Decision No. 260/QD-NH1 on the issuance of the "Regulation on Compulsory Reserves for Credit Institutions"

Pursuant to …;

REGARDING THE ISSUANCE OF THE "REGULATIONS ON COMPULSORY RESERVES FOR CREDIT ORGANIZATIONS"

GOVERNOR OF THE STATE BANK OF VIETNAM

Pursuant to the Law on Government Organization dated September 30, 1992;

Pursuant to the Ordinance on the State Bank of Vietnam and the Ordinance on Banks, Credit Cooperatives and Financial Companies promulgated by Decree No. 37/LCT-HĐNN8 and Decree No. 38/LCT-HĐNN8 dated May 24, 1990 of the Chairman of the National Council of the Socialist Republic of Vietnam;

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

At the proposal of the Director of the Economic Research Department;

DECISION:

Article 1: The attached regulations on compulsory reserves for credit organizations are hereby issued.

Article 2:This decision takes effect from the date of signing and replaces Decision No. 108/QĐ-NH5 dated June 9, 1992 of the Governor of the State Bank of Vietnam.

Article 3:The Heads of the Department of Financial Institutions, the Department of Accounting and Finance, and the Director of the State Bank of Vietnam's Trading Office shall guide the implementation of the compulsory reserve regulations issued under this decision.

Article 4:The Chief of the Governor's Office, the Chief Inspector, the Heads of units under the Central State Bank, the Directors of provincial and city branches of the State Bank, and the General Managers (Directors) of credit organizations shall be responsible for implementing this decision.

REGULATIONS

COMPULSORY RESERVES FOR CREDIT ORGANIZATIONS

(Issued together with Decision No. 260/QĐ-NH1

September 19, 1995 of the Governor of the State Bank of Vietnam)

PART I

GENERAL PROVISIONS

Article 1:

Credit organizations operating in Vietnam, including state-owned commercial banks, joint-stock commercial banks, joint venture banks, foreign bank branches operating in Vietnam, financial companies, credit cooperatives, and people's credit funds that mobilize deposits in Vietnamese dong and foreign currencies, must fulfill the provisions on compulsory reserves.

Article 2:

Foreign currency deposits serving as the basis for calculating compulsory reserves shall be convertible foreign currencies that can be converted into US dollars and compulsory reserves shall be held in US dollars.

Article 3:

The Trading Office of the State Bank of Vietnam and its branches (collectively referred to as the State Bank) are authorized to calculate and notify compulsory reserves to credit organizations.

Article 4:

The periodic determination of compulsory reserves refers to the period measured in days within each calculation cycle of compulsory reserves.

PART II

SPECIFIC PROVISIONS

Article 5:

Credit organizations (credit organizations) must maintain sufficient compulsory reserve amounts (compulsory reserves) according to the regulations of the State Bank at all times.

Article 6:

The provisions on the ratio, structure of compulsory reserves, and interest on compulsory reserves (the portion of compulsory reserves deposited in non-interest-bearing accounts at the State Bank) are determined specifically by the Governor of the State Bank based on monetary policy objectives and requirements in each period.

Article 7:

The amount of compulsory reserves for each period is calculated based on the compulsory reserve ratio prescribed by the Governor of the State Bank applied to the average balance of deposits of credit organizations in the previous period.

Article 8:

Compulsory reserves must be deposited in non-interest-bearing accounts opened at the Trading Office of the State Bank or at its branch where the credit organization has its main account. For foreign currency deposits, they must be deposited at the Trading Office of the State Bank.

Article 9:

During the periodic calculation of compulsory reserves, the State Bank bases its calculations on reports submitted by credit organizations:

9.1. Verify the data in the report, calculate the compulsory reserve amount to be implemented for that period, and notify the credit organization.

9.2. Compare the compulsory reserve amount to be implemented during the period with the total average balance on accounts included in the compulsory reserve structure for that period, and process according to Article 10 below.

Article 10:

The State Bank will handle as follows:

10.1. In cases where the total average balance on accounts included in the compulsory reserve structure of credit organizations is less than the compulsory reserve amount, the shortfall will be penalized according to the regime, while the credit organization must find sources to make up the compulsory reserve amount.

10.2. In cases where the total average balance on accounts included in the compulsory reserve structure of credit organizations exceeds the compulsory reserve amount, the State Bank will pay interest on the excess amount deposited in non-interest-bearing accounts at the State Bank according to the prescribed rate.

Article 11:

Reporting, summarizing, and analyzing compliance with compulsory reserves:

11.1. Before one day of the periodic calculation of compulsory reserves, credit organizations must submit their calculation of the compulsory reserve amount to the State Bank, along with the basis for the calculation and data from the previous period (according to the guidance model).

11.2. Within five days after the calculation period, the provincial and city branches of the State Bank and the Trading Office of the State Bank shall send reports to the Department of Financial Institutions of the State Bank of Vietnam; the Department of Financial Institutions shall compile the report for the Governor on the compliance with compulsory reserves by credit organizations, and simultaneously send it to the Department of Economic Research and Inspection of the State Bank.

Article 12:

Credit organizations have the right to appeal to the State Bank regarding decisions on handling non-compliance with compulsory reserves that are deemed unsatisfactory. During the unresolved period, credit organizations must still comply with the decisions of the State Bank.

Article 13:

Handling Violations:

Violations of these regulations shall be handled according to the penalty regulations for violations issued by the Governor of the State Bank.

CHAPTER III

FINAL PROVISIONS

Article 14:

Any amendments or supplements to the provisions of these regulations shall be decided by the Governor of the State Bank.