Quyết định 893/2001/QD-NHNN

DECISION

ON THE PERFORMANCE OF THE FOREIGN CURRENCY SWAP OPERATION BETWEEN THE STATE BANK AND BANKS TO MEET REQUIREMENTS FOR THE SHORT-TERM VND FUNDS OF BANKS

THE GOVERNOR OF THE STATE BANK

Pursuant to the Law on the State Bank of Vietnam No. 01/1997/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.

This Decision shall provide for the performance of foreign currency swap operations (SWAP) between the State Bank and banks to meet requirements for short-term VND funds of banks in the case of their temporary liquidity shortage to regulate the money market in line with objectives of the monetary policy from time to time.

Article 2.

The foreign currency swap operation provided for in this Decision shall be performed through an agreement of State Bank of Vietnam to purchase US$ in form of a spot transaction, and to re-sell the same amount of US$ after a certain period of time in form of a forward transaction. The performance of swap operation for other foreign currencies shall be provided for by the Governor of the State Bank of Vietnam from time to time.

Article 3.

The State Bank shall use the money supply for the refinancing purpose in each period of time to perform the foreign currency swap operation with banks.

Article 4.

Subjects participating in the foreign currency swap operation with the State Bank in accordance with provisions of this Decision shall be banks which are authorized by the State Bank to engage in foreign exchange activities.

Article 5.

The foreign currency swap operation with the State Bank shall be performed with terms of 7 days, 15 days, 30 days, 60 days and 90 days.

Article 6.

1. The exchange rate applicable by the State Bank to the purchase of US$ shall be the spot exchange rate of the State Bank at the date where the foreign currency swap agreement is entered into (or at the date where the foreign currency swap transaction is confirmed through the REUTERS network).

2. The exchange rate applicable by the State Bank to the resale of US$ to banks that perform the foreign currency swap operation shall be determined on the basis of the spot exchange rate applicable by the State Bank at the signing date of the foreign currency swap contract (or at the date where the foreign currency swap transaction is confirmed through the REUTERS network) and objectives of the monetary policy from time to time. The exchange rate applicable by the State Bank to the resale of US$ to banks that perform the foreign currency swap operation shall be announced by the State Bank from time to time.

Article 7.

The State Bank shall perform the foreign currency swap operation with banks at the Banking Operation Department.

Article 8. Sequences of the performance of foreign currency swap operation

1. Upon requirement for the performance of foreign currency swap operation, banks shall submit a written request to the State Bank (the Economic Research Department), which state clearly data (statistics) evidencing the shortage of VND liquidity for State Bank's consideration and decision.

2. Upon the approval of the State Bank, banks that have requirement for the performance of foreign currency swap operation shall perform the foreign currency swap with the State Bank (the Banking Operation Department) under the pro-forma contract attached or through the transaction system on the REUTERS network.

3. The transfer of US$ for sale to the State Bank shall be carried out and completed within 02 working days following the date where the foreign currency swap contract is entered into (or following the date where an foreign currency swap transaction is confirmed through the REUTERS network) at the latest. Upon receipt of the credit advice of the foreign currency, the State Bank shall immediately transfer the required VND amount to the Bank that has performed the foreign currency swap.

4. The transfer of VND for the repurchase of US$ from the State Bank shall be carried out and completed within 02 working days following the date where the foreign currency swap contract terminates (or following the date where the term of the foreign currency swap transaction which was confirmed through the REUTERS network expires). Upon the receipt of the credit advice of the VND, the State Bank shall transfer the US$ amount to the Bank that has performed the foreign currency swap.

Article 9.

Any funds transfer, which is made later than the time limit provided for in paragraph 3, paragraph 4, Article 8 of this Decision shall be treated as follows:

1. In case of US$ transfer: a penalty equal to 150% of interest rate applicable to a corresponding term in Singapore Inter-bank money market (SIBOR) shall be applied to the amount and for the number of days of late payment;

2. In case of VND transfer: a penalty equal to 150% of current refinancing rate of the State Bank shall be applied to the amount and for the number of days of late payment.

