Thông tư 02/2021/TT-NHNN

CIRCULAR

ON GUIDELINES FOR FOREIGN CURRENCY TRANSACTIONS ON FOREIGN CURRENCY MARKET BY CREDIT INSTITUTION AUTHORIZED TO MAKE FOREIGN CURRENCY TRANSACTIONS

Pursuant to the Law on the State Bank of Vietnam dated June 16, 2010;

Pursuant to the Law on Credit Institutions dated June 16, 2010 and Law on amendments to Law on Credit Institutions No. 17/2017/QH14 dated November 20, 2017;

Pursuant to Ordinance on Foreign Currencies dated December 13, 2005 and Ordinance on amendments to Ordinance on Foreign Currencies dated March 18, 2013;

Pursuant to the Government's Decree No. 70/2014/ND-CP dated July 17, 2014 on guidelines for the Ordinance on Foreign Currencies and Ordinance on amendments to Ordinance on Foreign Currencies;

Pursuant to the Government’s Decree No. 16/2017/ND-CP dated February 17, 2017 on functions, duties, powers and organizational structure of the State Bank of Vietnam;  

At the request of the Director of the Monetary Policy Department;

The Governor of the State Bank of Vietnam hereby promulgates a Circular on foreign currency transactions on foreign currency market by credit institution authorized to make foreign currency transactions.

Chapter I

GENERAL PROVISIONS

Article 1. Scope and regulated entities

1. This Circular provides guidelines for foreign currency transactions on domestic foreign currency market among credit institutions authorized to make foreign currency transactions (hereinafter referred to as “authorized credit institutions”) and between authorized credit institutions and their clients.

2. Foreign currency transactions between authorized credit institutions and the State Bank of Vietnam (hereinafter referred to as “State Bank”) shall be carried out in accordance with regulations of the State Bank.

3. This Circular is not applicable to foreign currency transactions on the international market. Authorized credit institutions shall make foreign currency transactions in accordance with their establishment and operation licenses or decisions on amendments to these licenses according to regulations of the State Bank or decisions on definite-term approval for other foreign currency transactions and/or other special documents of the Government, the Prime Minister and the State Bank (hereinafter collectively referred to as “licenses”); take responsibility for this type of transactions and comply with regulations of law on safety and risk prevention.

Article 2. Definitions

In this Circular, the terms below are construed as follows:

1. “authorized credit institutions” includes banks, non-bank credit institutions and branches of foreign banks authorized to trade in foreign currencies and provide foreign currency services.

2. “clients” includes:

a) Residents being business entities (including credit institutions other than authorized credit institutions), other organizations and individuals;

b) Non-residents being organizations and individuals.

3. “business entities" includes organizations established and operating under Vietnam’s law, including enterprises, cooperatives, cooperative unions and other organizations making investments other than authorized credit institutions.

4. “other organizations” mentioned in Point a Clause 2 of this Article means organizations established and operating under Vietnam’s law other than those mentioned in Clause 1 and Clause 3 of this Article.

5. “partners of an authorized credit institution” includes other credit institutions and clients.

6. “foreign currency transactions” includes foreign exchange spot transaction, foreign exchange forward, currency swap, and call option and put option transactions.

The term “giao dịch ngoại tệ” (“foreign currency transaction”) used in this Circular is synonymous to the term “giao dịch hối đoái” (“exchange transaction”) used in other legislative documents promulgated by the Governor of the State Bank.

7. “foreign exchange spot transaction” (hereinafter referred to as “FX spot”) means an exchange of an amount of a currency for another currency at the exchange rate at the transaction time where the payment is made within 02 working days after the transaction date.

8. “foreign exchange forward” (hereinafter referred to as “FX forward”) means an exchange of an amount of a currency for another currency at the exchange rate at the transaction time where the payment is made within 03 working days after the transaction date.

9. “currency swap” means a transaction between two parties which involves buying and selling of an equivalent amount of money in different currencies on different days at different exchange rates on each day.

Currency swap includes two FX spots or two FX forwards or one FX spot and one FX forward.

