Thông tư 17/2011/TT-NHNN

CIRCULAR

PROVIDING FOR THE LENDING SECURED BY THE MORTGAGE OF VALUABLE PAPERS BY THE STATE BANK OF VIETNAM TO CREDIT INSTITUTIONS

- Pursuant to the Law on the State Bank of Vietnam No. 46/2010/QH12 dated 16 June 2010;

- Pursuant to the Law on Credit Institutions No. 47/2010/QH12 dated 16 June 2010;

- Pursuant to the Decree No. 96/2008/ND-CP dated 26/8/2008 of the Government providing for the functions, duties, authorities and organizational structure of the State Bank of Vietnam;

Hereby, the State Bank of Vietnam provides for the lending secured by the mortgage of valuable papers by the State Bank of Vietnam to credit institutions as follows:

Chapter I.

GENERAL PROVISIONS

Article 1. Governing scope

This Circular provides for the short term lending in Vietnamese Dong (VND) by the State Bank of Vietnam to credit institutions in the form of security by the mortgage of valuable papers in order to supply short term capital and means of payment to credit institutions.

Article 2. Interpretation

In this Circular, following terms shall be construed as follows:

1. Lending secured by the mortgage of valuable papers (hereinafter referred to as mortgage lending) shall be a form of loan provision made by the State Bank of Vietnam (hereinafter referred to as the State Bank) to credit institutions on the basis of mortgaging valuable papers owned by the credit institutions to secure the debt repayment obligation.

2. Mortgage of valuable paper means the State Bank keeps the original valuable paper, or requires a credit institution to transfer the valuable paper to the State Bank’s account opened at the Securities Exchange Center to secure the debt repayment obligation for one or more mortgage loans of that credit institution at the State Bank.

3. Interest rate of the mortgage lending shall be the refinancing interest rate, which is applied to the mortgage lending by the State Bank to credit institutions and announced by the State Bank from time to time.

4. Remaining period of valuable paper shall be the period of time from the date when the State Bank disburses the mortgage loan for the credit institution to the maturity date of that valuable paper.

Article 3. Subjects entitled to mortgage loan from the State Bank

Credit Institutions, which are established and operate in accordance with provisions of the Law on Credit Institutions, including banks, non-banking credit institutions, central People’s Credit Funds and foreign banks’ branches (hereinafter referred to as credit institutions).

Article 4. Purpose of mortgage lending

State Bank of Vietnam provides mortgage loans to credit institutions for the purpose of supplying short term capital and means of payment to credit institutions.

Article 5. Principles of mortgage lending

The mortgage lending by the State Bank to credit institutions shall be implemented under following principles:

1. The mortgage loan shall be secured by valuable paper which is qualified in line with provisions in Article 8 of this Circular;

2. Credit institutions which are entitled to mortgage loans shall be required to use loan funds for the right purpose, make full payment of loan principal and loan interest to the State Bank at the due time.

Article 6. Mode of mortgage lending

1. Direct mode: Credit Institutions shall directly transact with the State Bank.

2. Indirect mode: credit institutions shall transact via monetary operation network system under the guidance of the State Bank.

Article 7. Grant of code, password and electronic signature

The State Bank shall grant code, password and electronic signature to representatives of credit institution for transaction via monetary operation network system of the State Bank in activities of mortgage lending in order to secure security and confidentiality.

Article 8. Valuable papers to be mortgaged

1. Criteria of valuable paper to be mortgaged:

a. To be entitled to transfer;

b. To be subject to legal ownership of credit institutions requesting for loan

c. Its remaining period is at least equal to the borrowing period;

d. It is not the valuable paper issued by the credit institution which applies for loan.

2. List, order of priority of valuable papers which are used as the mortgage for loan and the proportion between value of the valuable paper and amount of the mortgage loan at the State Bank shall be determined by the Governor of the State Bank from time to time.

Article 9. Value of the valuable papers used as security asset for the mortgage loan

1. Value of the valuable paper used as security asset for the mortgage loan shall be the total issued value of the valuable paper which is calculated under the face value.

2. The security rate of the value of the valuable paper over the amount of the mortgage loan shall be provided for by the Governor of the State Bank from time to time.