Article 10. Responsibility of Departments in the State Bank:

1. Periodically or where necessary, the Monetary Policy Department shall take the lead to cooperate with the Foreign Exchange Control Department and the Credit Department to exchange information on the market demand/supply of foreign currency, exchange rate movements, developments of bank's liquidity, performance of the State Bank's refinancing to banks as to formulate the orientation of the foreign currency swap operation in the relation with other liquidity regulating instruments of the State Bank such as refinancing facility, rediscount, open market operation to submit to the Governor for decision.

2. The Monetary Policy Department shall be responsible to:

2.1 Submit to the Governor for approval of the money supply for the refinancing purposes from time to time which is used for the performance of foreign currency swap operation with banks and give notice thereof to related Departments for their performance of the foreign currency swap operations.

2.2 Submit report to the Governor for decision of the foreign currency swap with each bank within two working days of receipt of the request for the foreign currency swap operation from banks and give notice thereof to the Banking Operation Department for its performance in the case of its acceptance of the foreign currency swap.

3. The Foreign Exchange Control Department shall be responsible for the daily provision of information on buying, selling exchanges rates, transaction exchange rate in the inter-bank foreign currency market to the Monetary Policy Department and the Banking Operation Department.

4. The Banking Operation Department of the State Bank shall be responsible for:

4.1 Provide in detail the time for the transfer.

4.2 Perform foreign currency swap contracts or foreign currency swap transactions with banks through the REUTERS networks upon receipt of notice from the Monetary Policy Department.

4.3 Deal with violations of transfer in accordance with Article 9 of this Decision

4.4 Consolidate and report weekly to the Governor of the State Bank on the performance of the foreign currency swap operations in the previous week with copies sent to the Monetary Policy Department, the Foreign Exchange Control Department, the Credit Department.

5. The Finance and Accounting Department shall be responsible for the guidance on the accounting for the foreign currency swap operations as provided for in this Decision.

Article 11.

This Decision shall be effective from the date of signing. Any supplement, amendment of provisions of this Decision shall be decided upon by the Governor of the State Bank of Vietnam.

Article 12. The Director of the Administration Department, the Director of the Monetary Policy Department, the Director of the Foreign Exchange Control Department, the Director of the Credit Department, the Director of the Banking Operation Department, the Director of the Finance and Accounting Department, Directors of related units in the State Bank, Directors General (Directors) of banks engaging in foreign currency swap operations with the State Bank shall be responsible for the implementation of this Decision.

APPENDIX

FOREIGN CURRENCY SWAP CONTRACT

Pursuant to the Ordinance on Economic Contract dated 29 September, 1989 of the State Council of Vietnam;
Pursuant to the Decree No. 63/1998/ND-CP dated 17 August, 1998 of the Prime Minister on foreign exchange control;
Pursuant to the Decision No. 893/2001/QD-NHNN dated 17 July, 2001 of the Governor of the State Bank on the performance of the foreign currency swap operation between the State Bank and banks to meet the requirement for short-term funds of banks.

This day of....................we:

THE STATE BANK OF VIETNAM (HEREINAFTER REFERRED TO AS PARTY A)

Address:

Telephone:

Fax:

Representative person: Mr. (Mrs.).....

Position:

THE BANK........ (HEREINAFTER REFERRED TO AS PARTY B)

Address:

Telephone:

Fax:

Representative person: Mr. (Mrs.)....

Position:

Jointly enter into the foreign currency swap contract with following agreements:

Article 1.

Party B shall sell US$ on the spot basis to party A at the exchange rate of .......

Article 2.

Party A shall sell US$ on the.....forward basis to party B at the exchange rate of.....

Article 3.

The transfer of funds and the treatment of late payment transfer shall be made in accordance with the provisions in paragraph 3, paragraph 4 Article 8 and Article 9 of the Decision No. 893/2001/QD-NHNN dated 17 July, 2001 of the Governor of the State Bank on the performance of foreign currency swap operation between the State Bank with banks to meet the requirement for short-term VND funds of banks.

Article 4.

The two parties commit to observe seriously agreements made in this Contract. The parties shall timely inform each other in writing of any obstacle that may arise for their joint solution.

This Contract is made in 04 copies with the same value, each party keeps 02 copies