Decision No. 711/2001/QD-NHNN on Issuing the Rules for Opening Documentary Credit for Import of Goods with Deferred Payment

REGULATIONếd.1. Amount of taxable income in Vietnam: DECREE
Regarding the issuance of the Rules on Opening Letters of Credit for Import with Deferred Payment

 

GOVERNOR OF THE STATE BANK OF VIETNAM

WHEREAS EDUCATIONAccording to Article 01/1997/QH10 of the State Bank Law and the Law on Credit Organizations number 02/3/1997/QH10;

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

WHEREAS EDUCATIONPursuant to Decree No. 90/1998/NĐ-CP dated January 7, 1998 of the Government promulgating the Rules on Borrowing and Repaying Foreign Debts reason foreign borrowing and debt repayment;

At the proposal of Accounting The Director of the Foreign Exchange Management Department of the State Bank of Vietnam,

 

ON - Office of the President of the StateArticleMINISTER

Article 1. Attached herewith are the Rules on Opening Letters of Credit for Import with Deferred Payment.

Article 2. These Rules shall take effect fifteen days from the date of signature and replace Decision No. 207/QĐ-NH7 dated July 1, 1997 on the Rules on Opening Letters of Credit for Import with Deferred Payment.

Article 3. The Heads of the Office, Heads of Units under the State Bank, Chairmen of the Boards of Directors, and General Managers (Directors) of banks within their respective functions, duties, and authorities shall be responsible for implementing these Rules.

 

RULES ON OPENING LETTERS OF CREDIT FOR IMPORT WITH DEFERRED PAYMENT

(Attached herewith Decision No. 711/2001/QĐ-NHNN dated May 25, 2001)

 

Chapter I

GENERAL PROVISIONS

Article 1.Payment by deferred payment letter of credit (hereinafter referred to as "L/C deferred payment") is a documentary credit payment method with a term that banks implement to serve import transactions of enterprises.

Article 2.Banks implementing the L/C deferred payment business include state commercial banks, investment banks, development banks, joint-stock commercial banks, policy banks, joint venture banks, foreign bank branches in Vietnam, and other types of banks (hereinafter referred to as "Banks") established and operating under the Law on Credit Organizations and meeting the conditions stipulated in Article 6 of these Rules. The objects eligible for Banks to open L/C deferred payment are enterprises established and operating in Vietnam in accordance with Vietnamese laws and meeting the conditions stipulated in Articles 8 and 9 of these Rules. Enterprises include:

Article 3.State-owned enterprises, private enterprises, joint ventures with foreign countries, wholly foreign-owned enterprises, limited liability companies, joint stock companies, partnerships, foreign company branches, enterprises belonging to political and social organizations, and other enterprises under various economic sectors as prescribed by law (hereinafter referred to as enterprises).

The opening of L/C

Article 4.deferred payment for importing goods must ensure compliance with: 1. National import policies.

2. Current regulations of the State concerning borrowing and repaying foreign debts, guaranteeing borrowed funds, and the provisions of these Rules.

3. Uniform Customs and Practice for Documentary Credits (UCP) of the International Chamber of Commerce (ICC) (according to the version chosen by the Bank to implement) and consistent with these Rules.

The opening of L/C deferred payment for designated goods by the Prime Minister shall be carried out according to the instructions of the Prime Minister.

Article 5.CONDITIONS AND SCOPE OF IMPLEMENTATION OF THE L/C DEFERRED PAYMENT BUSINESS

 

Chapter II

To implement the L/C

Article 6.deferred payment business, the Bank must meet the following conditions: 1. Be authorized to provide international settlement services stipulate in writing the procedures, formalities, and necessary documents for implementing the L/C deferred payment business in accordance with the UCP and consistent with these Rules.

stipulate in writing the criteria for determining the financial capacity of the enterprise to settle the L/C within the commitment period.

2.There must not occur other diseases listed in the disease declaration list of theMinistry When opening an L/C deferred payment for an enterprise, the bank must ensure:

3. Having 1. The balance of L/C deferred payment opened by the bank for one customer (including the amount of deferred payment L/Cs already opened but not yet paid to beneficiaries) must remain within the limit of the total guarantee balance for one customer as stipulated in the Guarantee Rules.

