-payment cases.

Handling of risk cases (damage, tear, loss...) and non-payment cases fornegotiable instruments issued by credit organizations shall be in accordance withlegal provisions and ensure the rights of the negotiable instrument holder.

Article 17.Storage, delivery, transportation of negotiable instruments.

The storage, delivery, and transportation of negotiable instruments by creditorganizations shall be carried out in accordance with current government andState Bank regulations.

PART II

SHORT-TERM NEGOTIABLE INSTRUMENTS ISSUANCE

Article 18.Face Value.

The face value of short-term negotiable instruments is printed or agreed upon bythe issuing credit organization with the buyer.

Article 19. Issuance Request Dossier.

The issuance request dossier includes:

1.Request for issuance of short-term negotiable instruments in the fiscal year.

2. A plan for issuing short-term negotiable instruments specifying the purposeof issuance, usage plan, total balance of short-term negotiable instruments atthe beginning of the fiscal year, total face value of short-term negotiableinstruments issued during the fiscal year, number of issues and expectedissuance times, name of negotiable instrument to be issued, currency ofissuance.

3. Financial reports of the two most recent consecutive years and up to the timeof the issuance request submission. Credit institutions with less than twoyears of operation must submit financial reports from their start of operationto the time of the issuance request submission.

4. Business plan for the fiscal year.

5. Charter and Operating License (for credit institutions issuing for the firsttime).

6. Changes in organizational structure and other changes (if any).

Article 20.Review and approval form.

On the basis of reviewing the issuance application dossier and issuanceconditions, the Governor of the State Bank or the Director of the State BankBranch in provinces and cities authorized to issue decisions to approve or notapprove the annual plan for issuing short-term negotiable instruments of creditinstitutions.

Article 21.Issuer organization.

1. Credit institutions proactively organize issuance sessions within the scopeof the approved annual issuance plan. Credit institutions may only exceed theapproved annual issuance plan with additional written approval from the StateBank that issued the original approval for issuance.

The supplementary approval application dossier includes: the issuanceapplication for additional short-term negotiable instruments, adjusted issuancetargets for short-term negotiable instruments, and adjusted business plan forthe fiscal year.

2. At least twenty working days before the issuance date, credit institutionsmust submit the issuance announcement of the planned issuance session to theState Bank that issued the approval for issuance. If the State Bank does notprovide written comments within ten working days prior to the planned issuancedate, the credit institution may proceed with the issuance of negotiableinstruments.

3. The issuance announcement includes the following elements:

Name of the issuing credit institution.

Name of the negotiable instrument (draft, bill, short-term deposit certificate...).

Total face value of the issuance session.

Term of the negotiable instrument; issuance form.

Issue date.

Due date.

Interest rate; method of interest payment; interest payment date and location.

Redemption method.

Place of payment for the principal of negotiable instruments.

Results of previous short-term negotiable instrument issuances in the fiscalyear (if applicable).

Other contents of the issuance announcement by the issuing credit institution.

Article 22. Reporting.

Monthly, credit institutions must report in writing on the results of short-term negotiable instrument issuance no later than the tenth day of the following month to the State Bank thatissued the approval decision.

CHAPTER III

ISSUE OF LONG-TERM NEGOTIABLE INSTRUMENTS

Article 23Face Value.

1.The face value of long-term negotiable instruments denominated in VietnameseDong issued in the form of certificates shall be a minimum of one million Dongand a maximum of one billion Dong. Face values greater than the minimum facevalue must be multiples of the minimum face value.

2. The face value of long-term negotiable instruments denominated in foreigncurrency issued in the form of certificates shall be a minimum of one hundred USdollars or equivalent foreign currency and a maximum of one hundred thousandUS dollars or equivalent foreign currency. Face values greater than the minimumface value must be multiples of the minimum face value.may be in US dollars or other foreign currency equivalent. Denominations larger than the minimum denomination must be multiples of the minimum denomination.

3. The face value of long-term negotiable instruments in the form of bondsmust be printed on the negotiable instrument.

4. The face value of long-term negotiable instruments in the form of long-termdeposit certificates must be printed on the certificate or agreed upon by theissuing credit institution and the buyer.

5. The face value of long-term negotiable instruments issued in the form ofbook-entry records must be agreed upon by the issuing credit institution andthe buyer.

Article 24.The issuance date and maturity payment date of long-term negotiable instrumentsare the same for all bonds issued in the same issuance session.

Long-term negotiable instruments in the form of bonds issued in the same sessionmust have the same issuance date and maturity payment date.

Article 25. Issuance application dossier for each issuance session.

For each issuance session, credit institutions must submit to the State Bank adossier requesting the issuance of long-term negotiable instruments. Theissuance dossier includes: issuance documentation includes:

1. Request for issuance of long-term negotiable instruments.

2. Issuance plan for long-term negotiable instruments, specifying the purposeof issuance, usage plan, total face value issued, face value, name ofnegotiable instrument, term, interest rate, issuance scope, method, locationfor principal and interest repayment; conditions and terms regarding the rightsand obligations of the issuing credit institution and the buyer.

The issuance plan for long-term negotiable instruments must be approved by theBoard of Directors.

3.Financial statements of the two most recent consecutive years and up to the date of the issuance application submission. Credit institutions with less than two years of operation shall submit financial statements from the start of operations to the date of the issuance application submission. Financial statements must be audited by an auditing organization recognized by the State Bank or confirmed by the banking inspectorate.