10. “call option or put option transaction” (hereinafter referred to as “FX option transaction”) means a transaction between two parties in which the buyer pays the seller a premium for the FX option but the buyer does not have the obligation to buy or sell an amount of a foreign currency for another foreign currency within a period of time agreed by both parties at the exchange rate determined at the transaction time and the payment is made on a later date. If the buyer opts to exercise their call option or put option, the seller has the obligation to sell or buy the amount of foreign currency as agreed upon.

In FX option transactions, the put option for one currency is also the call option for another currency.

11. “premium” means the amount of money payable by the option buyer to the option seller for the call option or put option in an FX option transaction.

12. “expiration date of FX option transaction” means the latest date by which the buyer may exercise their call or put option and which is at least 02 working days before the payment date.

13. “transaction date” means the day on which both parties conclude a transaction agreement according to regulations of this Circular.

14. “payment date” means the day on which both parties transfer the amounts of currencies exchanged with each other according to the concluded transaction agreement. If the payment date falls on a weekly day off or holiday of Vietnam’s foreign currency market and/ or the market of a foreign currency involved in the transaction, the payment date may be the following working day.

15. “transaction unit” means an operating unit of an authorized credit institution that performs the function of negotiating foreign currency transactions with partners of the institution.

16. “transaction support unit” means an operating unit of an authorized credit institution that performs the function of formulating, sending and receiving transaction confirmations with partners of the institution.

17. “transaction representative” means an individual affiliated to a transaction unit of an authorized credit institution and authorized by this credit institution to conclude transaction agreements with partners being other authorized credit institutions in writing as per the law.

18. “competent person” means an individual responsible for approving contents within their competence, which is provided for by the authorized credit institution in its internal regulations.

Article 3. Transaction rules

1. Foreign currency transactions must be made in accordance with regulations of this Circular and the scope of foreign currency transactions of each credit institution and branch of each foreign bank according to their licenses. With regard to the foreign currency transactions that credit institutions and branches of foreign banks are not authorized to make, these credit institutions and branches of foreign banks may make foreign currency transactions with authorized credit institutions as business entities in accordance with regulations of this Circular.

2. The parties to a foreign currency transaction must confirm and make the transaction in a transparent and truthful manner and take responsibility for their decision to participate in the transaction.

3. Foreign currency transactions with other authorized credit institutions shall only be made by headquarters of banks and non-bank credit institutions or Vietnamese offices of branches of foreign banks authorized to trade in foreign currencies and provide foreign currency services. This regulation is not applicable to transactions involving currencies of countries bordering Vietnam in border areas and border checkpoint economic zones.

Article 4. Types and scope of authorized transactions

1. Authorized credit institutions may make FX spots, FX forwards, currency swaps and FX option transactions with other authorized credit institutions.

2. Authorized credit institutions may make FX spots, FX forwards, currency swaps and put option transactions with business entities.

3. Authorized credit institutions may make FX spots and FX forwards with residents being other organizations and individuals.

4. Authorized credit institutions may make FX spots with non-residents being organizations and individuals and FX forwards with non-residents mentioned in Clause 5 of this Article.

5. Authorized credit institutions may sell foreign currencies in FX forwards with non-residents being foreign investors holding governmental bonds in VND in the domestic market to prevent exchange rate risk for bonds held by these investors.

Article 5. Currencies and exchange rates

1. Each authorized credit institution shall stipulate the foreign currencies to be traded.

2. The spot exchange rate between VND and USD of an FX spot or FX spot within a currency swap shall be determined based on the official rate announced by the State Bank on the transaction date and within the margin decided by the State Bank.

3. The forward rate between VND and USD in an FX forward or an FX forward within a currency swap shall be agreed upon by the parties thereto but not exceed the exchange rate determined based on:

a) The spot exchange rate on the transaction date;

b) The difference between two existing interest rates which are the refinancing interest rate announced by the State Bank and Federal Funds Target Rate. If the Federal Funds Target Rate is within the margin, the lowest interest rate in the margin shall apply.

c) Term of the transaction.

4. Exchange rates between VND and other currencies other than USD and between foreign currencies with each other in foreign currency transactions shall be agreed upon by the parties thereto.

5. Authorized credit institutions must publish spot exchange rates between VND and other currencies when making transactions with clients at their foreign currency transaction locations and on their official websites (if any). Authorized credit institutions shall make transactions with their clients at published exchange rates, unless otherwise agreed upon by both parties.

