Circular No. 25/2021/TT-NHNN amending and supplementing certain Articles of Circular No. 01/2015/TT-NHNN dated January 6, 2015 on the operation of interest rate derivative products trading and supply by commercial banks and foreign bank branches.

CIRCULAR

Amending and supplementing some articles of Circular No. 01/2015/TT-NHNN dated January 6, 2015 on the operation of interest rate derivative products trading and supply by commercial banks and foreign bank branches.

06 January 2015 stipulating the activities of operating and supplying

interest rate derivative products by commercial banks,

branches of foreign banksi

Pursuant to the Law on the State Bank of Vietnam dated June 16, 2010;

BASED ON THE LAW ON CREDIT ORGANIZATIONS dated June 16, 2010 and the Law Amending and Supplementing Some Articles of the Law on Credit Organizations dated November 20, 2017;

Pursuant to Government Decree No. 16/2017/NĐ-CP dated February 17, 2017 on the functions, tasks, powers, and organizational structure of the State Bank of Vietnam;

Article 1.

The Governor of the State Bank of Vietnam hereby promulgates this Circular amending and supplementing some articles of Circular No. 01/2015/TT-NHNN dated January 6, 2015 on the operation of interest rate derivative products trading and supply by commercial banks and foreign bank branches.

Article 1. Amending and supplementing some articles of Circular No. 01/2015/TT-NHNN

1. Adding Point c to Clause 2 of Article 2 as follows:

"c) A foreign investor is an organization holding government bonds issued in Vietnamese Dong in the domestic market."

2. Amending and supplementing Clause 8 and adding Clauses 13, 14, 15, and 16 to Article 3 as follows:

a) Amending and supplementing Clause 8 as follows:

"8. Net profit or net loss of an interest rate derivative contract of a credit institution or foreign bank branch at a certain point in time is the net profit or net loss of all settled periods of the interest rate derivative contract up to that point."

b) Adding Clauses 13, 14, 15, and 16 to Article 3 as follows:

"13. The date of conclusion of an interest rate derivative contract is the day when all parties complete signing the interest rate derivative contract.

14. The effective date of an interest rate derivative contract according to the agreement of the parties is the day when the parties start implementing the interest rate derivative contract; the effective date of the interest rate derivative contract coincides with or is later than the date of conclusion of the interest rate derivative contract.

15. The performance period of an interest rate derivative contract is the period from the effective date of the interest rate derivative contract to the maturity date of the interest rate derivative contract. The performance period of the interest rate derivative contract is equal to or shorter than the remaining performance period of the underlying transaction.

16. Net settlement is the determination and payment of a net amount calculated based on the current market value or model price of the interest rate derivative contracts terminated at or before the agreed maturity date, after offsetting the amounts payable under the interest rate derivative contracts between the parties who concluded the contracts to determine a receivable or payable amount of one party on the maturity date or early termination date of the interest rate derivative contract."

3. Adding Clause 6 and Clause 7 to Article 4 as follows:

"6. In case the customer does not have or does not have sufficient foreign currency to fulfill the payment obligation arising from the implementation of the interest rate derivative contract, then the customer may purchase foreign currency from the same commercial bank or foreign bank branch trading and supplying interest rate derivative products or from another credit institution permitted to conduct foreign exchange operations. The purchase and sale of foreign currency shall be carried out in accordance with the regulations of the State Bank of Vietnam on guiding foreign exchange transactions on the foreign exchange market of credit institutions permitted to conduct foreign exchange operations; if the customer purchases foreign currency with a term, the term of this transaction shall be equal to or shorter than the remaining performance period of the interest rate derivative contract.

7. Commercial banks and foreign bank branches may agree on the net settlement of interest rate derivative contracts concluded with customers, related transactions conducted with other commercial banks or foreign bank branches or foreign financial organizations."

4. Adding Article 4a as follows:

"Article 4a. Trading and supplying interest rate derivative products through electronic means

1. Commercial banks and foreign bank branches trading and supplying interest rate derivative products through electronic means must establish a trading and supply process for interest rate derivative products through electronic means in compliance with this Circular, laws on anti-money laundering, laws on electronic transactions, and relevant laws, ensuring customer information security and safe operation of commercial banks and foreign bank branches.

2. Commercial banks and foreign bank branches must retain all information related to the trading and supply of interest rate derivative products through electronic means to serve inspection, reconciliation, dispute resolution, complaint handling, and providing information upon request from competent state management agencies."