4. Business plan for the fiscal year.

5. Sample of the long-term negotiable instruments to be issued.

6. Charter and Operating License (for credit institutions issuing for the firsttime).

7. Changes in organizational structure and other changes (if any).

Article 26.Review and approval form.

On the basis of reviewing the issuance application dossier for each issuanceand issuance conditions, the Governor of the State Bank issues a decision toapprove or not approve each issuance session of long-term negotiableinstruments of credit institutions.

Article 27.Credit organizations on Issuer.

1. After receiving written approval from the Governor of the State Bank, creditinstitutions must publish the issuance announcement of long-term negotiableinstruments on mass media for a minimum of five consecutive days beforeissuance.

2. The earliest issuance date of long-term negotiable instruments shall not belater than forty-five days from the date of approval by the Governor of theState Bank.

3. Credit institutions may only exceed the total face value already approved withadditional written approval from the Governor of the State Bank.

The supplementary approval application dossier includes: the issuanceapplication for additional long-term negotiable instruments, adjusted issuancetargets for long-term negotiable instruments, and adjusted business plan for thefiscal year.

Article 28. Reporting.

Within ten working days from the end of the issuance period, the credit institution shall report in writing on the results of issuing long-term securities to the State Bank of Vietnam (Department of Monetary Policy).

PART IV

RESPONSIBILITIES OF THE CREDIT INSTITUTION, UNITS UNDER THE STATE BANK OF VIETNAM AND PROVINCE/CITY BRANCHES OF THE STATE BANK OF VIETNAM

VIETNAM AND BRANCHES OF THE STATE BANK IN PROVINCES AND CITIES

Article 29Responsibilities of the credit institution.

1.Promulgating publicly the issuance of securities and organizing the issuance of securities in accordance with Article 21 and Article 27 of this Regulation.

2. Timely and fully paying principal and interest to the holder of securities.

3.Reporting the results of issuance in accordance with Article 22 and Article 28 of this Regulation.

Article 30.Responsibilities of the Province/City Branches of the State Bank of Vietnam.

1.Receiving applications for the issuance of short-term securities, announcing the issuance of short-term securities, and reporting the results of the issuance of short-term securities by state-owned joint-stock credit institutions and people's credit institutions within their jurisdiction.

2.Considering and deciding on applications for the issuance of short-term securities by state-owned joint-stock credit institutions and people's credit institutions within their jurisdiction.

3.Cooperating with the Department of Monetary Policy to consider and submit to the Governor for decision the issuance of long-term securities by state-owned joint-stock credit institutions and people's credit institutions within their jurisdiction.

4.At the latest by the 15th day of the following month, reporting to the State Bank of Vietnam (Department of Monetary Policy) on the results of the issuance of short-term securities by state-owned joint-stock credit institutions and people's credit institutions within their jurisdiction in the previous month.

Article 31.Responsibilities of units under the State Bank of Vietnam.

1.Department of Monetary Policy:

a)Receiving applications for the issuance of short-term and long-term securities, announcing the issuance of short-term securities, and reporting the results of the issuance of short-term and long-term securities by state-owned credit institutions, associated credit institutions, foreign credit institutions, and the Central People's Credit Fund.

b)Receiving applications for the issuance of long-term securities and reporting the results of the issuance of long-term securities by state-owned joint-stock credit institutions and people's credit institutions.

c)Leading and coordinating with relevant units to consider applications for the issuance of securities by credit institutions to submit to the Governor of the State Bank of Vietnam for decision.

d)Studying the issuance situation of securities by credit institutions to propose to the Governor of the State Bank of Vietnam to amend and supplement regulations on the issuance of securities by credit institutions.

2.Department of Banks and Non-Bank Financial Institutions.

Cooperating with the Department of Monetary Policy to consider and submit to the Governor for decision the issuance of securities by credit institutions.

3.Bank Inspection:

a)Cooperating and providing to the Department of Monetary Policy information on the operations of credit institutions through inspection and remote supervision processes to submit to the Governor of the State Bank of Vietnam for consideration and decision regarding the issuance of securities by credit institutions.

b)Inspecting and supervising the issuance of securities by credit institutions; handling according to authority and proposing the Governor of the State Bank of Vietnam to handle cases of violation of the provisions of this Decision.

4.Foreign Exchange Management Department:

Cooperating with the Department of Monetary Policy to consider and submit to the Governor for decision the issuance of securities denominated in foreign currency by credit institutions.

5.Accounting and Finance Department:

Guiding the accounting system and the accounting treatment of the issuance of short-term and long-term securities by credit institutions.

6.Issuance Operations and Treasury Department:

a)Advising credit institutions on the design and printing of securities to ensure anti-counterfeiting.

b)Organizing the design, printing of securities, and providing blank seals when requested by credit institutions. function to design, print negotiable instruments and provide blank seals when requested by credit institutions.

Article 32Handling violations.

Organizations and individuals violating the provisions of this Regulation shall be subject to administrative penalties in the field of monetary policy and banking activities or criminal liability depending on the nature and degree of the violation.

Article 33Amendments and supplements.

The amendment and supplementation of this Regulation shall be decided by the Governor of the State Bank of Vietnam./.