Quyết định 1287/2002/QD-NHNN

DECISION

ON THE ISSUANCE OF THE REGULATION ON ISSUE OF VALUABLE PAPERS BY CREDIT INSTITUTIONS TO MOBILIZE DOMESTIC FUNDS

THE GOVERNOR OF THE STATE BANK

Pursuant to the Law on the State Bank of Vietnam No. 01/1997/QH10; the Law on Credit Institutions No. 02/1997/QH10 dated 12 December, 1997;
Pursuant to the Decree No. 15/CP dated 02 March, 1993 of the Government on the assignment, authority and responsibility for the State management of the ministries and ministry-level agencies;
Upon the proposal of the Director of the Monetary Policy Department,

DECIDES

Article 1. To issue in conjunction with this Decision "The Regulation on issue of valuable papers by credit institutions to mobilize domestic funds"

Article 2. This Decision shall be effective from 01 January, 2003 and replace following Decisions of the Governor of the State Bank of Vietnam:

Decision No. 220/QD-NH dated 27 November, 1991 on the permission to State owned commercial banks to issue bank's term bonds; Decision No. 212/QD-NH1 dated 22 September, 1994 on the issuance of the Rules on the issue of commercial banks' bonds, the Investment and Development Bank's bonds; Decision No. 07/QD-NH1 dated 25 January, 1994 on the permission to The Vietnam Foreign Commercial Bank to issue bank's term bonds in foreign currency; Decision No. 115/QD-NH1 dated 01 June, 1994 on the permission to The Vietnam Industrial and Commercial Bank to issue bank's term bonds in foreign currency; Decision No. 214/QD-NH1 dated 23 September, 1994 on the permission to The Vietnam Foreign Commercial Bank to issue bank's bonds; Decision No. 243/QD-NH1 dated 30 September, 1994 on the permission to the Vietnam Industrial and Commercial Bank to issue bank's bonds.

Article 3. Heads of units of the State Bank of Vietnam, General Managers of State Bank branches in provinces, cities under central Government management, General Directors (Directors) of credit institutions shall be responsible for the implementation of this Decision.

REGULATION

ON THE ISSUE OF VALUABLE PAPERS BY CREDIT INSTITUTIONS TO MOBILIZE DOMESTIC FUNDS
(Issued in conjunction with the Decision No. 1287/2002/QD-NHNN dated 22 November, 2002 of the Governor of the State Bank)

Chapter I

GENERAL PROVISIONS

Article 1. Governing scope and subjects of application

1. This Regulation provides for the issue of valuable papers by credit institutions to mobilize funds from organizations and individuals in the Vietnamese territory.

2. The issue, listing and trading of valuable papers by credit institutions in the stock exchange shall be performed in accordance with provisions of applicable laws on securities and securities market.

Article 2. Credit institutions issuing valuable papers

1. Credit institutions issuing valuable papers shall be those that are established and operate in accordance with this Regulation, including:

- State owned credit institutions.

- The joint stock credit institutions of the State and the People.

- The Central People's Credit Fund.

- Joint venture credit institutions.

- Foreign credit institutions permitted to operate in Vietnam.

2. The Financial leasing companies shall issue only long-term valuable papers with terms of over 12 months.

Article 3. Purchasers of valuable papers

Purchasers of valuable papers shall include:

- Vietnamese organizations, individuals

- Foreign organizations, individuals living and operating legally in Vietnam.

Article 4. Interpretation

In this Regulation, following terms shall be construed as follows:

1. Valuable papers shall be certificates issued by credit institutions to mobilize funds which confirm the obligation to pay a debt within a specific time, conditions for interest payment and other commitments undertaken between credit institutions and purchasers.

2. Short-term valuable papers shall be valuable papers with terms less than 12 months, which include term bonds, short-term deposit certificates, bills and other short-term valuable papers.

3. Long-term valuable papers shall be valuable papers with terms of 12 months and up, which include bonds, long-term deposit certificates and other long-term valuable papers.

4. Bearer valuable papers shall be valuable papers issued in form of certificates or book entry with the name of the owner. Credit institutions issuing bearer valuable papers shall open book for the registration of ownership and perform the re-registration when customers request for the transfer of ownership.

