Decision No. 906/2002/QĐ-NHNN on the issuance of the Discount and Rediscount Regulations of the State Bank for banks.

DECISION OF THE GOVERNOR OF THE STATE BANK OF VIETNAM

Regarding the issuance of the Discount and Rediscount Regulations

of the State Bank of Vietnam for banks

 

GOVERNOR OF THE STATE BANK OF VIETNAM

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

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

At the proposal of the Director of the Credit Department,

           

DECISION:

Article 1.The Discount and Rediscount Regulations of the State Bank of Vietnam for banks are hereby promulgated along with this Decision.

Article 2. This Decision shall take effect 15 days from the date of signature and replace Decision No. 356/1999/QĐ-NHNN14 dated October 6, 1999 of the Governor of the State Bank of Vietnam on the issuance of the Discount and Rediscount Regulations of the State Bank of Vietnam for banks.

Article 3.The Heads of the Office, Department of Credit, heads of units under the State Bank of Vietnam, Branch Governors of the State Bank of Vietnam in provinces and centrally-administered cities, Chairmen of Management Councils and General Directors (Directors) of banks are responsible for implementing this Decision.

Discount and Rediscount Regulations of the State Bank of Vietnam for banks

(ANNEXED TO DECISION

No.: 906/2002/QĐ-NHNN dated August 26, 2002 of the Governor of the State Bank of Vietnam).

Article 1. Scope and objects of application

1. These Regulations stipulate the implementation of discount and rediscount operations of the State Bank of Vietnam for banks, aiming to implement monetary policy and provide short-term capital to banks.

2. Banks eligible for discount and rediscount under these Regulations are those established and operating under the Law on Credit Organizations (hereinafter referred to as banks).

Article 2. Explanation of terms

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

1.Discount operation: is the act of the State Bank of Vietnam purchasing negotiable instruments with remaining maturity periods and belonging to banks. These negotiable instruments are purchased or auctioned by banks on the primary market.

2. Rediscount operation: is the act of the State Bank of Vietnam purchasing negotiable instruments with remaining maturity periods and belonging to banks. These negotiable instruments have been purchased or discounted by banks on the secondary market.

3. Discount and rediscount interest rate: is the interest rate applied by the State Bank of Vietnam to calculate the amount the State Bank of Vietnam must pay to banks when discounting or rediscounting short-term negotiable instruments and the amount the State Bank of Vietnam pays back to banks upon expiration of the discounting or rediscounting period, in cases where discounting or rediscounting has a term.

4. Trading day: is calculated based on working days, excluding weekends, holidays, and Tet holidays.          

Article 3Forms of discount and rediscount

1. Discount and rediscount of the entire remaining period of short-term negotiable instruments: The State Bank of Vietnam purchases short-term negotiable instruments entirely from banks.

2. Term discount and rediscount: Banks commit to repurchasing the entire short-term negotiable instruments discounted or rediscounted by the State Bank of Vietnam after a certain period of time.

Article 4. Conditions of short-term negotiable instruments eligible for discount and rediscount

1. Short-term negotiable instruments eligible for discount and rediscount at the State Bank of Vietnam include Treasury bills, State Bank bills, and other types of negotiable instruments specified by the Governor of the State Bank of Vietnam during each period.

2. The short-term negotiable instruments mentioned in Clause 1 of this Article are eligible for discount and rediscount by the State Bank of Vietnam if they meet the following conditions:

a. Issued in Vietnamese dong and transferable;

b. Remaining maturity period not exceeding 90 days in cases where the State Bank of Vietnam discounts or rediscounts the entire remaining period of short-term negotiable instruments.

c. The remaining maturity period of the negotiable instrument must be longer than the discounting or rediscounting period of the State Bank of Vietnam, in cases where discounting or rediscounting has a term.

Article 5Discount and rediscount interest rates

The State Bank of Vietnam determines and publishes a unified interest rate applicable to discount and rediscount operations (hereinafter referred to as the discount interest rate) consistent with the objectives of monetary policy during each period.

Article 6.Methods of implementing discount and rediscount operations

1. Direct method: Banks conduct transactions directly with the State Bank of Vietnam to carry out discount and rediscount operations of short-term negotiable instruments;

2. Indirect method: Banks carry out discount and rediscount procedures through a network system connected to the State Bank of Vietnam or via fax. Transactions conducted through the indirect method must ensure safety.