Article 6. Term of transactions

1. Except for the case in Clause 2 of this Article, the term of FX forwards, FX forwards within currency swaps and FX option transactions shall be agreed upon by the parties thereto.

2. The term of FX forwards and FX forwards within currency swaps between VND and a foreign currency shall be a maximum of 365 days from the transaction date.

Article 7. Transaction methods

1. Foreign currency transactions shall be carried out directly or via transaction means, including phones and electronic means.

2. Parties to foreign currency transactions made via electronic means and phones shall agree upon and take responsibility for these transactions, ensuring security, safety, protection of data messages and confidentiality as per the law. Data messages may hold the same value as documents if they meet the requirements in Article 12 of the Law on E-Transactions. Foreign currency transactions made by electronic means must comply with regulations of the Law on E-Transactions and relevant guiding documents.

3. For transactions made via the phone, authorized credit institutions must stipulate and inform their partners of phone numbers that may be used for these transactions. Phones must have a voice recording function and contents of transaction agreements with partners must be extractable for the purpose of transaction confirmation and internal control by credit institutions and dispute settlement (if any).

Article 8. Transaction fees

Authorized credit institutions may not charge transaction fees for foreign currency transactions.

Article 9. Transaction time

1. Authorized credit institutions shall stipulate the time where they may make transactions with their partners.

2. Authorized credit institutions must take measures to manage and control transactions made outside of the abovementioned time. Transactions made outside of authorized time must be approved by competent persons and recorded into the foreign currency position of authorized credit institutions on the transaction date.

Article 10. Transaction agreements

1. A written agreement on foreign currency transaction between an authorized credit institution and its partner must contain the following basic information:

a) Names of the parties;

b) Transaction date;

c) Currencies of the transaction;

d) Amount of foreign currencies;

dd) Exchange rate;

e) Payment date;

g) Premium (for FX option transactions);

h) Expiration date (for FX option transactions).

2. Besides the information mentioned in Clause 1 of this Article, a written agreement on foreign currency transaction between authorized credit institutions must contain the following additional information:

a) Transaction representative;

b) Payment instructions;

c) Transaction means;

d) Transaction confirmation method and person competent in transaction confirmation for transactions made via electronic means and phones.

3. Apart from the information mentioned in Clause 1 and Clause 2 of this Article, the parties may agree upon other contents as long as they are conformable with this Circular and other regulations of law.

4. The agreement mentioned in Clause 1, Clause 2, and Clause 3 of this Article shall be made in the form or a framework agreement and/or a detailed agreement.

Chapter II

SPECIFIC PROVISIONS

Section I. FOREIGN CURRENCY TRANSACTIONS BETWEEN AUTHORIZED CREDIT INSTITUTIONS ON INTER-BANK FOREIGN EXCHANGE MARKET

Article 11. Transaction agreements

1. The transaction representatives of both parties shall negotiate the basic contents mentioned in Clauses 1 and 2 Article 10 herein concerning the foreign currency transaction based on the transaction limit within their competences.

2. A transaction agreement concluded by the transaction representatives of both parties via transaction means may not be unilaterally changed and may only be changed or terminated after both parties have reached an agreement in writing.

3. Authorized credit institutions shall take responsibility for granting authorization to their transaction representatives and setting transaction limits and are obligated to make foreign currency transactions concluded by their transaction representatives with their partners.

Article 12. Transaction confirmation

1. If a transaction agreement is concluded by electronic means or the phone, the parties thereto must make and send confirmations of the transaction to each other. The transaction support unit of each party shall make and send a confirmation of the transaction within the transaction date. For transactions arising outside of the authorized time, the transaction confirmation must be sent no later than the working day following the transaction date.

2. Contents of a transaction confirmation shall be agreed upon by the parties to the transaction but it must include the basic information mentioned in Clause 1 Article 10 of this Circular and obtain approval from the competent person mentioned in Point d Clause 2 Article 10 herein.

3. For transactions confirmed via SWIFT (Society for Worldwide Interbank and Financial Telecommunication), authorized credit institutions must formulate procedures for creation, sending and receipt of confirmations to ensure safety and prevent risk. Authorized credit institutions must comply with regulations of the Law on E-Transactions and relevant law provisions.