5. Amending and supplementing Point b of Clause 2 and Point b of Clause 3 of Article 6 as follows:

a) Amending and supplementing point b Clause 2 as follows:

"b) Accrual Interest Rate Swap: This is a single-currency interest rate swap product where the commercial bank, foreign bank branch, and customer agree on the amount of interest received or paid, which is calculated based on interest rates accompanied by conditions based on exchange rate fluctuations, interest rate changes, commodity prices (excluding gold and goods prohibited from trade and import/export according to the law), and accumulated over agreed settlement periods on the nominal value."

b) Amend and supplement Point b of Clause 3 as follows:

"b) Accrual Cross Currency Swap: This is a swap product that exchanges interest rates between two currencies, where commercial banks, foreign bank branches, and customers agree on the amount of interest received or paid based on interest rates accompanied by conditions based on exchange rate fluctuations, interest rates, commodity prices (excluding gold and goods prohibited from trading or import/export according to the law) and accumulated over agreed payment periods on the nominal value of the principal; the exchange or non-exchange of the nominal principal value is agreed upon by both parties, and if there is an exchange of the initial nominal principal value or part thereof during or at the end of the period, it shall be applied according to the fixed exchange rate agreed upon in accordance with the State Bank of Vietnam's regulations on exchange rates at the time of signing the derivative interest rate contract."

6. Amend point b clause 1; supplement point d to clause 1; amend and supplement points a and b of clause 2 Article 7 as follows:

a) Amending and supplementing Point b Clause 1 as follows:

"b) Engaging in an underlying transaction that remains valid and in compliance with the law. For foreign investors, the underlying transaction is a bond investment transaction denominated in Vietnamese Dong issued in the domestic market;"

b) Supplement point d to clause 1 as follows:

"d) In cases where the customer receives foreign currency from interest generated in derivative interest rate transactions or from the exchange of the nominal principal value, such foreign currency may be used to settle obligations arising from the underlying transaction of the customer or the customer must sell this foreign currency to the commercial bank, foreign bank branch providing the derivative interest rate product;"

c) Amend and supplement points a and b of clause 2 as follows:

"a) The purpose of using derivative interest rate products is to mitigate interest rate risks associated with the underlying transaction or to mitigate interest rate risks for items on the balance sheet (including off-balance-sheet items) of credit institutions, foreign bank branches;

b) Engaging in an underlying transaction that remains valid and in compliance with the content and scope of activities stipulated by the Law on Credit Institutions and related laws. For credit institutions that are not commercial banks or foreign bank branches, in cases of mitigating interest rate risks for items on the balance sheet (including off-balance-sheet items), such credit institutions must have an interest rate risk mitigation plan approved by the competent authority of the institution;"

7. Amend and supplement point a of clause 3 Article 8 as follows:

"a) In cases where one or more offsetting transactions are carried out for a derivative interest rate contract provided by a commercial bank, foreign bank branch to a customer, the implementation period of each offsetting transaction and the remaining total value (in each currency) of the principal exchanges of the offsetting transactions after mutual netting shall not exceed the remaining term and the nominal principal value of the derivative interest rate contract;"

8. Amend and supplement point b of clause 1 Article 9 as follows:

"b) Mitigating interest rate risks for items on the balance sheet (including off-balance-sheet items) of commercial banks, foreign bank branches;"

9. Amend and supplement Article 12 as follows:

"Article 12. Limitations on the operation, supply, and use of derivative interest rate products

1. Commercial banks, foreign bank branches operating, supplying, and using derivative interest rate products must comply with the provisions of Circular No. 41/2016/TT-NHNN dated December 30, 2016 of the State Bank of Vietnam on capital adequacy ratios for banks, foreign bank branches, and amendments and supplements to this circular.

2. Commercial banks, foreign bank branches that have not yet implemented the provisions of Circular No. 41/2016/TT-NHNN dated December 30, 2016 of the State Bank of Vietnam on capital adequacy ratios for banks, foreign bank branches, and amendments and supplements to this circular shall control their net loss limit in operating, supplying, and using derivative interest rate products so that it does not exceed 5% of the charter capital or authorized capital of the commercial bank, foreign bank branch. If the net loss limit exceeds 5% of the charter capital or authorized capital, then the commercial bank, foreign bank branch shall cease entering into new derivative interest rate contracts, report to the State Bank of Vietnam (Bank Inspection and Supervision Department) on the reasons for the loss, measures, and timeframe for rectification.

When there is a need to enter into new derivative interest rate contracts, commercial banks, foreign bank branches must determine the net loss limit for operating, supplying, and using derivative interest rate products in accordance with the provisions of this circular. The net loss limit for using derivative interest rate products is determined by adding the total net profit and net loss of existing derivative interest rate contracts to the total net profit and net loss of settled derivative interest rate contracts within the fiscal year.