Chapter II.

SPECIFIC PROVISIONS

Article 10. Conditions of mortgage lending

On the basis of orienting management of monetary policy and money supply from time to time, the State Bank of Vietnam shall decide on provision of mortgage loan to credit institutions when they fully satisfy following conditions:

1. They are credit institutions as stated in Article 3 of this Circular and are not put in the special control;

2. They have valuable papers qualified and subject to the list of those which are permitted to use as a mortgage for loan at the State Bank in accordance with provisions in Article 8 of this Circular;

3. Their borrowing purposes are in compliance with objectives of monetary policy management of the State Bank from time to time;

4. Availability of an application file for mortgage loan from the State Bank in compliance with provisions in Article 15 of this Circular;

5. They have no overdue debt at the State Bank at the time of borrowing request;

6. They have made a commitment on using the mortgage loan for the due purpose and repayment of loan principal and interest to the State Bank at the due time.

Article 11. Period of mortgage lending

1. The period of mortgage lending is less than 12 months and not in excess of the remaining period of mortgaged valuable papers. The period of mortgage lending shall include non- business days, public holidays. Where the payment date falls on a non-business day, public holiday, the lending period shall be extended to the following working day.

2. Based on borrowing purposes of credit institutions, the State Bank shall decide the lending period, term of debt collection in specific cases.

3. In special cases, the State Bank may consider rescheduling the mortgage loan providing that credit institutions’ request and reasons for loan rescheduling are in line with orientation of monetary policy management of the State Bank.

Where there is a demand for rescheduling the mortgage loan at the State Bank, credit institution shall send 01 written request for rescheduling the mortgage loan (which clearly states the reason for rescheduling request) directly or by post to the State Bank. Within a maximum period of 2 working days since the receipt of the written request for the mortgage loan rescheduling, the State Bank shall give a written notice to the requesting credit institution of its approval or refusal of the mortgage loan rescheduling and send the notice to concerned units.

Article 12. Interest rate of mortgage loan

1. Interest rate of mortgage loan to credit institutions shall be refinancing interest rate applied by the State Bank in providing mortgage loans to credit institutions at the disbursement time of loans and remain in full force during the lending period.

2. Where the outstanding of the mortgage loan is classified as overdue debt, the credit institution shall be subject to overdue interest rate, which is equivalent to 150% of the lending interest rate stated in the credit contract.

Article 13. Limit of mortgage lending

1. Based on the targets of monetary policy from time to time, demand for loan fund, value of the valuable paper used as security asset and other loans outstanding of a credit institution at the State Bank, the State Bank shall determine the limit of mortgage lending to the borrowing credit institution.

2. The maximum lending limit shall not exceed the value of the valuable paper used as security to be converted in accordance with applicable provisions of the State Bank.

Article 14. Authority to take part in mortgage borrowing operation

1. Person who is authorized to sign, on behalf of credit institution, documents for taking part in the mortgage borrowing operation at the State Bank shall be one of followings:

a. Chairman of Board of Directors or Chairman of Members Board of the credit institution;

b. General Director (Director) of the credit institution.

2. The authorized persons as stipulated in Paragraph 1 of this Article may grant authority to Vice General Director (Director) or Branch Manager to sign documents for participating in the mortgage borrowing operation at the State Bank in line with provisions of applicable laws and shall be responsible for their delegation of powers. The delegated person shall not be permitted to re-grant authority to a third person.

Article 15. Application file for mortgage loan

Upon availability of a demand for mortgage loan at the State Bank, the credit institution shall send an (01) application file for mortgage loan directly or by post to the State Bank, the application file includes:

1. An application for mortgage loan at the State Bank in the form of lending secured by mortgage of valuable papers (in accordance with Form 01/NHNN-CC);

2. List of valuable papers proposed to mortgage for loan at the State Bank with the confirmation of the issuer, issuing agent or depository organization (in accordance with Form 02a/NHNN-CC);

3. Several norms of capital source and use of capital in Vietnamese Dong in accordance with Form 03/NHNN-CC; the transaction performance of the credit institution with the State Bank in accordance with Form 04/NHNN-CC; Calculation sheet of the demand for loan funds in VND from the State Bank in accordance with Form 05/NHNN-CC;