Article 7.2. The balance of L/C deferred payment opened by the bank for all customers must remain within the total guarantee limit as stipulated by the State Bank in the Guarantee Rules.

The bank may consider opening a short-term L/C deferred payment (with a term up to one year) for an enterprise when the enterprise meets the following conditions: 1. Possess the financial capability to settle the L/C within the commitment period as stipulated by the bank.

Commit in writing to the bank about the schedule for transferring funds to the bank for the bank to pay abroad: This transfer schedule must be consistent with the bank's obligation to pay abroad for the L/C to be opened. 3. At the time of requesting to open the L/C: Not violate the commitment to transfer funds to the bank to pay abroad for previously opened deferred payment L/Cs; have no outstanding debt with the bank in cases specified in Clauses 1 and 2 of Article 13 of these Rules.

Article 8.4. Have legal guarantees (by one or more forms such as: deposit, pledge, mortgage, or third-party guarantee) for opening the L/C

deferred payment as required by the bank. 5. Meet the conditions for short-term foreign borrowing as prescribed by the Governor of the State Bank. The bank may consider opening a medium- or long-term L/C deferred payment (with a term over one year) for an enterprise after the enterprise meets the following conditions:

2.There must not occur other diseases listed in the disease declaration list of theMinistry Conditions stipulated in Clauses 1, 2, 3, and 4 of Article 8 of these Rules.

A written confirmation from the State Bank that it has registered borrowing and repayment of foreign debts. DEPOSITS, PLEDGES, MORTGAGES, GUARANTEES, AND PAYMENTS

Before opening an L/C deferred payment for an enterprise, the General Manager (Director) of the bank or the person authorized by the bank, depending on the actual situation of production and business, financial capacity, reputation of each enterprise, and characteristics of imported goods, shall negotiate with the enterprise on applying one or more security measures (deposit, pledge, mortgage, guarantee) and determine the value of the security that the enterprise must meet. The application of the security measure of deposit for opening an L/C deferred payment shall be implemented in accordance with the provisions of Article 11 of these Rules. For the security measure of deposit for opening an L/C deferred payment:1. Based on specific circumstances and national import policies for goods, when necessary, the Governor of the State Bank will decide the minimum deposit rate for restricted import goods during each period as prescribed by the Government.

5. Satisfying the conditions for short-term foreign borrowing as prescribed by the Governor of the State Bank.

Article 9.The bank shall consider opening a deferred letter of credit (L/C) with medium to long terms (over one year) for enterprises after they meet the following conditions:

Conditions stipulated in Clauses 1, 2, 3, and 4 of Article 8 of this Regulation.

2.There must not occur other diseases listed in the disease declaration list of theMinistry A document from the State Bank confirming registration for foreign borrowing and debt repayment.

 

Chapter III

DEPOSIT, PLEDGE, MORTGAGE, GUARANTEE, PAYMENT

Article 10.Before opening a deferred letter of credit (L/C) for an enterprise, the General Director (Director) of the bank or the person authorized by the bank, depending on the actual situation of production and business operations, financial capacity, reputation of each enterprise, and characteristics of imported goods, shall negotiate with the enterprise on the application of one or more security measures (deposit, pledge, mortgage, guarantee) and determine the value of the security that the enterprise must provide. The implementation of the deposit security measure for opening a deferred L/C shall comply with the provisions of Article 11 of this Regulation.

Article 11.Regarding the security measure of deposit for opening a deferred L/C:

1. Based on specific circumstances and national import policies, when necessary, the Governor of the State Bank may decide on the minimum deposit requirement for goods subject to restricted imports during each period as prescribed by the Government.

2. Enterprises shall not deposit collateral using borrowed bank funds or other funds currently guaranteed by banks.

Article 12.The pledging, mortgaging of assets, and guarantee for the issuance of deferred payment letters of credit (L/Cs) shall be carried out in accordance with the agreement between the bank and the enterprise and in compliance with current laws on loan guarantees and related regulations.

Article 13.The enterprise is responsible for transferring money to the bank according to the commitments made between the enterprise and the bank to pay abroad on time. The bank is responsible for paying abroad according to its own commitments.

