Quyết định 898/2003/QD-NHNN

DECISION

ON THE ISSUANCE OF THE REGULATION ON THE DISCOUNT, REDISCOUNT OPERATION OF THE STATE BANK FOR 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 and the Law on the Credit Institutions No. 02/1997/QH10 dated 12 December, 1997;
- Pursuant to the Law on the amendment, supplement of several Articles of the Law on the State Bank of Vietnam No. 10/2003/QH11 dated 17 June, 2003;
- Pursuant to the Decree No. 86/2002/ND-CP dated 5 November, 2002 of the Government on the functions, assignments, authorities and organizational structure of Ministries and ministerial-level agencies;
- Upon the proposal of the Director of the Credit Department,

DECIDES:

Article 1. To issue in conjunction with this Decision " the Regulation on the discount, rediscount operation of the State Bank for banks".

Article 2. This Decision shall be effective 15 days after the date of its publication in the Official Gazette and replace the Decision No. 906/2002/QD-NHNN dated 26 August, 2002 of the Governor of the State Bank on the issuance of the Regulation on the discount, rediscount operation of the State Bank for banks.

Article 3. The Director of the Administration Department, the Director of the Credit Department, Heads of the State Bank's units; General Managers of State Bank branches in provinces, cities; Chairman of the Board of Directors, General Directors (Directors) of banks shall be responsible for the implementation of this Decision.

REGULATION

ON THE DISCOUNT, REDISCOUNT OPERATION OF THE STATE BANK FOR BANKS
(issued in conjunction with Decision No. 898/2003/QD-NHNN dated 12 August, 2003 of the Governor of the State Bank).

Article 1. Governing scope and subjects of application

1. This Regulation shall provide for the performance of the discount, rediscount operation of the State Bank for banks with the view to implementing the monetary policy.

2. Banks for which the discount and rediscount is made by the State Bank (hereinafter referred to as banks) shall be banks, which are established and operating under the Law on the Credit Institutions.

Article 2. The discount, rediscount operation of valuable paper

The discount, rediscount operation (hereinafter referred to as discount operation) of valuable paper of banks shall be the purchase of unmatured valuable paper by the State Bank, which have been bought by banks in the primary market or re-purchased by banks in the secondary market.

Article 3. The discount rate

The discount rate shall be the rate, which is applied by the State Bank for the calculation of the payment at the discount of valuable paper. The State Bank shall determine and announce the discount rate, in compliance with the objective of the monetary policy in each period of time.

Article 4. Forms of the discount operation

1. The discount for the remaining term of valuable paper: the State Bank shall purchase definitively valuable paper of banks at the discount price.

2. The term discount: The State Bank shall discount valuable paper together with the request for the re-purchase of whole amount of those valuable paper to banks after a specific period. The maximum discount term shall be 91 days.

Article 5. Discountable valuable paper

1. Valuable paper that are discounted by the State Bank shall include Treasury Bills, Treasury Bonds, State Bank's bills and other valuable paper as stipulated by the State Bank of Vietnam from time to time.

2. All types of valuable paper provided for in paragraph 1 of this Article shall be discounted by the State Bank upon the satisfaction of following conditions:

a. In case where the State Bank discounts valuable paper for their whole remaining term: The maximum remaining term of valuable paper shall be 91 days;

b. In case of the term discount: The remaining term of valuable paper must be longer than the discount term of State Bank;

c. Valuable paper are denominated in VND and are transferable;

Article 6. The discount limit

The discount limit shall be the maximum discount level, calculated in accordance with the discount balance made by the State Bank for a bank at any period of time in a quarter.

1. Based on the objective of the monetary policy and the total approved amount of money supply, the Governor of the State Bank shall decide on the total limit for the discount operation from time to time.

2. Based on the total of discount limit, the State Bank shall calculate the discount limit for each bank in accordance with following formula:

H = V x S x k

In which:

- H: The discount limit of for a bank

- V: The own capital of the bank

- S: Proportion between outstanding credit in VND and the total liability, which is calculated according to the following formula:

k: The discount coefficient, which shall be calculated by the following formula

In which, Vi and Si shall be the own capital and proportion between the outstanding credit and the total Liability of the bank i.

3. On the 25th of the last month of each quarter at the latest, banks shall submit to the State Bank (the Credit Department) the request for the notice of discount limit together with the statement of accounts of the latest month and the valuable paper statement, that satisfy fully conditions and are kept by banks (including valuable papers which are discounted for a specific term by the State Bank) as the basis for the determination and notice of the discount limit to banks in the following quarter.

4. Quarterly, the State Bank announces the discount limit to banks, which shall hold short-term valuable papers that satisfy sufficiently conditions for discount. The remaining credit limit of banks, which do not hold valuable papers, shall be used as the preventive discount limit.