5. Non-bearer valuable papers shall be valuable papers issued in form of certificates without stating the owner's name. Non-bearer valuable papers belong to the ownership of their holders.

6. Face value shall be the principal value printed or stated on the valuable papers issued in form of certificates or stated on the certificate of ownership in respect of valuable papers issued in form of book entry.

7. Total face value shall be total of face values of valuable papers issued by the credit institution within a year or in an issue.

8. Term of valuable paper shall be the duration from the date when the credit institution recognizes the debt to the date by which the credit institution commits to repay the entire debt.

9. Term of issue shall be the duration from the date where the credit institution starts to issue to the date when the issue ends.

10. Fixed interest rate shall be the interest rate that is unchanged and applied during the term of the valuable paper.

11. Periodically adjusted interest rate shall be the interest rate that is changed periodically according to the market, which is agreed upon between the credit institution and the purchaser upon issuing.

12. Prepaid interest shall be the sale of valuable papers at the price lower than the face value and the purchaser shall receive the amount equal to the face value at the maturity of the valuable papers.

13. Payment of interest one time at maturity shall be the payment of interest at maturity together with the principal value (face value).

14. Periodical payment of interest shall be the payment of interest on the basis of a coupon after a period of 6 months or 1 year in respect of long-term valuable papers.

Article 5. Forms of issue

Credit institutions shall issue valuable papers in form of certificates or book entry.

1. The form of non-bearer certificates shall apply to purchasers who are individuals. The bearer certificates shall apply to purchasers that are individuals and organizations.

2. The book entry form shall be applicable to purchasers that are organizations having deposit accounts at the issuing credit institution. In case of issuing in form of book entry, the issuing credit institution shall grant certificates of ownership of valuable papers to the purchasers.

Article 6. Form and elements of valuable papers

1. Valuable papers issued in form of certificates must contain following elements:

- Name of the issuing credit institution.

- Name of the valuable papers (term bonds, bills, short-term deposit certificates, long-term deposit certificates, bonds, etc.)

- Face value.

- Term.

- Issuing date.

- Date where the payment is due.

- Interest; modes of interest payment; time and place of interest payment.

- Modes of repayment.

- Place of repayment of the principal value of valuable papers.

- Name of the purchaser of valuable papers, Identity card number of the purchaser who is individual, address of the purchaser of valuable papers (for non-bearer valuable papers); or stating clearly that valuable papers are non-bearer ones.

- Other elements such as: Code, series of issue, signature of General Director or the authorized person, signatures of accountant and cashier of the issuing credit institution.

- Conditions, clauses on the transfer, discount, and mortgage of valuable papers at the issuing credit institution; dealing with risks (worn out, torn off, lost, etc.); cases of non-payment.

2. Apart from elements provided for in Paragraph 1 of this Article, credit institutions may stipulate notes and other instructions of the issuing credit institutions.

3. In respect of valuable papers issued in form of book entry, elements provided for in Paragraph 1 of this Article must be stated on the certificate of purchaser's ownership of valuable papers, except for elements such as number of identity card, code and series of the issue.

4. In respect of valuable papers with interest to be paid periodically, the interest coupon attached to valuable paper must contain elements relating to the valuable papers (serial number, face value), interest rate, the amount to be received, the period of interest payment.

5. Valuable papers issued in form of certificates must be designed and printed to ensure the high counterfeit features.

Article 7. The issue and payment currency

1. Valuable papers shall be issued in VND and foreign currency.

2. The issue, payment and transfer of valuable papers in foreign currency must comply with provisions on foreign exchange control of the Socialist Republic of Vietnam.

Article 8. Modes of issue

Credit institutions shall issue valuable papers under following modes:

1. To directly issue valuable papers.

2. To issue through a credit institution acting as agent or issue under entrustment.

Article 9. Terms of issue

Term of an issue shall not exceed 60 days including weekends, holidays in accordance with provisions of applicable laws. Credit institutions shall only be entitled to issue in excess of the above-mentioned term upon the approval of the State Bank.