4. The latest balance sheet of the credit institution (the original).

Article 16. Approving and refusing the application for mortgage loan of credit institution

1. Based on the application file for mortgage loan of the credit institution, the State Bank shall consider the application for loan of the credit institution and, within a maximum period of 02 working days since the full receipt of the valid application file for mortgage loan as provided for in Article 15 of this Circular, the State Bank shall give a written notice to the borrowing credit institution on the approval (in accordance with Form 06a/NHNN-CC) or disapproval to the mortgage loan (in accordance with Form 06b/NHNN-CC) and send such notice to related units.

2. The State Bank shall not consider the application for mortgage loan of a credit institution when that credit institution fails to fully satisfy conditions as stated in Article 10 of this Circular.

Article 17. Delivery, receipt and return of valuable paper as a mortgage asset

1. Upon the receipt of the notice on the approval to the mortgage loan of the State Bank, the borrowing credit institution shall be required to transfer valuable papers as mortgage assets to the State Bank.

2. The State Bank shall carry out the mortgage of valuable papers in conformity with the list of valuable papers that has already been approved.

3. During the lending period, if the borrowing credit institution has a demand for replacing the valuable papers which are being mortgaged at the State Bank with other valuable papers which are qualified and belong to the list of valuable papers authorized to use as mortgage for loan at the State Bank, the borrowing credit institution shall be required to send an (01) set of documents directly or by post to the State Bank. The documents include:

a. A written explanation for the reasons of replacement of valuable papers which are being mortgaged at the State Bank with other valuable papers.

b. The list of substitute valuable papers used as mortgage for loan at the State Bank of Vietnam which is certified by the issuers, issuing agents or depository organizations (under the Form No. 02b/NHNN-CC);

Within a maximum period of 02 working days since the full receipt of application file for replacement of valuable papers which are being mortgaged at the State Bank of the credit institution, the State Bank shall give a written notice to the credit institution of its approval or disapproval to such replacement and send such notice to related units.

4. After the credit institution has made full payment for both loan principal and interest, the State Bank shall return the valuable papers used as mortgage asset to the credit institution.

Article 18. Carrying out the provision of mortgage loan

1. The provision of mortgage loan to credit institutions shall be performed at the Banking Operation Department of the State Bank.

The Banking Operation Department of the State Bank shall, basing on the ratified file of approval to mortgage loan, carry out the procedures of receiving mortgage asset, signing credit contract with the said credit institution and transfer the loan amount to the deposit account of that credit institution opened at the State Bank.

2. Where it is necessary, the Governor of the State Bank may authorize the Manager of State Bank branches in provinces, cities under the Central Government’s management to perform the mortgage lending to credit institution whose head office is located in the local area. Process of mortgage lending at the State Bank branches in provinces, cities shall be the same to that at the Banking Operation Department of the State Bank.

Article 19. Repayment of mortgage loan

1. Upon the maturity of the debt, credit institutions shall make payment for both principal and interest of the mortgage loan to the State Bank and take back the valuable papers.

2. Where, at the maturity of the loan principal and interest, any credit institution fails to make payment and its loan is not rescheduled by the State Bank, then the State Bank shall take some measures for compulsory collection of loan principal and interest as follows:

a. To deduct from the deposit account of that credit institution at the State Bank for debt collection;

b. To collect loan principal and interest from other sources (if any) of that credit institution.

3. In case after making deduction from the deposit account for collection of loan principal and interest and debt collection from other sources of the credit institution, it is not sufficient to collect the full debt, the State Bank shall classify the outstanding debt as overdue and apply overdue interest rate. The State Bank shall continue to deduct from the credit institution’s deposit account for debt collection or may sell or make payment with the issuer of the mortgaged valuable papers in the monetary market for collecting the overdue loan principal and interest of the borrowing credit institution.

Chapter III.

IMPLEMENTATION ORGANIZATION

Article 20. Responsibilities of credit institutions which request for mortgage loan

1. To fully, timely supply files, documents as stipulated in this Circular and take responsibility to the law for the accuracy, legality of the data, documents supplied to the State Bank.