5. Banks, which do not hold valuable papers, if they have valuable papers, that satisfy sufficiently conditions, and request for the discount in the quarter, shall submit a written request to the State Bank (the Credit Department) for the notice of the supplement discount limit, enclosed with the statement of accounts of the latest month and the list of valuable papers to obtain the supplement limit notice from the preventive discount limit by the State Bank.

Article 7. The operating date

The operating date in the discount operation shall be working days, excluding weekends, holidays and Tet holidays.

Article 8. Methods of the performance of the discount operation

1. The direct method: Banks shall directly conduct discount operations with the State Bank;

2. The indirect method: Banks shall conduct discount operations via the computer system connected with the State Bank or via Fax.

Article 9. Units, which perform the discount operation at the State Bank.

The discount of valuable paper by the State Bank for banks shall be performed at the Banking Operation Department, In necessary case, the Banking Operation Department shall request the Governor of the State Bank to authorize the State Bank's branches in provinces, cities under the central Government's management (hereinafter referred to as authorized branches of the State Bank) to carry out the discount operation for banks, Head offices of which are located in their locality:

1. Written authorization by the State Bank of Vietnam to the State Bank's branches in provinces, cities under the central Government's management shall define clearly the scope of authorization and General Managers of the State Bank's branches in provinces, cities under the central Government's management shall only carry out the authorized assignments.

2. The authorization of the Governor of the State Bank to the State Bank's branches in provinces, cities under the central Government's management to perform the discount operation shall be notified to banks, Head Offices of which are located in their locality for their performance.

Article 10. The sequence, procedure for the performance of discount operation

1. Banks (Head-offices) that require to discount valuable paper shall submit the application for the discount (in accordance with the Form No. 01) to the State Bank (the Banking Operation Department or authorized branches of the State Bank) prior to 3.00 p.m of an operation day;

2. Based on the application for discount and the discount limit, which has not been used, of banks, the State Bank shall determine, decide on the acceptance or non-acceptance of the discount and inform the acceptance (in accordance with the form No. 02) or the non-acceptance (in accordance with the form No. 03) immediately after the receipt of the application for discount from banks.

3. In case where at the time of notice for the discount limit, the discount balance of banks at the State Bank is larger than the announced discount limit, amounts of term-discount which have been performed previously shall be entitled to perform in accordance with the commitment. The State Bank shall only perform the discount operation with banks when the outstanding discount is less than the notified discount limit of banks.

Article 11. Cases of non-acceptance of discount

1. Banks have used definitively the discount limit.

2. Short-term valuable paper fail to satisfy sufficiently conditions according to provisions at Article 5 of this Regulation;

3. The content of the application for discount submitted to the State Bank is not in compliance with the Form No. 01 or the signatory is in-competent;

Article 12. The formula to determine the payment for the discount operation of valuable paper of banks.

1. In case of the discount for the whole remaining term

In which:

St         : The payment made by the State Bank when discounting valuable papers.

Gt         : The value of valuable paper at maturity.

Tc         : The remaining term (days) of valuable paper. The remaining term shall be calculated from the discount date to the maturity date of valuable paper.

Ls         : The discount rate at the time of the discount of the State Bank (% per year).

365       : The number of days of a year.

2. In case of the term discount

a. The formula to determine the amount that the State Bank should pay to banks for the discount of valuable paper (discount price): to be calculated in line with following the formula, which is provided for in paragraph 1 of this Article.

b. The formula to determine the amount that banks should pay to the State Bank upon the expiry of discount (repurchase price):

In which:

Gv        : Payment made by banks to the State Bank upon the expiry of discount;

St         : Payment made by the State Bank to banks upon the discount;

Lm        : The discount rate at the time of the discount of the State Bank (% per year)..

Tm        : The discount term (days) of the State Bank

Article 13. Delivery, receipt of valuable paper and payment upon the discount at the State Bank.

1. After the receipt of the acceptance notice of discount operation from the State Bank, banks requesting for the discount shall complete the procedures to transfer valuable paper to and receive the payment from the State Bank at the Banking Operation Department or authorized branches of the State Bank within one day from the date of the receipt of notice. In case of the term discount, banks requesting for the discount shall submit to the State Bank the commitment for the re-purchase of valuable paper (in accordance with the Form No. 04) prior to the transfer of valuable paper and receipt of payment.

2. In case, upon the expiry of the discount (in case of the term discount), banks shall make a payment for the re-purchase of valuable paper to the State Bank and get back valuable paper in accordance with the commitment. Upon the expiry of discount, if Banks fail to make a payment to the State Bank and get back valuable paper, the State Bank shall deduct their accounts at the State Bank for payment.

In case where the balance in the bank' account is not sufficient, the State Bank shall classify amounts payable by the banks as overdue debts and those banks shall be subject to an overdue interest rate that is equal to 200% of the discount rate or they shall sell valuable paper in the money market for payment to the State Bank.

3. In case where banks requesting for the discount fail to deliver valuable paper provided for in the acceptance notice in the period stipulated by the State Bank, they shall be considered to have cancelled the application for the discount. A bank, which cancels the application for discount twice shall not be permitted to participate in the discount operation with the State Bank for a period of 6 months, from the date of second violation.