Article 10. Interest rate

Interest rate of valuable papers shall be stipulated by the issuing credit institution in line with the market interest rate, to secure business efficiency and operational prudence for the credit institution.

Article 11. Repayment of principal and payment of interests

1. Credit institutions shall repay the principal to the purchaser of valuable papers when they become due. Credit institutions may prepay provided an agreement to this extent with the purchaser is available.

2. Credit institutions shall negotiate to pay interests that are fixed or periodically adjusted.

3. Credit institutions shall pay interests under the mode of pre-payment or payment at the due date or periodical payment.

Article 12. Conditions to permit the issue

Credit institutions shall be permitted to issue valuable papers upon full satisfaction of following conditions:

1. Compliance with provisions on restrictions to secure prudential operation in accordance with provisions of the Law on credit institutions and guidance of the State Bank.

2. Sound financial position as assessed by the State Bank Inspection.

Article 13. Competence to approve the request for issue of valuable papers

1. The Governor of the State Bank shall approve the application for issue of short-term and long-term valuable papers by State owned credit institutions, joint-venture credit institutions, foreign credit institutions, Central People's Credit Fund and application for issue of long-term valuable papers by joint stock credit institutions of the State and the people.

2. The Governor of the State Bank shall authorize General Managers of State Bank branches in provinces, cities to approve application for issue of short-term valuable papers by joint stock credit institutions of the State and the People with Head-office locating in their respective locality.

3. Within 15 working days from the receipt of complete files for issue from credit institutions, the State Bank shall decide on approval of the application for issuing valuable papers by credit institutions or refuse to approve it.

Article 14. Place to submit application files for issuing

1. The State owned credit institutions, joint-venture credit institutions, foreign credit institutions, the Central People's Credit Fund shall submit the application files for issuing short-term and long-term valuable papers to the State Bank, Head-office.

2. Joint stock credit institutions of the State and the people shall submit the application files for issuing long-term valuable papers to the State Bank Head-office, submit the application files for issuing short-term valuable papers to State Bank branches in provinces, cities where their head offices locate.

Article 15. Transfer of valuable papers

1. The ownership of valuable papers shall be transferred in forms of purchase, sale, donations, gifts, exchange and inheritance in accordance with provisions of applicable laws.

2. Ownership transfer procedures:

a. In respect of non-bearer valuable papers: the owner of valuable paper shall state names, address and ID number of the transferee and sign on the back of the valuable paper, then deliver them to the transferee. The transferee shall come to the issuing credit institution to request for change of the ownership that has been registered with the credit institution.

b. In respect of the bearer valuable papers: bearer valuable papers shall be transferred freely.

Article 16. Dealing with risks and cases of non-payment

The dealing with contingent cases (worn out, torn off, lost, etc.) and cases of non-payment in respect of valuable papers issued shall be stipulated by credit institutions in accordance with provisions of applicable laws and rights of valuable papers owners must be ensured.

Article 17. Preservation, delivery and transport of valuable papers

The preservation, delivery and transport of valuable papers by credit institutions shall be performed in accordance with current provisions of the Government and the State Bank.

Chapter II

ISSUE OF SHORT-TERM VALUABLE PAPERS

Article 18. Face value

Face value of short-term valuable papers shall be pre-printed or negotiated between the issuing credit institution and the purchaser.

Article 19. Application files for issuing

Application files for issuing shall include:

1. The application for issuing valuable papers in the financial year.

2. The plan for issuing short-term valuable papers which clearly states the issuing purpose, the plan of use, total value of short-term valuable papers at the beginning of the financial year, total face value of short-term valuable papers issued in the financial year, number of issues and expected time of the issue, names of the issued valuable papers, currencies of the issue.

3. Financial statements of the two latest consecutive years to the time where the application for issuing is made.

4. The business plan of the financial year.

5. The charter and operation license (in respect of credit institutions that make the first issue).

6. Changes of organizational structure and other changes (if any).

Article 20. Forms of consideration and approval

On the basis of considering application files for issuing and conditions for issuing, the Governor of the State Bank or authorized General Managers of State Bank branches in provinces, cities, shall make the decision on approval or refuse to approve the plan of issuing short-term valuable papers for the whole year by credit institutions.

