Decision No. 52/1999/QĐ-NHNN on the reserve requirement ratio for credit institutions

 Pursuant to …;

Required Reserve Ratio for Credit Institutions

GOVERNOR OF THE STATE BANK OF VIETNAM

Pursuant to the Law on the State Bank of Vietnam No. 01/1997/QH10 and the Law on Credit Institutions No. 02/1997/QH10 dated December 12, 1997;

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

At the proposal of the Head of the Monetary Policy Department.

Pursuant to …;

Article 1. The required reserve ratio for credit institutions (including both VND and foreign currencies) is as follows:

1\. For demand deposits and time deposits with terms under 12 months of State-owned commercial banks, city joint-stock commercial banks, branches of foreign banks, joint venture banks, and finance companies: 7% of the total deposit balance.

2\. For demand deposits and time deposits with terms under 12 months of rural joint-stock commercial banks, cooperative banks, central people's credit funds, regional people's credit funds: 5% of the total deposit balance.

3- For time deposits with terms of 12 months or more: 0% of the total deposit balance.

4\. For deposits of credit institutions with a reserve requirement deposit balance below 500 million VND and deposits of grassroots people's credit funds, credit cooperatives, and microfinance banks, the required reserve ratio is 0%.

5\. In cases where credit institutions are permitted by the Governor of the State Bank of Vietnam to mobilize capital in physical gold and lend in physical gold, the required reserve ratio for such mobilized physical gold capital is 0%. In cases where credit institutions are permitted by the Governor of the State Bank of Vietnam to mobilize capital in physical gold but convert the mobilized physical gold into money for lending, the converted money must be subject to reserve requirements as prescribed for money reserves.

Details of the types of deposits specified in Article 11 of the Circular on Reserve Requirements issued together with Decision No.: 51/1999/QĐ-NHNN1 dated February 10, 1999 by the Governor of the State Bank of Vietnam.

Article 2. Required reserves in VND of credit institutions deposited in demand deposit accounts at the State Bank of Vietnam's Trading Department or at the State Bank of Vietnam's branch in the province or city where the credit institution's headquarters is located; Required reserves in foreign currencies of credit institutions deposited in demand deposit accounts at the State Bank of Vietnam's Trading Department.

Article 3. Deposits of credit institutions held at the State Bank of Vietnam within the scope of the mandatory reserve ratio prescribed shall be subject to an interest rate of 0%/month.

Article 4. The State Bank of Vietnam pays interest on excess required reserves of credit institutions (including both VND and foreign currencies) deposited in demand deposit accounts at the State Bank of Vietnam as follows:

1\. For excess required reserves in VND: The State Bank of Vietnam pays interest at the rate of interest on demand deposits in VND of credit institutions deposited at the State Bank of Vietnam, as stipulated by the Governor of the State Bank of Vietnam for each period.

2\. For excess required reserves in foreign currencies: The State Bank of Vietnam pays interest at the rate of interest on demand deposits in foreign currencies of credit institutions deposited at the State Bank of Vietnam, as stipulated by the Governor of the State Bank of Vietnam for each period.

Article 5. The State Bank of Vietnam imposes penalties on credit institutions for insufficient required reserves during the maintenance period specified in Article 14 of the Circular on Reserve Requirements as follows:

1\. For insufficient required reserves in VND during the "reserve maintenance period," the penalty rate is 150% of the rediscount rate published by the State Bank of Vietnam for each period, calculated on the shortfall for the entire "reserve maintenance period."

2\. For insufficient required reserves in foreign currencies during the "reserve maintenance period," the penalty rate is 150% of the ceiling lending rate in US dollars for economic organizations, as stipulated by the Governor of the State Bank of Vietnam for each period, calculated on the shortfall for the entire "reserve maintenance period."

Article 6. This Decision takes effect from March 1, 1999, and applies to the reserve maintenance period for March 1999.

This Decision replaces Decision No. 135/QĐ-NHNN1 dated April 11, 1998 of the Governor of the State Bank of Vietnam. Previous regulations that conflict with this Decision cease to be effective.

Article 7. The Head of the Office, the Chief Inspector of the State Bank of Vietnam, Heads of units under the State Bank of Vietnam, Governors of State Bank of Vietnam branches in provinces and cities, General Directors (Directors) of credit institutions are responsible for implementing this Decision.