2. To comply with commitments made with the State Bank at the time of mortgage borrowing regarding the use of loan funds for due purpose, full repayment of the loan, including both principal and interest, at the due date.

3. To fully transfer the valuable papers used as mortgage asset and take back the entire mortgage asset after the loan has been fully paid to the State Bank.

4. To be subject to the inspection, control of the State Bank, when required, over the use of mortgage loan during the borrowing time.

Article 21. Responsibilities of units of the State Bank

1. The Monetary Policy Department

a. To preside over, coordinate with related units in the determination of the level of money supply for quarterly, annual refinancing objective, including the refinancing with the mortgage of valuable paper, to submit to the Governor of the State Bank for approval and give notice to related units.

b. To act as an advisor for the Governor of the State Bank in the determination and announcement of refinancing interest rate as a basis for application to valuable paper mortgage operation.

c. To coordinate with related units to solve difficulties, queries arising in the performance of mortgage lending.

2. The Credit Department

a. To receive and appraise application file for mortgage loan of credit institution

b. To submit the Governor of the State Bank for approval to the application for loan mortgaged by valuable paper of credit institutions, and to authorize State Bank branches in provinces, cities under the Central Government’s management to perform (if any) and give notice to the borrowing credit institution of the approval or disapproval to mortgage loan.

c. To send the file approved by the Governor of the State Bank to the Banking Operation Department for performing the mortgage lending.

d. To preside over, coordinate with related units to solve difficulties, queries arising in the performance of mortgage lending.

dd. To submit the Governor for his consideration and deciding proposal of the credit institution regarding replacement of valuable papers being mortgaged at the State Bank.

e. To summary and make monthly, quarterly, annual report on the performance of mortgage lending in the Banking Operation Department of the State Bank and State Bank Branches in provinces, cities under the Central Government’s management to the Governor of the State Bank.

g. To submit the Governor of the State Bank, from time to time, for approval to the list, order of priority of valuable papers used in the mortgage borrowing operation and the proportion between the value of valuable paper and amount of the mortgage loan.

3. The Banking Operation Department

a. Based on the application file for mortgage loan which has been approved by the Governor of the State Bank, to perform the mortgage lending and mortgage of valuable paper, collect loan principal and interest in accordance with provisions of this Circular.

b. To organize the delivery, receipt, keeping and preservation of mortgage asset, files and documents, to return valuable papers and perform accounting of the mortgage loan.

c. To coordinate with related units to solve difficulties, queries arising in the performance of mortgage lending.

d. To summary data of mortgage loans arising at the Banking Operation Department on a monthly, quarterly, annual basis, to timely detect difficulties, queries in the implementation and send to the Credit Department for summary and reporting to the Governor of the State Bank.

dd. To deposit valuable papers which are used as mortgage for borrowing at the State Bank in accordance with applicable provisions, to confirm the deposition of valuable papers of the borrowing credit institution with respect to the case where the borrowing credit institution has been depositing valuable papers at the State Bank.

e. To provide guidance on the process of mortgage lending performance by the State Bank to credit institutions.

4- The Finance and Accounting Department shall provide guidance on the accounting relating to the mortgage lending operation.

5. Informatics Technology Department

a. To install software programs and ensure the infrastructure of the communication network for mortgage lending to be performed on stable, safe and confidential manner.

b. To provide for code number, password, electronic signature to persons participating in the mortgage operation of the State Bank and credit institutions.

6. Banking Inspection, Supervision Agency

a. To inspect, control and supervise the use of mortgage loan by credit institutions during the borrowing time; To deal with under their competence and propose the State Bank’s Governor for settlement of cases of violating provisions in this Circular and other related provisions.

b. To coordinate with related units to solve difficulties, queries arising in the performance of mortgage lending.

7. State Bank Branches in provinces, cities under the Central Government’s management

a. To perform mortgage lending to credit institutions whose head office is located in the local area upon the authorization of the Governor of the State Bank.

b. To organize the delivery, receipt, keeping, preservation of mortgage asset, files, documents, to return valuable papers and perform accounting for the mortgage lending in accordance with applicable provisions.

