Thông tư 30/2019/TT-NHNN

CIRCULAR

RESERVE REQUIREMENTS TO BE SATISFIED BY CREDIT INSTITUTIONS AND FOREIGN BANK BRANCHES

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 the Law on amendments to the Law on Credit Institutions dated November 20, 2017;

Pursuant to the Government’s Decree 16/2017/ND-CP dated February 17, 2017 defining the functions, tasks, 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 promulgates a Circular on reserve requirements to be satisfied by credit institutions and foreign bank branches.

Article 1. Scope

This Circular provides regulations on determination and maintenance of reserve requirements by credit institutions and foreign bank branches for implementing national monetary policy.

Article 2. Regulated entities   

Credit institutions and foreign bank branches (hereinafter referred to as “credit institutions”) that are duly established and operating in accordance with the Law on Credit Institutions, except credit institutions prescribed in Article 3 hereof.

Article 3. Credit institutions not bound by reserve requirements

1. Credit institutions placed under special control: A credit institution is not required to maintain the reserve requirement for the period commencing from the month following the month when it is placed under the special control according to the decision made by the State Bank of Vietnam (hereinafter referred to as “SBV”) to the end of the month when the special control is lifted by SBV.  

2. Credit institutions that have not yet started their business: The credit institution is not required to maintain the reserve requirement until the end of the month in which it is inaugurated. In this case, the credit institution shall notify SBV (Operations Center) in writing of its date of inauguration within 3 working days from that inauguration date.

3. Credit institutions that are given an approval for dissolution or issued with a decision to institute bankruptcy proceedings or decision on revocation of business license by a competent authority: The credit institution is not required to maintain the reserve requirement from the month following the month when it obtains the approval for dissolution or when the decision to institute bankruptcy proceedings or the decision on revocation of business license comes into force. In this case, the credit institution shall send the decision to institute bankruptcy proceedings to SBV (Operations Center) within 3 working days from the day on which it receives this decision.

Article 4. Required reserves

Required reserve is the minimum amount of money that a credit institution must keep on deposit at SBV, and is determined according to Article 5 hereof, maintained according to Article 9 hereof and elaborated in the Appendix enclosed herewith.

Article 5. Determination of required reserves

1. SBV shall determine the required reserve to be kept by a credit institution during a reserve maintenance period by multiplying the reserve ratio applied to that credit institution for each type of deposits during the reserve maintenance period by the average balance of reservable deposits it holds during the reserve computation period corresponding to that type of deposits.

The following formula shall be adopted to calculate the required reserve:

DTBB = (DTBB_i ratio x HĐ_i)

Where:

DTBB: The required reserve to be kept by the credit institution during the reserve maintenance period;

DTBB_i ratio: The reserve ratio applied to the credit institution, corresponding to the reservable deposits of type i during the reserve maintenance period;

HĐ_i: The average balance of reservable deposits of type i held by the credit institution during the reserve computation period.

2. The average balance of reservable deposits held at a credit institution during the reserve computation period is calculated by dividing the sum of end-of-day balances of reservable deposits held at the entire network of the credit institution (including the headquarters, domestic branches and domestic financially-dependent affiliates of a credit institution or of a foreign bank branch) in the period by the number of days in the reserve computation period.

The average balance of reservable deposits of each type is calculated by adopting the following formula:

3. Reserve maintenance period is the length of time of the current month, beginning from the first day of the month and ending on the last day of that month, including weekends and public holidays.

4. Reserve computation period is the length of time of the previous month, beginning from the first day of the month and ending on the last day of that month, including weekends and public holidays.

Article 6. Reserve ratios, interest rates on required reserves and excess reserves

1. Reserve ratios for credit institutions

a) The SBV’s Governor is accorded authority to decide the reserve ratio for each type of credit institutions and each type of deposits that corresponds to the national monetary policy goals and objectives in each period, except reserve ratios for VND deposits imposed on credit institutions prescribed in Point b of this Clause;

b) If a credit institution granting agricultural and rural development loans is supported via the reserve requirement tool, the reserve ratio for VND deposits will be subjected to SBV's specific regulations on use of monetary policy tools for supporting credit institutions granting agricultural and rural development.

2. Interest rates on required reserves and excess reserves applied to each type of credit institutions and each type of deposits shall be subject to the decision issued by SBV in conformity with national monetary policy goals and objectives in each period.

Article 7. Reduction in reserve ratios

The reserve ratios imposed on the assisting credit institutions defined in Clause 40 Article 4 of the Law on Credit Institutions (as amended in 2017) as prescribed in Clause 1 Article 6 hereof shall be reduced by 50% regardless of types of reservable deposits according to the approved recovery plan as prescribed Clause 7 Article 148dd of the Law on Credit Institutions (as amended in 2017).

Article 8. Reservable deposits

Reservable deposits include:

1. Deposits of organizations (except for other credit institutions established and operating in Vietnam) and deposits of individuals at credit institutions in the forms of demand deposits, term deposits, saving deposits and special deposits.

2. Funds earned by credit institutions from the issuance of deposit certificates, promissory notes, treasury bills and bonds.