If the enterprise fails to transfer money (in full or in part) to the bank as committed, the bank must still fulfill its obligation to pay abroad and has the right to debit the customer from the date of payment and depending on each case, the bank has the right to decide:

1. In cases where the enterprise fails to transfer money (in full or in part) to the bank as committed due to objective reasons, based on its own conditions, the bank shall debit the enterprise at the interest rate for on-time loans and determine the repayment period as follows:

a) For short-term deferred payment L/Cs, the maximum repayment period equals one production and business cycle but does not exceed 12 months from the date the bank pays abroad; except in special cases approved by the Governor of the State Bank or delegated to the bank to consider and decide.

b) For medium and long-term deferred payment L/Cs, the maximum repayment period equals half the term of the deferred payment L/C from the date the bank pays abroad; except in special cases approved by the Governor of the State Bank or delegated to the bank to consider and decide.

2. The bank shall debit overdue amounts or transfer overdue debts, and apply the overdue interest rate as stipulated by the Governor of the State Bank at the time of debiting overdue amounts or transferring overdue debts, and take necessary measures to recover debts in accordance with the law in the following cases:

a) The enterprise fails to transfer money (in full or in part) to the bank as committed due to subjective reasons from the enterprise's side.

b) The enterprise fails to fulfill its debt repayment obligations within the period determined by the bank as provided for in Clause 1 of this Article.

3. Immediately after debiting, debiting overdue amounts, or transferring overdue debts to the enterprise in accordance with the conditions specified in Clause 1 or Clause 2 of this Article, the bank must promptly notify the enterprise in writing.

 

Chapter IV

AUTHORITY TO ISSUE AND FEES FOR DEFERRED PAYMENT L/C BUSINESS

AND FEES FOR DEFERRED L/C SERVICES

Article 14.The bank shall establish the authority to issue deferred payment L/Cs within its system in accordance with current legal provisions.

Article 15.Fees for the deferred payment L/C business (excluding value-added tax):

1. The total of fees for opening the L/Cand document checking fees shall not exceed 2%/year calculated on the value of the L/C opened, calculated during the validity period of the L/C.

2. Acceptance payment fees shall not exceed 2%/year calculated on the amount accepted for payment but not yet paid to the beneficiary, calculated from the date of acceptance to the due date of payment.

3. Transfer fees when paying the L/C abroad shall be regulated by the bank and comply with the regulations of the State Bank of Vietnam on service charges for foreign payments through banks.

4. Modification fees, telecommunication fees, and other reasonable fees (if incurred) shall be regulated by the bank.

 

Chapter V

INSPECTION, AUDITING, AND HANDLING

Article 16.Periodically or when necessary, inspections and audits of the deferred payment L/C business shall be conducted as follows:

1. Banks are subject to inspection and auditing by the State Bank;

2. Enterprises are subject to supervision and inspection by the bank;

3. Enterprises are subject to inspection by the State Bank regarding their foreign borrowing and repayment situation under the form of deferred payment import letter of credit in accordance with current regulations on foreign borrowing and repayment by enterprises.

Inspected and audited banks and enterprises have the duty to provide complete information, data, and relevant documents concerning the implementation of the deferred payment L/C business for such inspections and audits. Inspections and audits must be carried out strictly in accordance with the law.

Article 17.Credit organizations on Individuals violating the provisions of this Regulation, depending on the nature and degree of violation, will be disciplined, administratively handled, or criminally prosecuted if damage occurs, they must compensate according to the law.

 

Chapter VI

REPORTING SYSTEM

Article 18.Banks must submit reports to the State Bank (Department of Foreign Exchange Management) and provincial branches of the State Bank in their jurisdiction periodically in accordance with current regulations on foreign borrowing and repayment reports (including the deferred payment L/C business).

Article 19.Provincial branches of the State Bank directly under the central government shall report to the State Bank (Department of Foreign Exchange Management) as follows:

1. Report immediately upon discovering violations of the Deferred Payment Import Letter of Credit Opening Regulations and propose handling measures. deferred import letter of credit and propose measures for handling.

2. Implement in accordance with current regulations on foreign borrowing and repayment reports (including the deferred payment L/C C business).

 

Chapter VII

Article on ADDITIONAL PROVISIONS AND AMENDMENTS

Article 20.The addition and amendment of this Regulation shall be decided by the Governor of the State Bank./.