Joint Circular No. 770-TT/LB guiding the implementation of certain provisions related to banking and financial work in the Articles on economic contract regime accompanying Decree No. 54-CP dated March 10, 1975 of the Council of Ministers.

JOINT CIRCULAR

Guidelines for implementing certain provisions related to banking and financial work in the Statute on economic contract regime accompanying Decree No. 54-CP dated March 10, 1975 of the Council of Ministers

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On March 10, 1975, the Council of Ministers issued Decree No. 54-CP promulgating the statute on the economic contract regime. On June 23, 1975, the State Economic Arbitration Council issued Circular No. 525-HĐ guiding the implementation of the statute. Now, the State Bank – Finance Ministry – State Economic Arbitration Council issues this Circular to guide the implementation of certain provisions in the Statute on the economic contract regime that are relevant to banking and financial work.

I. RELATIONSHIP BETWEEN THE IMPLEMENTATION OF THE ECONOMIC CONTRACT REGIME AND THE ORGANIZATION OF PAYMENTS AND LOANS.

A. The organization of payments and loans by the State Bank and Construction Bank.

1. The State Bank and Construction Bank agencies (referred to hereafter as bank agencies) shall organize the implementation of lending and payment activities in accordance with the state regulations.

2. Bank agencies closely related to the organization of compliance with the economic contract regime must implement the following provisions:

a) Bank agencies shall only proceed with payments and loans when there is an economic contract (except for cases specified in Point 3). In implementing this provision, bank agencies shall check the number and date of signing the economic contract recorded fully on payment documents and loan request documents. For payment and loan request documents without pre-printed lines for recording the number and date of signing the contract, the units issuing these documents must record the number and date of signing the contract in the purpose (or content) line of the amount requested for payment or loan, and shall be entirely responsible under the law for accurately recording the number and date of signing the economic contract on these documents.

b) In necessary cases, banks have the right to require economic agencies and units to present economic contracts for inspection before proceeding with payments and loans. Specifically, for the purchase and sale of materials and goods within the construction investment area, when applying the payment method according to the economic contract signed between the buyer with an account at the Construction Bank and the seller with an account at the State Bank, the economic contract must be submitted to the Construction Bank for inspection in advance to ensure sufficient funds for payment.

c) During the implementation of banking operations, if bank agencies discover that units conducting payments or requesting loans do not have an economic contract (except for cases stipulated in subsequent Point 3), or incorrectly record the number and date of signing the economic contract (including cases where the number and date of signing the expired contract are also considered as lacking an economic contract), then the bank will not proceed with payment or loan, and simultaneously apply the payment and credit techniques prescribed by the regulations and immediately report the violation to the Economic Arbitration Council for adjudication.

3. Organizations and economic units may conduct payments and be eligible for bank loans without requiring an economic contract in the following cases:

a) When executing special and urgent orders in writing from the Prime Minister and special and urgent orders within the authority granted by the Prime Minister to Ministries, General Departments, Agencies equivalent to Ministries, and agencies directly under the Council of Ministers, Chairmen of provincial and centrally-administered city administrative committees.

b) When purchasing, supplying, transporting temporarily and unexpectedly, and completing transactions and payments in one go.

c) When carrying out economic activities with special characteristics permitted by the Council of Ministers, such as payment and loan for imported goods based on purchase orders (according to Decree No. 200-CP dated December 31, 1973 promulgating the Import Plan Regulation, Contract Signing and Payment for Imported Goods - Article 13), and payment and loan for clearing overdue debts (according to Decree No. 219-TTg dated June 14, 1975 of the Prime Minister).

d) Before being assigned a control number, or during the period for signing an economic contract (according to Article 5 of the Joint Circular of the State Planning Commission and the State Economic Arbitration Council No. 573-TT/LB dated July 10, 1975), the contract signing period for plan construction must be consistent with the plan schedule, starting from receiving the upper-level assigned control number and must be completed before the plan defense.

đ) When commercial or production units exceed their obligations in purchasing agricultural, forestry, mining, and marine products necessary for production reserves and circulation.

4. An economic contract is deemed valid for conducting payments and loans if it includes the following main provisions:

a) Name, address, transaction account number at the bank, and name of the bank serving both parties to the contract;

b) Must have two signatures from each party to the contract;

- Of the unit head.

- Of the accounting head.

For units that have not yet received a formal decision appointing an accountant, the department head, team leader, or person designated to oversee accounting work can sign on economic contracts and bear the same responsibility as the accounting head. If these individuals are absent, the person appointed by the unit head in writing also has the same authority and responsibility as the accounting head.

The unit head may directly sign the contract or authorize a representative to sign the economic contract. In case of authorization, the unit head bears full responsibility like the accounting head.

The unit head may directly sign the contract or authorize a representative to sign the economic contract. In case of authorization, the unit head bears full legal responsibility for the implementation of the economic contract.