3. Credit institutions, foreign bank branches (excluding commercial banks, foreign bank branches specified in clauses 1 and 2 of this Article) may use derivative interest rate products if they meet one of the following criteria:

a) Having internal regulations on risk management, including interest rate risk limits; stop-loss limits; total risk position limits for derivative interest rate products;

b) Controlling the net loss limit for using derivative interest rate products in accordance with the provisions of clause 2 of this Article."

10. Amend and supplement the title and points b and d of clause 1 Article 14 as follows:

a) Amending and supplementing the title of Clause 1 as follows:

"1. A derivative interest rate contract shall be established in writing (including electronic contracts), in accordance with the provisions of this Circular and relevant laws, and must include at least the following contents:"

b) Amend and supplement point b and d of Clause 1 as follows:

"b) The underlying transaction, the principal amount of the underlying transaction, the interest rate applied to the underlying transaction, the schedule for repayment of the principal and interest of the underlying transaction (applicable to corporate customers and foreign investors);"

"d) The effective date of the derivative interest rate contract, the payment period, the payment date, the method of net interest payment; agreement on the net settlement of derivative interest rate contracts (if applicable);"

11. Amend and supplement Article 18 as follows:

"Article 18. Reporting"

Credit institutions and foreign bank branches shall implement reporting of derivative interest rate transactions in accordance with the statistical reporting regulations of the State Bank of Vietnam.

12. Amend and supplement Clause 4, Clause 7; and add Clause 9 to Article 19 as follows:

a) Amend and supplement Clause 4 as follows:

"4. Request corporate customers and foreign investors to provide information and documents proving their eligibility to use derivative interest rate products in accordance with this Circular and internal regulations of commercial banks and foreign bank branches regarding the operation and supply of derivative interest rate products."

b) Amend and supplement Clause 7 as follows:

"7. Implement reporting on business operations and supply of derivative interest rate products in accordance with the statistical reporting regulations of the State Bank of Vietnam."

c) Add Clause 9 as follows:

"9. Issue business procedures and supply of derivative interest rate products through electronic means, including measures to manage and control risks that may arise (if any)."

13. Amend and supplement Point a of Clause 2; amend and supplement Points a, b, c, đ of Clause 3 of Article 20 as follows:

a) Amend and supplement Point a Clause 2 as follows:

"a) Provide commercial banks and foreign bank branches with certified copies or extracts of the underlying transaction contract; other information and documents required by commercial banks and foreign bank branches supplying derivative interest rate products to prove eligibility to use such products in accordance with this Circular. Bear legal responsibility for the accuracy and truthfulness of the information and documents provided to commercial banks and foreign bank branches;"

b) Amend and supplement Points a, b, c, đ of Clause 3 as follows:

"a) Commit to commercial banks and foreign bank branches in the derivative interest rate contract or in a separate document that the product will be used for the purpose of hedging against or mitigating interest rate risk; be ready to provide certified copies or extracts of the underlying transaction contract or plans to hedge against or mitigate interest rate risk for items on the balance sheet (including off-balance-sheet items) upon request of the State Bank of Vietnam or competent authorities;"

b) Bear legal responsibility for the accuracy and truthfulness of the information and documents provided to commercial banks and foreign bank branches supplying derivative interest rate products;"

c) Develop and approve according to authority plans to hedge against or mitigate interest rate risk for items on the balance sheet (including off-balance-sheet items), including analysis of interest rate risks;"

"đ) Fulfill responsibilities as prescribed in Point b and c of Clause 2 of this Article."

Article 2. Replacing and abolishing certain terms, phrases, points, and clauses of Circular No. 01/2015/TT-NHNN

1. Replace the phrase "arising from the balance sheet" with the phrase "for items on the balance sheet (including off-balance-sheet items)" in Clause 5 of Article 3 and Clause 2 of Article 5.

2. Replace the term "legal entity" with the term "legal entity and foreign investors" in Clause 5 of Article 4, Clause 1 of Article 5, the title and Point a of Clause 1 of Article 7, and the title of Clause 2 of Article 20.

3. Replace the phrase "validity period" with the phrase "implementation period" in Clause 4 of Article 6.

4. Remove the phrase "provision for risk" from the name of Section 5.

5. Abolish Article 16, Form 01, and Form 02 issued together with Circular No. 01/2015/TT-NHNN.

This Circular takes effect from December 25, 2025/.

The Director of the Office, the Head of the Monetary Policy Department, the Heads of units under the State Bank of Vietnam, credit institutions, and foreign bank branches shall be responsible for organizing the implementation of this Circular.

Article 4. Implementation provisions

1. This Circular takes effect from February 14, 2022.

2. For interest rate derivative contracts signed before the date this Circular takes effect, commercial banks and foreign bank branches shall continue to implement the contents recorded in the interest rate derivative contracts in accordance with the laws in force at the time of signing such contracts or amend and supplement the interest rate derivative contracts in compliance with this Circular./.