Circular No. 49/2018/TT-NHNN on term deposits

CIRCULAR

Regulations on Term Deposits

On the basis of Law on the State Bank of Vietnamam dated June 16, 2010;

On the basis of Law on Credit Institutions June 16, 2010 and Law Amending and Supplementing Certain Provisions of the Law on Credit Institutions November 20, 2017;

On the basis of Decree-Law on Foreign Exchange December 13, 2005 and Decree-Law Amending and Supplementing Certain Provisions of the Decree-Law on Foreign Exchange March 18, 2013;

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

At the proposal of the Director of the Foreign Exchange Management Department and the Director of the Monetary Policy Department;

The Governor of the State Bank of Vietnam hereby promulgates this Circular on term deposits.

Article 1. Scope of Regulation and Applicability

Article 1. This Circular stipulates term deposits between credit institutions, foreign bank branches (hereinafter referred to as credit institutions) and organizations, individuals.

Article 2. This Circular does not stipulate term deposits between credit institutions.

Article 3. Credit institutions receiving term deposits

Credit institutions receiving term deposits are credit institutions established and operating in accordance with the Law on Credit Institutions, including:

1. Commercial banks.

2. Cooperative banks.

6. Founding shareholders, founding members, and owners of credit institutions, parent banks of foreign bank branches.

4. Microfinance organizations.

5. People's Credit Funds.

6. Foreign bank branches.

Article 4. Subjects depositing term deposits

Subjects depositing term deposits (hereinafter referred to as customers) include:

1. Resident organizations and individuals.

2. Non-residents including:

a) Diplomatic and consular agencies, representative offices of international organizations in Vietnam; Representative offices and project offices of foreign organizations in Vietnam;

b) Vietnamese citizens who do not fall under the cases specified in point e and g Clause 2 Article 4 of the Decree-Law on foreign exchange (as amended and supplemented);

c) Foreign individuals permitted to reside in Vietnam for six months or more.

Article 4. Definitions

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

1. A term deposit is a sum of money deposited by a customer at a credit institution for a specific period agreed upon between the customer and the credit institution, with the principle of full repayment of principal and interest to the customer.

2. Joint term deposits are term deposits made by two or more customers.

3. Verification documents for personal information of Vietnamese citizens are Identity Cards or Citizen Identification Cards or Passports still valid or Birth Certificates of individuals under 14 years old.

4. Verification documents for personal information of resident individuals and non-resident foreign individuals are visas or other documents confirming the duration of their permission to reside in Vietnam issued by competent Vietnamese authorities still valid.

5. Verification documents for organizational information are Establishment Decisions or Operating Licenses or Business Registration Certificates or Business Operation Registration Certificates or other equivalent documents according to the provisions of the law.

Article 5. Principles for implementing term deposit transactions

1. Credit institutions shall accept term deposits within the scope of activities permitted by law and the establishment and operation licenses of credit institutions.

2. Customers can only deposit and withdraw term deposits through their own settlement accounts.

3. Customers must execute or have a legally authorized representative execute the deposit and withdrawal of term deposits in accordance with the guidance of the credit institution and the provisions of the law. Specifically, customers who are partially incapacitated or fully incapacitated according to the law or are under 15 years old must execute the deposit and withdrawal of term deposits through a legal representative; Individuals with difficulties in understanding and controlling their actions according to the law must execute the deposit and withdrawal of term deposits through a guardian (legal representatives and guardians are collectively referred to as legal representatives).

4. For joint term deposits, customers must deposit and withdraw term deposits through a common settlement account of all customers. Residents and non-residents may not make joint term deposits. Organizations and individuals may not make joint term deposits in foreign currency.

5. The deposit period is determined by agreement between the credit institution and the customer. For customers who are foreign organizations and individuals as non-residents, foreign individuals as residents, the deposit period cannot exceed the remaining validity period of the verification documents specified in Clause 4 and Clause 5 Article 4 of this Circular.

6. The currency for repayment of principal and interest of term deposits is the currency in which the customer deposited the funds.