If the person signing the economic contract is an authorized representative, the contract must clearly indicate the number and date of the authorization letter.

c) The provisions that both parties commit to implement must be clearly recorded, as stipulated in points c and d of Article 11 of the Ordinance on economic contract regime, particularly paying attention to the terms regarding quantity, quality, price, time, location, method of delivery, payment method, and material liability in case of breach of economic contracts.

5. In an economic contract, a specific payment form must be recorded which has been agreed upon by both parties signing the contract. That payment form must comply with the regulations of the non-cash payment system as per Decision No. 70-Nha khoa/QD dated September 27, 1975 of the State Bank. If the payment form recorded in the economic contract does not conform to the regulations of the non-cash payment system, the bank has the right to refuse payment and guide the customer to apply an appropriate payment method beneficial for both parties.

In special cases, an economic contract may record two payment forms if there are different purchasing, delivery, transportation, and payment methods, but each payment form must necessarily comply with the regulations of the non-cash payment system.

In case the parties signing the economic contract cannot agree on the payment form clause, or in case one of the parties breaches the payment discipline, the bank serving the seller will decide, and both parties signing the economic contract have the duty to execute.

6. The implementation of payments and loans by banks must also ensure respect for the systems and regulations on payments, credit, and cash management issued by the Prime Minister and the State Bank.

B. Capital allocation.

1. Financial agencies and construction banks have the responsibility to promptly review and allocate capital according to plans and budget limits to ministries, sectors, and localities to ensure the operation of units.

2. Economic accounting units are permitted to sign economic contracts to purchase materials, goods; supply labor within the scope of state business capital allocated for their management (including budget capital, bank loans, own capital...). Budgetary units are only allowed to sign such contracts within the approved budget limit. Cooperatives are only allowed to sign economic contracts within the scope of their own capital and bank loans. Independent economic accounting units, if they violate economic contracts and are fined, must deduct from the welfare fund to cover the fine amount.

3. When there are urgent tasks assigned by the government outside the national plan targets, based on the Government's and Ministry of Finance's orders, capital will be allocated to ministries, sectors, and localities from the state budget or bank loans as applicable.

II. PROCEDURES FOR WITHDRAWING FINES AND COMPENSATION PAYMENTS DUE TO BREACH OF ECONOMIC CONTRACTS.

1. Fines:

a) An enterprise violating an economic contract - an independent economic accounting state-owned enterprise, must issue a payment authorization to deduct from its welfare fund account opened at the bank to pay the fine. If the account of the violating unit does not have sufficient funds to pay the fine as recorded on the payment authorization, the bank will deduct all remaining funds in that account; the outstanding fine amount will be recorded in the accounting books as a debt to the state budget for tracking and subsequent payment.

b) An enterprise violating an economic contract - a budgetary unit, must issue a request to withdraw budget limits, deducting from the approved budget limit (category, item designated for contract execution expenses), or funds in the current account of the budgetary unit if any, opened at the bank. If the category, item designated for contract execution expenses does not have sufficient funds, the unit must reallocate funds from other categories within the permissible financial regulations to have funds to pay the fine. The unit shall not deduct from the category, item for salary and allowances of cadres, workers, and staff, nor from the basic construction fund, unless that category belongs to the basic construction fund.

c) An enterprise violating an economic contract - a project managing unit (Party A), must deduct from the basic construction fund account opened at the construction bank to pay the fine. Party A must report to the competent authority and the construction bank to supplement the capital if necessary.

d) An enterprise violating an economic contract - a cooperative or production group with an account at the State Bank, must issue a payment authorization to deduct from its settlement deposit account at the State Bank to pay the fine.

đ) All fines above must be paid into the state budget (type Vietnam, item 116, category IV, miscellaneous income of the local budget, units subject to central management must pay the fine into the central budget).

2. Compensation:

a) The compensating unit - an independent economic accounting state-owned enterprise, must issue a payment authorization to deduct from its settlement deposit account at the bank and must account for the compensation amount in the enterprise management fee account to be included in the cost price or circulation fee.

b) The unit required to compensate - a budgetary unit, must pay the compensation as stipulated for paying fines due to breach of economic contracts in point b, section 1 above.

c) The unit required to compensate - a project managing unit (Party A), must pay the compensation as stipulated for paying fines due to breach of economic contracts in point c, section 1 above.

d) The unit required to compensate - a cooperative or production group with an account at the State Bank, must pay the compensation as stipulated for paying fines due to breach of economic contracts in point c, section 1 above.

đ) All compensation amounts mentioned above must be transferred by the violating unit through the bank to the accounts of the compensated units at the bank and recorded as follows:

- Settlement deposit account of production and business units and considered as business income.

||| An approved budget limit account or a current deposit account of a budgetary unit is considered to be a restored budget limit.

||| 3. The deadline for collecting fines and compensating damages.