Article 21. Issuing organization

1. Credit institutions shall actively organize issues within the approved issuing plan of the whole year. Credit institutions shall only be entitled to issue in excess of the approved issuing plan for the whole year upon the written approval by the State Bank, which make the decision on approval of issue.

The application files for supplemental approval shall include: the application for issuing additional short-term valuable papers, the adjusted plan of issuing short-term valuable papers and the adjusted business plan of the financial year.

2. Credit institutions shall submit the issuing notice of the expected issue to the State Bank, which has made the approval decision, 20 working days before the time of issue. In case where there is no written decision of the State Bank 10 working days before the expected date of issue, credit institutions shall be entitled to organize the issue of valuable papers.

3. Issuing notice shall include following elements:

- Name of the issuing credit institution.

- Names of the valuable papers (term bonds, bills, short-term deposit certificates, etc.)

- Total face value of the issue.

- Terms of valuable papers; forms of issue

- The due date.

- Interest rate; modes of paying interest; time and place of interest payment.

- Modes of repayment.

- Place of repayment of the principal of valuable papers.

- Results of previous issues of short-term valuable paper in the financial year (if any).

- Other contents of the notice made by issuing credit institution.

Article 22. Report

Monthly, credit institutions shall submit a written report on the results of short-term valuable papers issues on 10th of the following month at the latest to the State Bank which has made the approval decision.

Chapter III

ISSUE OF LONG-TERM VALUABLE PAPERS

Article 23. Face value

1. Face value of long-term valuable papers denominated in VND and issued in form of certificates shall be VND 1 million at the minimum and VND 1 billion at the maximum. Face values that are greater than minimum face value shall be multiples of the minimum face value.

2. Face value of long-term valuable papers denominated in foreign currency and issued in form of certificates shall be USD 100 or equivalent amount of other foreign currencies at the minimum, USD 100, 000 or equivalent amount of other foreign currencies at the maximum. Other face values greater than the minimum face value shall be multiples of the minimum face value.

3. Face value of long-term valuable papers, which are bonds issued in form of certificates shall be pre-printed on the valuable papers.

4. Face value of long-term valuable papers, which are long-term deposit certificates issued in form of certificates shall be pre-printed or negotiated between the issuing credit institution and the purchaser.

5. Face value of long-term valuable papers issued in form of book entry shall be negotiated between the issuing credit institution and the purchaser.

Article 24. Issuing date and due date of valuable papers being bonds.

Long-term valuable papers, which are bonds and issued in the same issue, shall have the same issuing date and the same repayment date.

Article 25. Application files for each issue

The issuing credit institution shall submit the application file for issuing long-term valuable papers for each issue. The files of issue shall comprise of:

1. The application for issuing long-term valuable papers.

2. The plan for issuing long-term valuable papers which clearly states the issuing purpose, the plan of use, total issuing face value, face value, names of the valuable papers, issuing terms, interest and scope, modes and place of repayment of principal and payment of interest; conditions and clauses on rights and obligations of credit institutions and the purchasers. Plan of issuing long-term valuable papers must be approved by the Board of Directors.

3. Financial statements of the two latest consecutive years to the time of the application for issue. Credit institutions, which have been operating for less than two years, shall send the financial statement prepared from the time when their operation is commenced to the time of the application for issue. Financial statements must be audited by an auditing firm accepted by the State Bank or confirmed by the State Bank Inspection.

4. Business plan for the financial year.

5. Form of the long-term valuable papers to be issued.

6. Charter and operation license (in respect of credit institutions, which make the first issue).

7. Changes of organizational structure and other changes (if any).

Article 26. Forms of examination and approval

On the basis of considering application files for each issue and conditions for issue, the Governor of the State Bank shall make the decision on approval or refuse to approve each issue of long-term valuable papers by the credit institution.

Article 27. Organization for issue

1. After obtaining the written approval of the Governor of the State Bank, credit institutions shall give the notice of issuing long-term valuable papers in the mass media for 5 consecutive days before the issuing date at the latest.

2. The time for commencement of long-term valuable papers issue shall not exceed 45 days from the time of obtaining the approval of the Governor of the State Bank.