3. On a monthly, quarterly and annual basis, to consolidate information, data of mortgage loans arising at the branch, to timely detect difficulties, queries in the implementation to send to the Credit Department for general report to the Governor of the State Bank.

Article 22. Implementation effectiveness

1. This Circular shall be effective since 1 October 2011 and replace the Circular No. 03/2009/TT-NHNN dated 02 March 2009 of the Governor of the State Bank on lending secured by mortgage of valuable papers by the State Bank to banks and the Circular No.11/2009/TT-NHNN dated 27 May 2009 on amendment of Paragraph 1, Article 7 of the Circular No. 03/2009/TT-NHNN dated 02 March 2009 of the Governor of the State Bank on lending secured by mortgage of valuable papers by the State Bank to banks.

2. Any mortgage loan which is still outstanding until the effective date of this Circular shall still be implemented in accordance with the signed credit contract until the State Bank fully collects the loan principal and interest.

3. Director of the Administrative Department, Director of the Credit Department and Heads of units of the State Bank of Vietnam, Manager of State Bank Branches in provinces, cities under the Central Government’s management; Chairman of Board of Directors, Chairman of Members Board, General Directors (Directors) of credit institutions, Central People’s Credit Funds, foreign banks’ branches shall be responsible for the implementation of this Circular.

FORM 01/NHNN-CC

APPLICATION FOR LOAN

in the form of lending secured by the mortgage of valuable papers

To: The State Bank of Vietnam
(Credit Department)

Name of the credit institution:

Address:

Telephone:                                Fax:                  Code:

Number of the VND deposit account: ….. opened at the State Bank….

Pursuant to the Circular No.17/2011/TT-NHNN dated 18 August 2011 of the Governor of the State Bank providing for the lending secured by the mortgage of valuable papers by the State Bank to credit institutions;

Based on situation of capital sources and use of capital, ability of balancing the capital sources and volume of valuable papers being held,

Credit Institution… hereby would like to propose the State Bank of Vietnam to provide loan secured by the mortgage of valuable paper with following contents:

1. Amount proposed to borrow: (in number)… dong, (in words)…. dong.

2. Purpose of borrowing:

3. Period of borrowing:

4. Loan security asset: (Treasury bill, Treasury bond… with the total face value of … dong)

5. Mode of debt repayment: (Principal and interest shall be paid in one time at maturity)

6. Plan of using loan funds (clearly explaining the borrowing purposes of the credit institution and balancing the capital sources including refinancing source for implementation)

Credit institution… undertakes that the information supplied hereinabove is truthful and commits to comply with current provisions on lending secured by the mortgage of valuable papers by the State Bank to credit institutions.

FORM 02A/NHNN-CC

Credit Institution

LIST OF VALUABLE PAPERS PROPOSED FOR MORTGAGE AT THE STATE BANK OF VIETNAM

Unit: dong

FORM 02B/NHNN-CC

Credit Institution

LIST OF SUBSTITUTE VALUABLE PAPERS AS MORTGAGE FOR BORROWING AT THE STATE BANK OF VIETNAM

Unit: dong

FORM 03/NHNN-CC

Credit institution….

SEVERAL NORMS OF CAPITAL SOURCES AND USE OF CAPITAL IN VIETNAMESE DONG

Unit: billion dong

FORM 04/NHNN-CC

Credit institution…

TRANSACTION PERFORMANCE BY CREDIT INSTITUTION WITH THE STATE BANK OF VIETNAM

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Note:

1. For OMO operation, if valuable paper is sold to the SBV, then turnover of bid winning shall be accounted to lending turnover, if valuable paper is bought from the SBV, then the turnover of bid winning shall be accounted to the turnover of debt repayment. Payments of sales of valuable papers upon maturity to the SBV are accounted to turnover of debt repayment, payments of purchases of valuable papers to SBV upon maturity are accounted to lending turnover.

2. Balance of valuable paper sales to the SBV shall be stated as positive (+) value

Balance of valuable paper purchases from the SBV shall be stated as negative (-) value

3. Reporting period: current quarter.