, Clause 1, Clause 2 Article 7a of this Regulation.Hierarchical implementation of discount and rediscount operations within the State Bank of Vietnam system.

1. Discount and rediscount operations of negotiable instruments of the State Bank of Vietnam for banks are carried out at the State Bank of Vietnam (headquarters in Hanoi) or branches of the State Bank of Vietnam in provinces and centrally-administered cities.

2. Based on the approved supply of funds for discount and rediscount operations during each period, the Head of the Department of Credit considers and decides on discount and rediscount for requests up to 200 billion dong and reports to the Governor for consideration and decision on requests over 200 billion dong. If necessary, the Governor of the State Bank of Vietnam may delegate authority to provincial and centrally-administered city branches of the State Bank of Vietnam to consider and decide on discount and rediscount of negotiable instruments for banks in their respective areas. Provincial and centrally-administered city branches of the State Bank of Vietnam can only decide on discount and rediscount within the delegated scope.

3. The State Bank of Vietnam’s Trading Department (in the case where the head officeof the bank requesting discounting and rediscounting is located in Hanoi) or theState Bank of Vietnam’s branch in the province or city (where the head office ofthe bank requesting discounting and rediscounting is located) shall organize theimplementation of discounting and rediscounting operations, including the handoverand receipt of short-term negotiable instruments, determination and payment of thediscount and rediscount amount for banks, determination of the amount to sellshort-term negotiable instruments back to banks upon expiration of the discountingand rediscounting period (in cases with a term), accounting, monitoring, andretaining short-term negotiable instruments, and paying short-term negotiableinstruments to issuers when due.

Article 8. Procedures for implementing discounting and rediscounting operations

1. Banks (head offices) that require discounting and rediscounting of short-termnegotiable instruments shall submit a discount request form (Form No. 01) to theState Bank of Vietnam on working days of the week.

2. Based on the discount and rediscount request form from the bank and the fundsallocated for this operation, the State Bank of Vietnam shall examine, decide, andnotify acceptance (using Form No. 02) or non-acceptance (using Form No. 03) withinone working day from the date of receipt of the discount and rediscount requestform.

Article 9.Cases of non-acceptance of discounting and rediscounting

1. Short-term negotiable instruments that do not meet the conditions stipulated inArticle 4 of this Regulation;

2. The discount and rediscount request form sent to the State Bank of Vietnam doesnot comply with Form No. 01, or the signatory does not have the appropriateauthority.

Article 10. Method for determining the payment amount when discounting and rediscountingshort-term negotiable instruments of banks.

1. In cases of discounting and rediscounting the entire remaining term

: Revenue for reducing cost in the clean water pricing plan (if applicable), which includes revenues from activities related to the production and business of clean water other than sales revenue, and is determined by contract (during the period the price remains valid) (VND);

St=

Lsx Tc

1+365 x 100

c) The Reorganization Enterprise Fund at the state-owned holding corporation level is centralized in a separate account of the state-owned holding corporation, managed by the Board of Directors, to support the reorganization and ownership conversion of enterprises under the state-owned holding corporation as stipulated in Article 2 of this Decision and is responsible for settling accounts with the Ministry

St:       The amount paid by the State Bank of Vietnam when discounting and rediscountingshort-term negotiable instruments;

Gt: The value of short-term negotiable instruments at maturity;

Tc: The remaining term of short-term negotiable instruments (from the date ofdiscounting and rediscounting to the maturity date of the negotiable instrument);

Ls: Discount rate (annual) at the time of discounting and rediscounting;

1. Number of days assumed in one year

2. In cases of term discounting

a. Formula for determining the amount the State Bank of Vietnam pays to bankswhen discounting and rediscounting short-term negotiable instruments: Calculatedaccording to the formula stated in Clause 1 of this Article.

b. Formula for determining the amount banks pay to the State Bank of Vietnamupon expiration of the discounting and rediscounting term:

Lmx Tm

Gv= St x ( 1 + ) 365 x 100

In which: Gv: The price banks pay when repurchasing negotiable instruments;

St: The amount the State Bank of Vietnam has paid to the bank when discountingand rediscounting;

Lm: Discount rate (annual) at the time of repurchase;

Tm: Time the State Bank of Vietnam discounts and rediscounts (in days)

Article 11. Handover and payment of short-term negotiable instruments when discounting andrediscounting at the State Bank of Vietnam.