4. If a transaction confirmation is faxed or emailed, within 10 working days from the transaction date, both parties must send the original copy of the confirmation to each other.

Article 13. Transaction documents

When an authorized credit institution makes a foreign currency transaction with another authorized credit institution, documents proving the purpose of use of foreign currencies are not required.

Section II. FOREIGN CURRENCY TRANSACTIONS BETWEEN AUTHORIZED CREDIT INSTITUTIONS AND CLIENTS

Article 14. Transaction agreements

1. Authorized credit institutions and clients shall conclude transaction agreements with the basic information mentioned in Clause 1 Article 10 herein as prescribed by law.

2. Transaction agreements shall be concluded by transaction units of authorized credit institutions according to regulations in internal procedures for foreign currency transactions promulgated by authorized credit institutions. A concluded transaction agreement may not be unilaterally changed and may only be changed or terminated after both parties have reached an agreement in writing.

3. In case a client makes a transaction directly at a transaction location of an authorized credit institution, both parties shall conclude the transaction agreement in writing, which must bear the signature of the competent person.

Article 15. Transaction confirmation

1. For transaction agreements concluded by the phone or electronic means, both parties thereto shall make written confirmations of the transactions, which must include the basic information mentioned in Clause 1 Article 10 herein and the signature of the competent person.

2. Transaction confirmations must be made and sent no later than the working day following the transaction date.

3. In case both parties sign a written framework agreement which states that the client allows the authorized credit institution to make the foreign currency transaction automatically, the authorized credit institution shall adhere to the framework agreement but must notify the client of the transaction made and ensure that the basic information mentioned in Clause 1 Article 10 herein is available.

4. If a transaction confirmation is faxed or emailed, within 10 working days from the transaction date, both parties must send the original copy of the confirmation to each other.

Article 16. Transaction documents

1. Clients must present documents that contain information about purpose of use, quantity and type of foreign currency, deadline for payment or wire transfer according to applicable regulations on foreign currency management and regulations of authorized credit institutions when making the following foreign currency transactions with authorized credit institutions:

a) Buying a foreign currency in an FX spot or FX forward;

b) Buying a foreign currency in a currency swap between a foreign currency with VND, or buying a foreign currency in a transaction with early payment date of a currency swap between two foreign currencies;

c) Buying call option (documents concerning the received foreign currency are required);

2. In case the foreign currency payment plan of the client changes due to an objective reason approved by the authorized credit institution and negotiated by the client in advance, on the basis of a written request from the client sent together with documentary proof of the necessity of a change to the transaction term, the authorized credit institution and the client may make currency swaps to change the term of the signed FX forward as appropriate to the term stated in documents presented. Total term of the signed FX forward and all currency swaps shall be a maximum of 365 days starting from the transaction date.

3. For any foreign loan in foreign currency whose initial or remaining loan term is longer than 365 days, the client may use VND to buy foreign currencies with a term of 365 days from authorized credit institutions for the purpose of exchange rate risk prevention. Based on a written request from the client, at least 02 working dates before the term of a signed FX forward expires, the authorized credit institution and the client may make currency swaps to extend the term of the signed transaction. The term of FX forward in currency swaps shall be 365 days or equal to the remaining loan term if the remaining loan term is less than 365 days. Total term of FX forward and following currency swaps shall not exceed total loan term.

4. For purchase of foreign currencies in FX forwards by foreign investors mentioned in Clause 5 Article 4 of this Circular:

a) When buying a foreign currency in an FX forward with an authorized credit institution, the foreign investor must provide documentary proof of ownership of governmental bonds, ensuring that the value and term of the foreign currency transaction does not exceed the purchase price and remaining term of those bonds. Within 07 working days from the date on which the FX forward is made, the foreign investor shall provide documents on blocking of the abovementioned bonds at Vietnam Securities Depository and Clearing Corporation for the signed FX forward to enter into force.

b) At least 02 working days before the expiration date of an FX forward, if the foreign investor wishes to continue preventing exchange rate risk for their bonds, the authorized credit institution and client may make a currency swap to extend the term of the signed FX forward. The authorized credit institution must ensure that the term of this currency swap and following currency swaps (if any) does not exceed the remaining term of the blocked bonds. Total term of the FX forward and currency swaps may not exceed the term of the blocked bonds.