Article 14. Responsibilities of related units of the State Bank

1. The Monetary Policy Department shall:

a. Co-operate with related units to determine the total discount limit in each quarter submitted to the Governor of the State Bank for approval;

b. Advise the Governor of the State Bank on the determination of the discount rate;

c. Co-operate with the Credit Department for the provision of information to determine the discount limit for banks.

2. The Credit Department shall:

a. Distribute the discount limit to banks in accordance with provisions, on 5th of the first month of each quarter on the basis of total of approved discount limit.

b. Notify the discount limit of banks where valuable papers are maintained that fully satisfy conditions for the discount to the Banking Operation Department and banks.

c. Notify the supplement discount limit to banks, which have not been notified the discount limit and have just arisen the valuable paper maintenance in the quarter from the source of preventive discount limit, at the same time, submit to the Banking Operation Department for performance;

d. Supplement or adjust the list of valuable paper to be discounted by the State Bank when necessary.

3. The Banking Operation Department shall:

a. Guide the specific procedure for the performance of discount operation at the Banking Operation Department and authorized branches of the State Bank.

b. Perform the discount operation for banks in accordance with announced discount limit. To organize the accounting, receipt and delivery, preservation and maintenance of valuable paper in accordance with applicable provisions.

c. Advise the Governor of the State Bank on the authorization to the State Bank's branches in provinces, cities under the central Government's management to perform, in whole or in part, the discount for banks in their locality.

d. Consolidate quarterly results of the discount performance for the whole system to report to the Governor of the State Bank, and, at the same time, send the same to the Credit Department and the Monetary Policy Department.

4. The Finance and Accounting Department shall:

Provides the guidance on the accounting of discount operation at the Banking Operation Department and authorized branches of the State Bank in provinces, cities under the central Government's management.

5. The authorized branches of the State Bank in provinces and cities under the central Government's management shall:

a. Perform the discount operation for banks within the authorized competence.

b. Report monthly results of the discount operation in their locality to the Banking Operation.

Article 15. Amendment, supplement

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

Form No. 01

REQUEST FOR THE DISCOUNT

To: The State Bank of Vietnam

(The Banking Operation Department or authorized branch of the State Bank in province, city)

Name:.......................................................................... Position:...........................................

Representative of the Bank:...................................................................................................

Address:...............................................................................................................................

Code of the Bank:............................................ Telephone:................... Fax:..........................

VND account at Bank No. :........................................... at:....................................................

The discount limit distributed by the State Bank shall be VND............................ billion;

The discount rate has not been used: VND………………….... billion.

Requests the State Bank of Vietnam to discount following valuable paper:

Unit: VND million

Form requested for the discount: ................................................. (state clearly whether the discount is made for the whole remaining term or for how many days)

We undertake to comply strictly with provisions of the Regulation on the discount of the State Bank with banks.

Form No. 02

NOTICE OF THE DISCOUNT ACCEPTANCE

- Pursuant to the Discount Regulation of the State Bank for banks issued in conjunction with the Decision No. ........./2003/QD-NHNN of the Governor of the State Bank.

- Pursuant to the request for the discount dated .............. of the Bank............

- Based on the discount limit of the bank, which has not been used at the time requesting for discount.

The State Bank agrees to discount valuable papers of the Bank .................... under following list:

The State Bank would like to inform for the knowledge and performance of discount procedures of the Bank......... in accordance with applicable provisions

Form No. 03

NOTICE OF THE DISCOUNT REFUSAL

- Pursuant to the Discount Regulation of the State Bank for banks issued in conjunction with the Decision No. ........./2003/QD-NHNN of the Governor of the State Bank.

- Pursuant to the request for the discount dated .............. of the Bank............

The State Bank does not agree the discount of valuable papers upon the request of your Good Bank (attached with the list of valuable papers not permitted to discount) with the total value of ..............., because of following reasons:

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

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

............................................................................................................................................

............................................................................................................................................

The State Bank would like to inform for the knowledge of the Bank.............

Form No. 04

COMMITMENT FOF RE-PURCHASE OF VALUABLE PAPER TO BE DISCOUNTED BY THE STATE BANK

To: The State Bank of Vietnam

(The Banking Operation Department or authorized branch of the State Bank in province, city)

Pursuant to the Notification No. dated ......../.../20.. of the Banking Operation Department (or the State Bank's branch) on the acceptance of the State Bank for the term discount for..... days in respect of valuable paper of the Bank ....

I (Name) .................... , position ..............., representative of the Bank ................, undertakes to re-purchase all valuable paper stated in the following list upon the expiry of discount of the State Bank.

Unit: VND million

I would like to undertake that the repurchase amount of valuable paper shall be fully paid to State Bank and above valuable paper shall be taken back on date........ in accordance with the Regulation on the discount of the State Bank for banks. Any violation shall be dealt with in accordance with provisions of applicable laws.