1. After receiving notification of acceptance of discounting and rediscounting fromthe State Bank of Vietnam, the bank requesting discounting and rediscounting shallproceed with the handover of short-term negotiable instruments and receipt ofpayment from the State Bank of Vietnam at the State Bank of Vietnam’s TradingDepartment or branch in the locality. In cases of term discounting andrediscounting, the bank requesting discounting and rediscounting must send apromise to repurchase negotiable instruments (using Form No. 04) to the StateBank of Vietnam before carrying out the handover and receipt of payment.

2. Upon expiration of the discounting and rediscounting term (in cases of termdiscounting and rediscounting), banks shall reclaim short-term negotiableinstruments while simultaneously paying the repurchase amount for short-termnegotiable instruments to the State Bank of Vietnam according to the promise. Ifbanks fail to reclaim short-term negotiable instruments and pay the State Bank ofVietnam according to the promise upon expiration of the discounting andrediscounting term, the State Bank of Vietnam will deduct the amount from thebank's account or transfer the amount owed by the bank to overdue debt and chargelate fees at 130% of the discount rate.

3. In cases where banks requesting discounting and rediscounting fail to hand overnegotiable instruments in accordance with the approved list within the specifiedtime frame by the State Bank of Vietnam, it shall be deemed that the banks havewithdrawn their discounting and rediscounting requests. A bank that withdraws itsdiscounting and rediscounting request twice will not be allowed to participate indiscounting and rediscounting operations with the State Bank of Vietnam for sixmonths from the date of the second violation.

Article 12.Responsibilities of relevant units under the State Bank of Vietnam

1. Monetary Policy Department: Advise the Governor of the State Bank of Vietnam:

a. Determine the total volume of funds allocated for discounting and rediscountingoperations during each period;

b. Determine and announce the discount rate during each period;

c. Supplement or adjust the list of short-term negotiable instruments eligible fordiscounting and rediscounting by the State Bank of Vietnam when necessary.

2. Credit Department:

a. Receive and review the discount request forms from banks and examine anddecide on discount and rediscount requests up to VND 200 billion;

b. Submit to the Governor for examination and decision on discount andrediscount requests exceeding VND 200 billion;

c. Notify the State Bank of Vietnam’s Trading Department or branch in the provinceor city and related units to implement discounting and rediscounting operations;

d. Submit to the Governor for authorization to allow branches of the State Bank ofVietnam in provinces and cities to examine and decide on discounting andrediscounting for banks in their localities when necessary.

3. State Bank of Vietnam’s Trading Department:

a. Organize the implementation of discounting and rediscounting operations forbanks;

b. Regularly compile and report monthly results of discounting and rediscountingoperations across the system to the Governor of the State Bank of Vietnam, andsend copies to the Credit Department and Monetary Policy Department.

4. Accounting and Finance Department: guide the implementation of discount and rediscount accounting entries at the State Bank of Vietnam Trading Center and provincial and municipal branches of the State Bank of Vietnam.

5. Provincial and municipal branches of the State Bank of Vietnam:

a. Receive, review applications, and decide on discounts and rediscounts for banks within their jurisdiction within the scope of authorization from the Governor of the State Bank of Vietnam.

b. Organize the implementation of discount and rediscount operations for banks with headquarters within their jurisdiction.

c. Regularly report monthly results of discount and rediscount operations within their jurisdiction to the Trading Center for consolidation and reporting to the Governor of the State Bank of Vietnam.

Article 13.Any amendments or supplements to the contents of this Regulation shall be decided by the Governor of the State Bank of Vietnam.

Form No. 01

Name of bank: Socialist Republic of Vietnam

No.:...                                    Independence - Freedom - Happiness

 

DISCOUNT AND REDISCOUNT APPLICATION FORM

Respected: State Bank of Vietnam

(Credit Department or provincial/municipal branch of the State Bank of Vietnam authorized)           

My name is:…Position:…

Bank representative:…

Address:...