Article 17. Selling of foreign currencies to transactions before payment deadline

1. For requests for purchase of foreign currencies using VND from clients at least 03 working days before the payment deadline written in the documents mentioned in Article 16 of this Circular, authorized credit institutions may sell foreign currencies through FX forwards, excluding the following cases:

a) Foreign investors purchases and transfer foreign currencies overseas according to regulations in Article 9 of the Government's Decree No. 70/2014/ND-CP dated July 17, 2014 on guidelines for the Ordinance on Foreign Currencies and Ordinance on amendments to Ordinance on Foreign Currencies;

b) Vietnamese citizens purchasing foreign currency cash for the purposes mentioned in Clause 1 Article 2 of Circular No. 20/2011/TT-NHNN dated August 29, 2011 by the Governor of the State Bank on guidance on the purchase, sale of foreign currencies in cash between individuals and authorized credit institutions.

2. The last day of the term of the FX forwards mentioned in Clause 1 of this Article must not come 05 working days before the payment deadline stated in client’s documents.

Chapter III

RESPONSIBILITIES OF ORGANIZATIONS, INDIVIDUALS AND AFFILIATES OF STATE BANK

Article 18. Responsibilities of authorized credit institutions

1. Promulgate internal regulations on procedures for making foreign currency transactions in compliance with regulations of this Circular and relevant regulations of law. To be specific:

a) Specify responsibilities and powers of relevant individuals and units when making foreign currency transactions, ensuring compliance with regulations on internal control systems of commercial banks and branches of foreign banks;

b) Divide functions and tasks between the transaction unit and transaction support unit concerning transactions with other authorized credit institution, ensuring the participation of these units in the confirmation and making of each foreign currency transaction.

2. Promulgate internal regulations on risk management in foreign currency transactions in compliance with regulations of the State Bank and relevant legislative documents.

3. Provide clients with instructions on compliance with regulations of this Circular and other relevant regulations on foreign exchange management when providing foreign exchange services and making foreign currency transactions with clients.

4. Inspect, consider and retain client’s documents as appropriate to actual transactions to ensure that foreign currency transactions are carried out for the intended purpose and in accordance with regulations of law on foreign exchange management.

5. Report on foreign currency transactions according to statistical and reporting regulations of the State Bank.

Article 19. Responsibilities of clients

Responsibilities of clients when making foreign currency transactions with authorized credit institutions:

1. Strictly comply with the regulations of this Circular.

2. Take responsibility before the law for the validity of documents presented to authorized credit institutions.

Article 20. Responsibilities of State Bank affiliates

1. Monetary Policy Department shall take charge of handling issues related to foreign currency transactions that arise during the implementation of this Circular.

2. Banking Supervision Agency; and State Bank branches of provinces and central-affiliated cities shall:

a) Inspect and supervise compliance with regulations of this Circular and handle violations as per the law;

b) Notify Monetary Policy Department of issuance of establishment and operation licenses, decisions on amendments to establishment and operation licenses, written permissions for foreign currency transactions, and other documents about foreign currency transactions issued by the State Bank to branches of foreign banks and credit institutions.

3. State Bank affiliates shall handle issues arising from the implementation of this Circular within their competences.

Chapter IV

IMPLEMENTATION CLAUSE

Article 21. Effect

1. This Circular takes effect from May 17, 2021 and supersedes Circular No. 15/2015/TT-NHNN dated October 02, 2015 on foreign currency transaction on foreign currency market by credit institution permitted to make foreign currency transactions.

2. Credit institutions, branches of foreign banks and their clients may continue carrying out foreign currency transaction agreements that are concluded and come into force before the effective date of this Circular. Any revisions to the aforesaid agreements made after the effective date of this Circular are only permitted if they are conformable with regulations of this Circular.

Article 22. Implementing responsibilities

Head of State Bank Office, Director of Monetary Policy Department and heads of affiliates of the State Bank, credit institutions and branches of foreign banks shall implement this Circular.