Article 6. Time Deposit Agreement

1. The time deposit agreement between credit institutions and customers must be documented in writing, including at least the following contents:

a) Customer information:

(i) For individual customers: Full name, nationality, whether they are resident or non-resident individuals, number and date of issuance of personal identification documents and information of the legal representative in case of depositing through a legal representative;

(ii) For organizational customers: Name of organization, whether they are resident or non-resident organizations, number and date of issuance of organizational identification documents; Information about the legal representative of the organization including full name, number and date of issuance of personal identification documents;

(iii) For joint time deposits: Information of all joint owners of the time deposit;

b) Credit institution information: Name of credit institution; Full name and position of the legal representative of the credit institution conducting the time deposit transaction with the customer;

c) Amount, currency, deposit term, deposit date, maturity date;

d) Interest rate, interest payment method;

đ) Agreement on early withdrawal, extension of deposit term;

e) Information of the customer's settlement account used for depositing and receiving time deposit payments including: account holder's name, account number, name of the credit institution where the settlement account was opened;

g) Handling in cases where the customer's settlement account is frozen, closed, temporarily locked, and other changes to the status of the customer's settlement account;

h) Measures for customers to check their time deposits;

i) Handling in cases of damaged, torn, lost time deposit agreements;

k) Rights and obligations of customers, credit institutions;

l) Effectiveness of the agreement.

5. In cases of using standard contracts or general transaction terms in concluding consumer loan contracts, the finance company must perform:

3. The time deposit agreement specified in Clause 1 and 2 of this Article shall be established in the form of a specific time deposit agreement or a framework agreement and a specific time deposit agreement.

4. In cases where standard contracts or general terms and conditions are used in the time deposit agreement, credit institutions must perform the following:

a) Publicly display standard contracts and general terms and conditions for time deposits at legitimate transaction locations within the network of operations of the credit institution (hereinafter referred to as the transaction location) and post them on the credit institution's electronic information website (if available);

b) Provide complete information about standard contracts and general terms and conditions to customers before signing the time deposit transaction agreement and obtain confirmation from customers that they have been provided with complete information by the credit institution.

Article 7. Interest Rate

1. Credit institutions shall determine the interest rate for time deposits in accordance with the regulations of the State Bank of Vietnam on interest rates during each period.

2. The method of calculating interest on time deposits shall be carried out in accordance with the regulations of the State Bank of Vietnam.

3. The method of paying interest on time deposits shall be implemented according to the agreement between the credit institution and the customer.

Article 8. Measures for Checking Time Deposits and Notification Methods When There Are Changes to Time Deposits

1. Credit institutions must provide a means for customers to check their time deposits.

2. In addition to the measures stipulated in Clause 1 of this Article, credit institutions and customers may agree on other measures for customers to check their time deposits and methods for the credit institution to notify customers when there are changes to their time deposits.

Article 9. Extension of Deposit Term

1. The extension of the deposit term on the maturity date of a time deposit shall be carried out according to the agreement between the credit institution and the customer in the time deposit agreement.

2. For non-resident organizations and foreign individuals, and resident foreign individuals, the agreement on extending the deposit term must comply with the provisions of Clause 5, Article 5 of this Circular.

3. In cases where the conditions for extending the deposit term as stipulated in Clause 2 of this Article are not met, on the maturity date of the time deposit, the credit institution shall transfer the principal and interest (if any) to the customer's settlement account.

Article 10. Early Withdrawal of Time Deposits

1. The early withdrawal of time deposits shall be carried out according to the agreement between the credit institution and the customer in the time deposit agreement.

2. The interest rate applicable to early withdrawals of time deposits shall comply with the regulations of the State Bank of Vietnam regarding interest rates applicable to early withdrawals at the time of early withdrawal.

Article 11. Using Time Deposits as Collateral

Time deposits may be used as collateral in accordance with the guidelines of the credit institution in compliance with the regulations of the law on secured transactions.

Article 12. Transfer of Ownership of Time Deposits

The credit institution shall guide customers in carrying out transactions to transfer ownership of time deposits in compliance with relevant laws. Except in cases of inheritance, the transferee must comply with the provisions of Article 3 and Clause 5, Article 5 of this Circular.

Article 13. Receiving and Paying Out Time Deposits via Electronic Means

1. The credit institution shall guide procedures for receiving and paying out time deposits via electronic means through the customer's settlement account at the credit institution in compliance with this Circular, regulations on electronic transactions, anti-money laundering regulations, and other relevant laws, ensuring accurate and secure receipt and payment of time deposits for customers and safe operation for the credit institution.

