Decision No. 397/1997/QĐ-NHNN1 on the reserve requirement ratio and structure for banks and credit institutions

Pursuant to …;

Regarding the reserve requirement ratio and structure for banks and credit institutions

GOVERNOR OF THE STATE BANK OF VIETNAM

- Based on the Government Organization Law dated September 30, 1992;

- Based on the State Bank Ordinance and the Banking, Credit Cooperative, and Financial Company Ordinance promulgated by Decree No. 37/LCT-HĐNN8 and Decree No. 38/LCT-HĐNN8 dated May 24, 1990 of the Chairman of the Council of State of the Socialist Republic of Vietnam;

- Based on Decision No. 1073/QĐ-TTg dated November 17, 1999 of the Prime Minister concerning measures to address the aftermath of floods in the provinces and cities of Quảng Bình, Quảng Trị, Thừa Thiên Huế, Đà Nẵng, Quảng Nam, Quảng Ngãi, and Bình Định;

- At the proposal of the Director of the Economic Research Department,

Pursuant to …;

Article 1. The reserve requirement ratio for banks and credit institutions is 10% of the total amount of time deposits with terms under 24 months.

Details of the types of time deposits with terms under 24 months are specified in Article 11 of the Reserve Requirement Regulation issued together with Decision No. 396/1997/QĐ-NHNN1 dated December 1, 1997 of the Governor of the State Bank of Vietnam.

Article 2. The structure of mandatory reserve funds includes demand deposits at the State Bank of Vietnam and cash and banknotes still within their payment period kept in the vaults of banks and credit organizations:

2.1. The mandatory reserve funds of banks and credit institutions deposited in non-interest-bearing accounts at the State Bank must be at least 70% of the total mandatory reserve funds of banks and credit institutions.

2.2. Cash and negotiable instruments within their payment period held in the vaults of banks and credit institutions may be counted as mandatory reserves up to a maximum of 30% of the total mandatory reserve funds of banks and credit institutions.

In cases where the average actual cash and negotiable instruments within their payment period held in the vaults of banks and credit institutions exceed 30% of the mandatory reserve funds, only 30% will be counted. If the average actual cash and negotiable instruments within their payment period held in the vaults of banks and credit institutions are less than 30% of the mandatory reserve funds, the actual amount will be counted.

Article 3. The State Bank pays interest on the excess mandatory reserve funds of banks and credit institutions deposited in non-interest-bearing accounts at the State Bank at an annual rate of 0.2% per month.

The State Bank imposes penalties on banks and credit institutions for insufficient mandatory reserves at a rate of 200% of the rediscount rate published by the State Bank for each period, calculated on the shortfall for the entire maintenance period.

Article 4. Banks and credit institutions with deposit mobilization amounts below 500 million dong are not required to implement Decision No. 396/1997/QĐ-NHNN1 of the Governor of the State Bank regarding the issuance of the Reserve Requirement Regulation for banks and credit institutions.

Article 5. This Decision takes effect from January 1, 1998.

Article 6. The Chief of the Governor's Office, the Inspector General, Heads of Units under the Central State Bank, Branch Governors of the State Bank in Cities, and General Directors (Directors) of banks and credit institutions are responsible for implementing this Decision.