Economic contract violators must pay fines and compensation according to the amount and time limit recorded in the arbitration economic council's judgment decision. If the violating party fails to pay the fine and compensate within the stipulated period, the banking authority (State Bank and Construction Bank), based on the arbitration economic council's judgment decision, will proactively deduct from the violating party's accounts to pay the fine into the State budget and transfer the compensation amount to the receiving party; simultaneously, they will impose late payment penalties at a rate of 0.025% per day on the overdue amount. Late payment penalties are deducted from the accounts similarly to fines and compensation, with late payment penalties paid into the State budget and late compensation penalties transferred to the receiving parties.

||| If the violating party's accounts do not have sufficient funds for deduction, the bank has the responsibility to monitor and deduct once the accounts have funds.

||| If during the year, the accounts designated for fines or compensation deductions of economic contract violators do not have sufficient funds, the bank will continue to deduct the full amount of fines or compensation and transfer them to the benefiting party when these accounts have funds in the following year.

||| III. MATERIAL LIABILITY OF AUTHORITIES CAUSING VIOLATIONS OF ECONOMIC CONTRACTS

||| 1. For superior management authorities.

||| Article 19 of the Regulation on Economic Contract System stipulates: "If the cause of the violation is due to the superior authority's flawed directive, the violating party still must pay the fine and compensate for losses. The superior authority with flaws must promptly resolve the losses caused to the grassroots unit."

In this case, the superior management authority must issue a mandate to deduct from its own account opened at the bank from the account for payments to be settled, if it is an independent economic accounting unit, or deduct from the approved budget limit account, if it is a budgetary unit. With the amount equal to the fine and compensation that the grassroots unit must pay, the bank has the duty to deduct and transfer the aforementioned fine and compensation amounts into the previous account of the grassroots unit from which the fine was deducted and compensation was paid.

||| 2. For the State Bank and Construction Bank.

In cases where banking authorities fail to fully fulfill their responsibilities in performing settlement tasks, causing delays in settlements resulting in material damage to units, and if the unit lodges a written complaint and the banking authority cannot prove that it is not due to its fault, then the banking authority must bear the delayed payment penalty at a rate of 0.2% per month on the delayed amount for the compensated unit.

In cases where the violating party's account has funds but the banking authorities do not comply with the arbitration economic council's judgment decision to proactively deduct and compensate in a timely manner after receiving a written complaint from the unit and the banking authority cannot prove that it is due to its fault, the banking authorities must bear the penalty for delayed execution of settlement operations at a rate of 0.025% per day on the amount and number of days delayed in deduction and compensation. The penalty for delayed deduction and compensation is deducted from the operational expense account to be paid into the State budget (category V-item 116-subcategory 4 - miscellaneous revenue of the State budget account) if it is a penalty for delayed deduction of fines, or transferred to the compensated unit if it is a penalty for delayed deduction of compensation.

||| IV. MATERIAL LIABILITY OF INDIVIDUALS CAUSING VIOLATIONS OF ECONOMIC CONTRACTS.

Article 23 of the charter on economic contract regime stipulates: Those individuals who cause violations due to a lack of sense of responsibility, resulting in damage to state property, shall be subject to punishment according to one or all three of the following forms depending on the severity of the case:

- Being fined by deduction from salary or personal bonus;

- Being administratively disciplined;

- Being prosecuted criminally under current laws.

The implementation of Article 23 above is carried out in accordance with Decree No. 49-CP dated April 9, 1968 of the Council of Ministers on the material responsibility system.

V. RESPONSIBILITIES OF THE ECONOMIC ARBITRATION BOARD AND RELATIONSHIPS BETWEEN THE ECONOMIC ARBITRATION BOARD AND FINANCIAL AUTHORITIES AND BANKS IN IMPLEMENTING THE ECONOMIC CONTRACT REGIME.

1. Upon receiving complaints about violations of the economic contract regime from units, or notifications from financial and banking agencies regarding the situation of units violating economic contracts, the economic arbitration boards at various levels must promptly organize investigations, studies, and adjudications. During the adjudication process, the economic arbitration board recommends to the superior management agency or the head of the unit that violated the contract on the form and degree of punishment for such individual.

2. Within their functions and powers, the economic arbitration board organizes inspections of delays in signing economic contracts by agencies and units, and reports the results to relevant functional agencies at the same level to monitor compliance with economic contracts, identifies irregularities and shortcomings in economic activities at various levels and industries, and proposes measures to prevent, correct, and remedy these issues.

Financial and banking agencies need to promptly address issues related to economic contracts concerning their respective sectors.

During the course of performing tasks, summarizing, and concluding work in their sector, or when implementing decisions rendered by the economic arbitration board, financial and banking agencies need to identify issues related to the operations of the economic arbitration board and propose solutions to the economic arbitration board for resolving these issues.