2. The credit institution must ensure the retention of all information related to the receipt and payment of time deposits via electronic means to meet customer requirements for review, inspection, and dispute resolution.

Article 14. Handling Risk Cases

The credit institution shall guide the handling of cases involving damaged, torn, lost time deposit agreements, and other risk cases concerning time deposits in compliance with relevant laws, management models, characteristics, and business conditions of the credit institution, and ensuring the legitimate rights of customers.

Article 15. Internal Regulations

1. Based on the provisions of the Law on Credit Institutions, this Circular, and relevant laws, the credit institution shall issue internal regulations on time deposit transactions of the credit institution in compliance with management models, characteristics, and business conditions, ensuring accurate and secure time deposit transactions for customers and safe operation for the credit institution.

2. Internal regulations must clearly define the responsibilities and obligations of each department and individual involved in time deposit transactions and must include at least the following provisions:

a) Acceptance of time deposits, including at least the following contents: customer identification and updating of customer information, establishment and signing of time deposit agreements, acceptance of time deposits (including acceptance of time deposits through authorized representatives), accounting records of time deposit acceptance;

b) Payment of time deposits, including at least the following contents: verification of customer information, payment of principal and interest of time deposits (including payment of time deposits through authorized representatives, payment of time deposits under inheritance), accounting records of time deposit payments;

c) Handling of risk cases as stipulated in Article 14 of this Circular;

d) Use of time deposits as collateral;

đ) Transfer of ownership of time deposits;

e) Measures for customers to search for time deposits as stipulated in Article 8 of this Circular;

g) Receipt and payment of time deposits via electronic means (applicable to credit institutions that carry out receipt and payment of time deposits via electronic means).

Article 16. Public Display

1. Credit institutions must publicly display at their transaction locations and post on their electronic information websites (if available) the following minimum contents:

a) Deposit interest rates for term deposits; fees (if applicable);

b) Types of foreign currencies accepted for term deposits;

c) Procedures for receiving and paying out term deposits between credit institutions and customers;

d) Measures for customers to check their term deposits;

đ) Handling of cases where deposit agreements for term deposits are torn, damaged, or lost.

2. Credit institutions must comply with the contents publicly displayed according to the provisions of Clause 1 of this Article.

Article 17. Implementation Provisions

1. This Circular takes effect from July 5, 2019.

2. For term deposits executed before this Circular takes effect, credit institutions and customers shall continue to implement according to the signed agreements until the deposit period expires. In cases where the deposit agreement includes an extension of the deposit period but the subject and deposit period do not comply with the provisions of Article 3 and Clause 5 of Article 5 of this Circular, credit institutions and customers shall not extend the deposit period.

3. The Vietnam Bank for Social Policies may base its guidance on transactions of term deposits at the Vietnam Bank for Social Policies in accordance with the laws governing the organization and operation of the Vietnam Bank for Social Policies based on the provisions of this Circular.

4. This Circular amends and supplements some articles of Circular No. 16/2014/TT-NHNN dated August 1, 2014, issued by the Governor of the State Bank of Vietnam guiding the use of foreign currency accounts and Vietnamese dong accounts of residents and non-residents at authorized banks as follows:

a) Add the third bullet point under Point d, Clause 1, Article 3, and the third bullet point under Point d, Clause 1, Article 5 as follows:

"Receiving foreign currency transfers arising from transactions of principal and interest payments for foreign currency term deposits in compliance with the regulations on term deposits."

b) Add Point k under Clause 2, Article 4, Point k under Clause 2, Article 5, and Point i under Clause 2, Article 6 as follows:

"Transferring funds to open foreign currency term deposits at authorized credit institutions in compliance with the regulations on term deposits."

Article 18. Implementation Organization

The Director of the Office, Heads of the Department of Foreign Exchange Management, the Department of Monetary Policy, Heads of units under the State Bank of Vietnam, Governors of the State Bank of Vietnam branches in provinces and centrally administered cities, Chairpersons of the Board of Directors, Chairpersons of the Board of Members, and General Directors (Directors) of credit institutions and foreign bank branches are responsible for organizing the implementation of this Circular.