Decision No. 18/1998/QĐ-NHNN7 Issuing regulations on foreign currency status for credit institutions permitted to engage in foreign exchange transactions.

Pursuant to …;

Issuing Regulations on the Foreign Currency Status for Credit Institutions Authorized to Conduct Foreign Exchange Business
engaged in foreign exchange business

GOVERNOR OF THE STATE BANK OF VIETNAM

Pursuant to the State Bank Law promulgated by Decree No. 37-LCT/HĐNN8 dated May 24, 1990 of the Chairman of the National Assembly of the Socialist Republic of Vietnam;

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

At the proposal of the Director of the Foreign Exchange Management Department;

DECISION:

Article 1: Now hereby issuing with this Decision the Regulations on the Foreign Currency Status for Credit Institutions Authorized to Conduct Foreign Exchange Business.

Article 2: This Decision shall take effect fifteen days from the date of signature and shall replace Decision No. 204/QĐ-NH7 dated September 20, 1994 of the Governor of the State Bank promulgating the temporary regulations on the foreign currency status for credit institutions authorized to conduct foreign exchange business.

Article 3: The Director of the Governor's Office, Heads of Departments under the State Bank, Inspectors of the State Bank, Heads of Departments and Bureaus related to the State Bank, Directors of Branches of the State Bank in provinces and cities, General Managers (Managers) of credit institutions authorized to conduct foreign exchange business are responsible for implementing this Decision./.

REGULATIONS

REGULATIONS ON FOREIGN CURRENCY STATUS FOR CREDIT INSTITUTIONS
AUTHORIZED TO CONDUCT FOREIGN EXCHANGE BUSINESS

(Issued together with Decision No. 18/1998/QĐ-NHNN7
dated January 10, 1998 of the Governor of the State Bank)

This technical regulation sets out technical requirements, testing methods, sampling procedures; management requirements; responsibilities of organizations and individuals producing, trading, and importing cigarettes.

Article 1: Purpose

These Regulations on foreign currency status aim to ensure safety in foreign currency trading activities of credit institutions involved in foreign currency operations, contributing to gradually perfecting the foreign exchange market and integrating the foreign currency trading activities of credit institutions into the international financial market.

Article 2: Applicability:

The Regulations on foreign currency status apply to credit institutions authorized to conduct foreign exchange business including State-owned Commercial Banks, Investment and Development Banks, Joint Stock Commercial Banks, Joint Venture Banks, and Financial Companies.

Branches of foreign banks operating in Vietnam are not within the scope of these Regulations.

Article 3: In these Regulations, the following terms shall be understood as follows:

1. "Foreign currency" means currencies used by credit institutions in their foreign exchange business, excluding the Vietnamese Dong.

2. "Foreign currency status" of each foreign currency is the difference between total assets on the asset side and total liabilities on the liability side of that foreign currency, including corresponding off-balance-sheet accounts.

If total assets on the asset side exceed total liabilities on the liability side, a surplus foreign currency status will arise.

If total assets on the asset side are less than total liabilities on the liability side, a deficit foreign currency status will arise.

If total assets on the asset side equal total liabilities on the liability side, the foreign currency status is balanced.

3. "Total surplus foreign currency status" is the sum of surplus foreign currency statuses of foreign currencies with surplus status. "Total deficit foreign currency status" is the sum of deficit foreign currency statuses of foreign currencies with deficit status.

4. "End-of-day foreign currency status" is the foreign currency status at the closing time of the trading day.

5. "Total end-of-day foreign currency status" is the total foreign currency status at the closing time of the trading day.

6. "Foreign currency status limit" is the maximum surplus or deficit foreign currency status that credit institutions are allowed to maintain.

Article 4: Transactions generating foreign currency status include spot and forward foreign exchange transactions.

II. SPECIFIC PROVISIONS

Article 5: Credit institutions authorized to conduct foreign exchange business (excluding branches of foreign banks) must comply with the following foreign currency status limits:

1. Total surplus foreign currency status at the end of the day may not exceed 30% of the credit institution's own capital.

2. Total deficit foreign currency status at the end of the day may not exceed 30% of the credit institution's own capital.