3. Credit institutions shall only be entitled to issue in excess of the total face value, which is approved, upon obtaining the additional approval in writing of the Governor of the State Bank.

The application files for additional approval shall include the application for additional issue of long-term valuable papers, the adjusted plan for issuing long-term valuable papers and the adjusted business plan for the financial year.

Article 28. Reports

Credit institutions shall, after 10 working days from the end of the issue at the latest, submit a written report on the result of the issue of long-term valuable papers to the State Bank (the Monetary Policy Department).

Chapter IV

RESPONSIBILITIES OF CREDIT INSTITUTIONS, UNITS OF THE STATE BANK OF VIETNAM AND STATE BANK BRANCHES IN PROVINCES, CITIES

Article 29. Responsibilities of credit institutions

1. To announce publicly the issue of valuable papers and to organize issuing valuable papers in accordance with provisions in Articles 21 and 27 of this Regulation.

2. To repay the principal and to pay interest timely and fully to the owners of valuable papers.

3. To report the result of the issue as stipulated in Articles 22 and 28 of this Regulation.

Article 30. Responsibilities of State Bank branches in provinces, cities

1. To receive application files for issue of short-term valuable papers, to give notice of the issue of short-term valuable papers, to report on the result of short-term valuable papers issue of local joint stock credit institutions of the State and the People in their respective locality.

2. To consider and make decision on approval of the application for issuing short-term valuable papers by local joint stock credit institutions of the State and the People.

3. To coordinate with the Monetary Policy Department to propose to the Governor for decision on the issue of long-term valuable papers by local joint stock credit institutions.

4. To report, on 15th of the following month at the latest, to the State Bank (the Monetary Policy Department) on the result of short-term valuable paper issues of the previous month of local joint stock credit institutions.

Article 31. Responsibilities of units of the State Bank of Vietnam

1. The Monetary Policy Department

a. To receive application files for issue of short-term and long-term valuable papers, to give notice of issue of short-term valuable papers, to report of results of short-term and long-term valuable paper issues of State owned credit institutions, joint venture credit institutions, foreign credit institutions, Central People's Credit Fund.

b. To receive application files for issue of long-term and long-term valuable papers, to give notice of issue of long-term valuable papers, to report of results of long-term and long-term valuable paper issues of joint stock credit institutions.

c. To take the lead, cooperate with related units to consider applications for issuing valuable papers by credit institutions to submit to the Governor of the State Bank for decision.

d. To research the performance of issuing valuable papers by credit institutions in order to recommend to the Governor of the State Bank for amendment, supplement of provisions on issuing valuable papers by credit institutions.

2. Banks and Non-Bank Credit Institutions Department

To cooperate with the Monetary Policy Department to consider and submit to the Governor for decision on issuing valuable papers by credit institutions.

3. The State Bank Inspection

a. To cooperate with and provide to the Monetary Policy Department the business performance of credit institutions assessed through the off-site supervision and inspection of credit institutions to submit to the Governor of the State Bank for decision on issuing valuable papers by credit institutions.

b. To inspect and supervise the issue of valuable papers by credit institutions; to deal, within their scope of competence, or to propose the Governor of State Bank to deal with violations of provisions stated in this Decision.

4. The Foreign Exchange Control Department

To cooperate with the Monetary Policy Department to consider and submit to the Governor for decision on issuing valuable papers denominated in foreign currency by credit institutions.

5. The Accounting and Finance Department

To provide guidance on the system of accounts and the accounting for issuing short-term and long-term valuable papers by credit institutions.

6. The Issuing and Vault Department

a. To advise credit institutions on the design of sample and the printing of valuable papers to ensure the counterfeit features.

b. To organize the design, printing of valuable papers and provide blank printed documents upon request by credit institutions.

Article 32. Dealing with violations

Organizations, individuals that violate provisions in this Regulation shall, depending on the nature and seriousness of the violation, be fined for administrative violations committed in the monetary area and banking activities or be prosecuted for criminal liability.

Article 33. Amendment, supplement

The amendment, supplement of this Regulation shall be decided by the Governor of the State Bank.