3. Other deposits held by credit institutions in the principle of fully paying principals and interests to depositors as agreed, except margins and deposits of other credit institutions established and operating in Vietnam.

Article 9. Maintenance of required reserves

1. Credit institutions shall maintain the required reserves on their checking accounts opened at SBV.

2. Each credit institution shall maintain the full required reserve at SBV during the reserve maintenance period according to the following rules:

a) The average of balances in checking accounts opened by the credit institution at SBV, including checking accounts opened at the Operations Center and SBV's provincial branches, during the reserve maintenance period (hereinafter referred to as “actual reserve”) shall not be less than the required reserve in that period.

The actual reserve shall be calculated by adopting the following formula: 

b) Total daily balances in checking accounts opened by the credit institution at SBV over a reserve maintenance period may be either lower or higher than the required reserve in that period.

3. Determination of excess or deficiency in required reserves

a) Excess reserve is the part of the actual reserve in excess of the required reserve in a reserve maintenance period;

b) Reserve deficit is the negative difference between the actual reserve and the required reserve in a reserve maintenance period.

4. The credit institution suffering from deficiency in the required reserve shall incur administrative penalties in accordance with applicable regulations on penalties for administrative violations in monetary and banking sector.

Article 10. Reserve requirements for foreign currency deposits

1. Foreign currency deposits held by a credit institution which are used as the basis for calculating the required reserve to be satisfied by that credit institution are deposits in any foreign currency type, converted into USD and for which the required reserves must be kept in USD.

2. In case the average balance of reservable deposits in one of the following foreign currencies, EUR, JPY, GBP and CHF, at a credit institution accounts for more than 50% of its total reservable foreign currency deposits, reservable foreign currency deposits may be converted into this foreign currency and the required reserve may be made in the same currency.

3. Foreign currencies may be converted into USD as prescribed in Clause 1 of this Article or into the foreign currency prescribed in Clause 2 of this Article through VND according to the exchange rates from foreign currencies to VND used by the credit institution for making the balance sheet in accordance with SBV's regulations on chart of accounts of credit institutions in the month corresponding to the reserve computation period.

Article 11. Reporting on average balance of reservable deposits

1. Within 3 first working days of every month, each credit institution shall prepare a report on the average balance of reservable deposits during the reserve computation period according to Form DTBB001 enclosed herewith, which shall be then used as the basis for determining the required reserve to be satisfied during the reserve maintenance period, and then send it to SBV's Operations Center directly or by post, electronically via the reserve requirements management system, or in other form as regulated by SBV (Operations Center). The credit institution shall assume legal responsibility for the accuracy, legitimacy and validity of its report.

2. Credit institutions that have a reserve requirement of 0% for reservable deposits of all types shall not submit the report specified in Clause 1 of this Article over reserve maintenance periods in which the reserve requirement of 0% applies.

Article 12. Responsibility of SBV’s provincial branches

Each SBV’s provincial branch shall:
1. Update the reserve requirement management system with timely and accurate information about checking accounts opened by credit institutions at this branch according to instructions given by the Information Technology Department.

2. Play the leading role and cooperate with the Information Technology Department in ensuring the accuracy and punctuality of information about balances in checking accounts opened by credit institutions at this branch on the reserve requirement management system.

3. Provide SBV’s Operations Center with documents or decisions on special control, termination of special control, dissolution or revocation of business license of credit institutions within 3 working days from the date of issuance of the document or decision.

4. Based on the contents about reduction in reserve ratio for an assisting credit institution (if any) in the recovery plan approved by Director of this SBV’s provincial branch, notify the SBV’s Operations Center in writing of such reduction in reserve ratio; such written notification must include the name of the assisting credit institution, the commencement month and period during which the reduced reserve ratio applied.

5. Within 30 working days from the receipt of the list of credit institutions facing reserve deficits from SBV’s Operations Center, take actions within its competence or propose measures for taking actions against such credit institutions to SBV’s Governor according to applicable regulations, then report SBV’s Governor and Monetary Policy Department, Banking Supervision Agency and SBV's Operations Center on its decision to take actions against the credit institution with reserve deficit.

6. Supervise and, within its competence, take actions against violations committed by credit institutions during the implementation of this Circular.

Article 13. Responsibility of SBV’s Operations Center

1. Manage reserve requirements to be satisfied by credit institutions as follows:

a) play the leading role and cooperate with the Information Technology Department and relevant units in instructing credit institutions to report their average balances of reservable deposits and receiving reports thereof through the reserve requirement management system;

b) Within 5 first working days of every month, based on the report on the average balance of reservable deposits during the reserve computation period submitted by a credit institution, determine and notify the required reserve maintained during the reserve maintenance period and the maintenance of required reserve in the previous reserve maintenance period to that credit institution according to Form DTBB002 enclosed herewith;

c) Within 7 first working days of every month, pay interests on required reserves and excess reserves in the previous reserve maintenance period to credit institutions;

d) Within 10 first working days of every month, prepare and submit a consolidated report on maintenance of reserve requirements in the previous reserve maintenance period by credit institutions to SBV's Governor and also the Banking Supervision Agency and Monetary Policy Department according to Form DTBB003 enclosed herewith, send the list of credit institutions facing reserve deficits (in which the required reserve, actual reserve and reserve deficit of each credit institution must be specified) to SBV’s branch of province/city where the headquarters of the credit institution or the foreign bank branch facing reserve deficit is located.