3. The surplus or deficit status of the US dollar at the end of the day for credit institutions may not exceed 15% of the credit institution's own capital.

Article 6: Credit institutions must purchase or sell foreign currencies to ensure that the foreign currency status at the end of the day remains within the limits set forth in Article 5 of these Regulations.

Article 7: Own capital used in calculating foreign currency status shall be calculated according to the current regulations of the State Bank.

Article 8: Principles for calculating foreign currency status:

1. Principle for calculating the status of each foreign currency: subtract total liabilities of a foreign currency from its total assets, including corresponding off-balance-sheet accounts and forward foreign exchange transactions.

2. Principle for calculating total foreign currency status: convert the status of each foreign currency into Vietnamese Dong. Then, sum up all surplus foreign currency statuses to calculate total surplus foreign currency status, and sum up all deficit foreign currency statuses to calculate total deficit foreign currency status. Calculate the percentage of each total foreign currency status relative to own capital.

3. The exchange rate for calculating total foreign currency status shall be the spot transaction rate at the end of the day of the credit institution.

III. REPORTING REGIME

Article 9: Each day before 10 AM, credit institutions authorized to conduct foreign exchange business must submit a report on the previous day's foreign exchange buying and selling volume to the State Bank (Department of Foreign Exchange Management) using the attached sales and purchase report form (attached to these Regulations).

Monthly, on the 15th and last day of the month, the General Manager (Manager) of credit institutions authorized to conduct foreign exchange business (excluding branches of foreign banks) must report the foreign currency status at the reporting point of the entire system to the Central Bank (Department of Foreign Exchange Management) using the attached form. The report must be submitted no later than three days after the reporting date.

IV. HANDLING OF VIOLATIONS

Article 10: Violations of reporting procedures will be handled either by law or through the following measures:

1. Warning for late submission of reports.

2. Suspension of part or all foreign exchange buying and selling activities for frequent late submissions or failure to submit reports.

Article 11: Violations of foreign currency status limits will be handled either by law or through the following measures:

1. Warning for the first violation, and the credit institution must buy or sell foreign currencies on the next working day to bring the foreign currency status back within the permitted limits.

2. Suspend partially or entirely the foreign currency trading activities for cases of violation for the second time until the Credit Institution brings its foreign currency status back to the permissible limit.

3. The third violation will result in the revocation of the license for foreign currency business operations.

V. IMPLEMENTATION

Article 12: The Director of the Foreign Exchange Management Department shall be responsible for coordinating with Departments, Bureaus, and Branches of the State Bank related to disseminating, organizing the implementation of this Regulation. Monthly, they shall compile and report to the Governor of the State Bank on the situation of foreign currency business operations of the entire system of licensed Credit Institutions, while sending it to relevant Departments, Bureaus, and Branches of the State Bank for coordination in directing and supervising.

Article 13: The Inspector General of the State Bank shall be responsible for inspecting and supervising the implementation of reporting systems, compliance with regulations on foreign currency status limits, and foreign currency business operations of licensed Credit Institutions.

Article 14: The Directors of State Bank Branches in provinces and cities shall be responsible for inspecting and supervising the implementation of reporting systems, compliance with regulations on foreign currency status limits, and foreign currency business operations of licensed Credit Institutions within their jurisdiction.

Article 15: The General Directors (Directors) of Credit Institutions licensed to conduct foreign currency business operations as mentioned in Article 2 shall be responsible for implementing the provisions of this regulation.

Article 16: Any amendments or supplements to the provisions of this Regulation shall be decided by the Governor of the State Bank.

BANK...

FOREIGN EXCHANGE STATUS REPORT

Legal Representative of

Base Currency Unit 1000

Prepared Control Statement Date... month... year...

Head of the unit

(Signature, stamp)

Note:

1-Credit Institutions convert VND amounts to calculate percentages relative to net equity (r).

Conversion rate based on the transaction exchange rate at the time of report preparation.

2. For accounts that have both surplus and deficit:

Surplus difference reported on the liability side

Deficit difference reported on the asset side.

Example:

For accounts 272, 273, 279..., the liability side of the report will take the surplus difference and vice versa.

3. For banks that record in foreign currency, the foreign currency column in the report will be replaced by VND (meaning VND is considered as foreign currency). /