Công văn 1005/CV-NHNN7

On the 30 September 1998, the State Bank issued the Circular No. 08/1998/TT-NHNN7 guiding the implementation of the Decision No.173/1998/QD-TTg dated 12 September, 1998 of the Prime Minister on the obligation to sell and the right to buy foreign currency of residents being a organisation.

During the implementation of the Decision No. 173/1998/QD-TTg some difficulties and obstacles arose and the State Bank now provides the reasons and guidelines on the implementation of additional points as follows:

1. Banks which maintain accounts for organisations which have not complied with the obligation to sell foreign currency earning from the current account income accrued after 12 September, 1998 or from the current account income accrued before 12 September, 1998 which still exists on their accounts (including also the foreign currency sale by organisations such as airlines, insurance, oil & gas companies, post- office), or for organisations which did not produce evidence to show its exemption to sell foreign currency on their account in accordance with provisions in Circular No.08/1998/TT-NNNN7 shall be responsible for notifying their customers and to enforce the purchase of this foreign currency at the ratio provided for.

2. Authorised banks shall strictly carry out the sale of foreign currency to enterprises which require foreign currency. In case the foreign currency availability is not sufficient to cover foreign currency demand for import, especially for import of basic goods and goods of priority as directed by the Government such as gasoline and fertilisers these banks shall report to the State Bank for a solution.

3. Economic organisations and non-profit organisations which have foreign currency balance on the term deposit account shall also have to comply with the sale obligation as provided for. Authorised banks shall be responsible to immediately notify the organisations concerned to sell the balance on the foreign currency term deposit account and pay interests until the day the organisations fulfil the sale obligation.

4. During the transfer of the current account income to the administration for customers account in compliance with Circular No 08/1998/TT-NHNN7 the banks shall have to pay interest in foreign currency at the deposit rate provided for by the State Bank. The period determined for calculation of interest shall be from the date the funds are transferred to the account Administration for customers to the date the foreign currency funds are sold or transferred back to the deposit accounts of the organisations.

5. Within 15 working days from the date the foreign currency is credited to the deposit account, if the economic organisations or the non-profit organisations have a reasonable requirement for foreign currency such as payment of import contract or repayment of debts due, the banks shall be allowed to use the foreign currency balance on the deposit accounts (including the foreign currency credited to the account Administration for customers) to effect payment for the import contract or to repay the foreign debts or debts due to domestic banks in accordance with the repayment schedules provided for in the loan contracts.

Foreign currency pledged under an import contract and a contract performance guarantee by an organisation or non-profit organisation shall not be subject to the sale obligation as provided for in Decision No.173/1998/QD-TTg dated 12 September, 1998.

6. The permitted receipt in foreign currency between residents are not considered as current account income and shall not be subject to sale in accordance with Decision 173/1998/QD-TTg.

7. Documents evidencing the cases not subject to sale of foreign currency shall be the original or the copy certified by the notary public. If the documents which not certified by the notary public, banks can request the organisation to present the original or the copy which is certified and sealed by the seal of the organisation concerned (the certification must expressed clearly that the content of the original and the copy is the same) and the organisation shall be responsible before the Law for any errors. In case the documents consist of different pages, the organisations authorised person shall sign on each page and seal on the middle of every two pages).

8. When buying the foreign currency, an organisation shall present the valid original documents to the bank, The bank selling foreign currency shall confirm and seal on the original documents, the amount sold and shall keep only a sealed copy stating the amount of foreign currency sold and return the original to the organisation. If a customer uses the original document which has been sealed and which states the amount of foreign currency sold by a previous bank, to buy foreign currency in another bank, that bank can consider and sell only the foreign currency amount which the customer is short of.

9. Authorised banks operating in the provinces and cities shall be responsible to submit the daily report on the performance of the implementation of the Decision No. 173/1998/QD-TTg and the Circular 08/1998/TT-NHNN7 to the State Bank branches in the provinces and cities in the reporting forms of the Document No.924/CV-NHNN7 dated 7 October on the report on performance of implementation of the Decision No.173/1998/QD-TTg.

As far as the reporting form No.1 attached to Document No.924/CV-NHNN7 concerned, the banks which have customers yet to carry out the sale of foreign currency balance accrued before 12 September, still have to report to the State Bank head-office until the foreign currency amount concerned have been purchased. The reason for the delayed compliance with the sale obligation by the customers shall be stated clearly in the report.

10. The State Bank requests commercial banks to seriously enforce provisions of the Circular No. 08/1998/TT-NHNN7 and this Document. General Managers (Managers) of authorised banks shall be responsible before the Governor for acts of hiding or collaborating with organisations to circumvent the provisions; purchasing foreign currency from organisations for hoarding and not selling to enterprises which have requirement for foreign currency as provided for in the Circular No. 08/1998/TT-NHNN7 and other provisions on the buying and selling of foreign currency.

The above is for banks notice and implementation.