2. Update the reserve requirement management system with timely and accurate information about checking accounts opened by credit institutions at SBV’s Operations Center according to instructions given by the Information Technology Department.

3. Play the leading role and cooperate with the Information Technology Department in ensuring the accuracy and punctuality of information about balances in checking accounts opened by credit institutions at SBV’s Operations Center on the reserve requirement management system.

4. Based on written notification of reduction in reserve ratios of assisting credit institutions given by the Banking Supervision Agency or SBV’s provincial branches, determine and notify the required reserves and perform other tasks as prescribed in Clause 1 of this Article to such assisting credit institutions.

Article 14. Responsibility of Information Technology Department

1. Build, install and give instructions about the reserve requirement management system (hardware, software and database) so that SBV’s Operations Center, SBV’s provincial branches, credit institutions and relevant units can report, calculate required reserves, determine actual reserves, excess reserves, reserve deficits and interests on required reserves and excess reserves paid to credit institutions.

2. Cooperate with SBV’s Operations Center in instructing credit institutions to report their average balances of reservable deposits and receive reports thereof through the reserve requirement management system.

3. Provide instructions for issuance and revocation of access password or digital signature password of participants in the reserve requirement management system.

Article 15. Responsibility of Monetary Policy Department

1. Based on monetary policy goals and objectives, request SBV’s Governor to make decision on:

a) The reserve ratio for each type of credit institutions and for each type of deposits in each period;

b) The interest rates on required reserves and excess reserves imposed on each type of credit institutions and each type of deposits in each period.

2. Play the leading role in dealing with any difficulties related to regulations herein.

Article 16. Responsibility of Banking Supervision Agency

1. Based on the contents about reduction in reserve ratios for assisting credit institutions (if any) in approved recovery plans (except recovery plans approved by Directors of SBV’s provincial branches), notify the SBV’s Operations Center in writing of such reduction in reserve ratios; such written notification must include the name of the assisting credit institution, the commencement month and period during which the reduced reserve ratio applied.

2. Provide SBV’s Operations Center with documents or decisions on special control, termination of special control, dissolution or revocation of business license of credit institutions within 3 working days from the date of issuance of the document or decision, except those issued by SBV’s provincial branches.

3. Within 30 working days from the receipt of the report on the maintenance of reserve requirements by credit institutions from SBV’s Operations Center, take actions within its competence or propose measures for taking actions against credit institutions facing reserve deficits to SBV’s Governor according to applicable regulations, then report SBV’s Governor and also the Monetary Policy Department and SBV's Operations Center on its decision to take actions against credit institutions facing reserve deficits.

4. Supervise and, within its competence, take actions against violations committed by credit institutions during the implementation of this Circular.

Article 17. Effect

1. This Circular comes into force as from March 01, 2020.

2. Since the effective date of this Circular, the following regulations shall cease to have legal effect:

a) Decision No. 581/2003/QD-NHNN dated June 09, 2003 of the Governor of the State Bank of Vietnam;

b) Circular No. 27/2011/TT-NHNN dated August 31, 2011 of the Governor of the State Bank of Vietnam;

c) Circular No. 23/2015/TT-NHNN dated December 04, 2015 of the Governor of the State Bank of Vietnam.

3. With regard to credit institutions that have been placed under special control before this Circular takes effect and are not required to satisfy reserve requirements according to documents issued by SBV, the period for which the credit institution is not bound by the reserve requirements shall comply with SBV’s documents that it applies.

4. With regard to a credit institution that is given an approval for dissolution or issued with a decision to institute bankruptcy proceedings or decision on revocation of business license by a competent authority before this Circular takes effect and is maintaining reserve requirements according to applicable regulations, it is not required to maintain reserve requirements from the month following the month when this Circular takes effect.

5. Before this Circular takes effect, SBV’s Operations Center/ SBV’s provincial branches shall continue paying interests on required reserves and excess reserves to credit institutions for the reserve maintenance periods for which the required reserves have been notified by SBV’s Operations Center/ SBV’s provincial branches to credit institutions in accordance with Regulations on reserve requirements for credit institutions enclosed with Decision No. 581/2003/QD-NHNN dated June 09, 2003 of SBV's Governor, as amended in Circular No. 27/2011/TT-NHNN dated August 31, 2011 and Circular No. 23/2015/TT-NHNN dated December 04, 2015 of SBV.

Article 18. Implementation  

Chief of the Ministry’s Office, the Director of the Monetary Policy Department, Heads of SBV’s affiliated units, Directors of SBV’s provincial branches, Chairpersons of the Boards of Directors, Chairpersons of the Boards of Members and General Directors (Directors) of credit institutions and foreign bank branches shall implement this Circular./.