Bank code:…Phone:…Fax:…

Account number:…At:…

Request the State Bank of Vietnam to discount and rediscount the following short-term negotiable instruments upon maturity:

Unit: Million VND

Purpose of applying for discount, rediscount:…

Form of application for discount:…(Specify full-term discount or term discount for how many days)

If approved for discount by the State Bank of Vietnam, we commit to comply with all provisions of the State Bank of Vietnam's Discount and Rediscount Regulations for banks.

----Date…Month…Year…

Bank representative

(Signature, stamp/electronic signature)

Form No. 02

State Bank of Vietnam Socialist Republic of Vietnam

Vietnam Independence - Freedom - Happiness

No.:…/TB                                       ..., day ... month ... year ...

                                                                                   

NOTICE OF APPROVAL FOR DISCOUNT AND REDISCOUNT

BASED ON THE STATE BANK OF VIETNAM'S DISCOUNT AND REDISCOUNT REGULATIONS FOR BANKS ISSUED PURSUANT TO DECISION NO. …/2002/QĐ-NHNN OF THE GOVERNOR OF THE STATE BANK OF VIETNAM.

BASED ON THE DISCOUNT AND REDISCOUNT APPLICATION FORM DATED... MONTH... YEAR... OF THE BANK...

THE STATE BANK OF VIETNAM AGREES TO DISCOUNT AND REDISCOUNT THE FOLLOWING SHORT-TERM NEGOTIABLE INSTRUMENTS OF THE BANK... AS LISTED BELOW:

The State Bank of Vietnam notifies the Bank...to be aware and implement the delivery and receipt of negotiable instruments and payment at...in accordance with regulations.

Implementation Report of Production Projects of Supporting Industry Products Confirmed with Incentives

State Bank of Vietnam   Socialist Republic of Vietnam

Vietnam Independence - Freedom - Happiness

 

No.:…TB                                ..., day ... month ... year ...

                       

NOTICE

NOTICE OF NON-APPROVAL FOR DISCOUNT AND REDISCOUNT

BASED ON THE STATE BANK OF VIETNAM'S DISCOUNT AND REDISCOUNT REGULATIONS FOR BANKS ISSUED PURSUANT TO DECISION NO. …/2002/QĐ-NHNN OF THE GOVERNOR OF THE STATE BANK OF VIETNAM.

BASED ON THE DISCOUNT AND REDISCOUNT APPLICATION FORM DATED... MONTH... YEAR... SIGNED BY MR./MS... POSITION OF THE BANK...

THE STATE BANK OF VIETNAM DOES NOT APPROVE THE DISCOUNT OF NEGOTIABLE INSTRUMENTS AS REQUESTED BY THE BANK...IN THE APPLICATION FORM ABOVE FOR THE FOLLOWING REASONS:

1................................................................................................................

2................................................................................................................

The State Bank of Vietnam notifies the Bank...to be aware.

Form number 04

Name of bank: Socialist Republic of Vietnam

No.:...                                     Independence - Freedom - Happiness

LETTER OF COMMITMENT TO REPURCHASE SHORT-TERM NEGOTIABLE INSTRUMENTS

DISCOUNTED AND REDISCOUNTED BY THE STATE BANK OF VIETNAM

Respected: State Bank of Vietnam   

(Credit Department or provincial/municipal branch of the State Bank of Vietnam designated)

BASED ON THE NOTICE NUMBER...DATED.../.../20..OF THE STATE BANK OF VIETNAM TRADING CENTER (OR DESIGNATED BRANCH OF THE STATE BANK OF VIETNAM) REGARDING THE APPROVAL OF TERM DISCOUNT AND REDISCOUNT OF...DAYS FOR THE SHORT-TERM NEGOTIABLE INSTRUMENTS OF THE BANK...

I am...position..., representing the Bank..., hereby commit to repurchase all short-term negotiable instruments listed below on the final day of the State Bank of Vietnam's discount and rediscount period.                               

I hereby commit to accept back the above negotiable instruments and pay the full purchase amount to the State Bank of Vietnam on... (final day of discount and rediscount period) in accordance with the State Bank of Vietnam's Discount and Rediscount Regulations for banks. In case of delay in payment for the purchase of short-term negotiable instruments, I agree to bear overdue interest at 130% of the discount rate at the time of payment, calculated on the amount discounted and rediscounted by the State Bank of Vietnam and the period of delay.                                                             ----Date…Month…Year…

Bank representative

(Signature, stamp/electronic signature)