Quyết định 04/2007/QD-NHNN

DECISION

ON OVERDRAFT AND OVERNIGHT LENDING APPLICABLE IN THE INTER-BANK ELECTRONIC PAYMENT

THE GOVERNOR OF THE STATE BANK

- Pursuant to the Law on the State Bank of Vietnam issued in 1997; the Law on the amendment, supplement of several Articles of the Law on the State Bank of Vietnam issued in 2003;
- Pursuant to the Decree No. 64/2001/ND-CP dated 20 September 2001 of the Government on the payment activities through payment services suppliers;
- Pursuant to the Decree No. 141/2003/ND-CP dated 20 November 2003 of the Government on the issuance of Governments Bonds, Bonds guaranteed by the Government and Bonds of local governments;
- Pursuant to the Decree No. 151/2006/ND-CP dated 20 December 2006 of the Government on investment credit and export credit of the State Bank;
- Pursuant to the Decree No. 52/2003/ND-CP dated 19 May 2003 of the Government providing for the function, assignments, authorities and organizational structure of the State Bank of Vietnam;
- Upon the proposal of the Director of the Monetary -Policy Department,

DECIDES;

Article 1. Governed scope and subjects of application

This Decision provides for the overdraft and overnight lending by the State Bank of Vietnam to banks which are set up and operate in accordance with the Law on Credit Institutions, are direct participants to the inter-bank electronic payment system (hereinafter referred to as banks) in order to satisfy the deficit on the clearance account in the inter-bank electronic payment.

Article 2. Interpretation

1. Overdraft in the inter-bank electronic payment means banks are entitled to make payment in excess of the credit balance in their clearance account opened at the Banking Operation Department of the State Bank of Vietnam during the payment date.

2. Overnight lending in the inter-bank electronic payment means the State Bank of Vietnam extends loans secured by the mortgage of valuable papers to the banks within the period of time commencing from the previous working day to 8h30 of the following working day.

Article 3. Purposes of the overdraft and overnight lending

1. Banks shall be entitled to make overdraft to cover the temporary deficit of payment funds during a day of the inter-bank electronic payment.

2. Bank shall be extended an overnight loan by the State Bank of Vietnam to settle the overdraft at the end of a working day.

Article 4. Conditions of the overdraft and overnight lending

In order to be entitled to receive the overdraft and overnight loan, banks must satisfy following conditions:

1. Availability of an application for the overdraft and overnight borrowing, which is accepted by the State Bank of Vietnam;

2. Accepting and complying with provisions of this Decision;

3. Availability of mortgaged assets for the implementation of the loan security.

Article 5. Assets mortgaged for the overdraft, overnight loan

1. Assets mortgaged for the overdraft, overnight loan of banks shall include:

a. The State Treasury Bills;

b. The State Bank Bills;

c. The State Treasury Bonds;

d. Bonds for Central Government's projects

dd. Government Bonds for the construction of Mother Land

e. Governments bonds issued by the Fund for Development Support before the Fund for Development Support was reorganized as Vietnam Development Bank, Governments Bonds issued by Vietnam Development Bank under the designation of the Prime Minister and bonds issued by Vietnam Development Bank of which the payment of interest, principal is guaranteed by the Government;

g. Local governments bonds issued by Hanoi Peoples Committee and Hochiminh Peoples Committee;

h. Other valuable papers provided for by the Governor of the State Bank from time to time, applicable to refinancing transactions of the State Bank of Vietnam.

Banking Operation Department of the State Bank of Vietnam shall provide specific guidance on the acceptance of the mortgage of valuable papers, which are types of valuable papers issued in forms of book entry and certificate, for the overdraft and overnight loan of the banks in line with the condition of inter-bank electronic payment transaction from time to time.

2. Conditions for the acceptance of mortgaged assets:

Valuable papers shall be accepted by the State Bank of Vietnam as mortgaged asset when satisfying following conditions:

a. Bank is also the beneficiary (in respect of non-bearer valuable paper) or is legal holder (in respect of bearer valuable paper);

b. The minimum remaining payment term of mortgaged valuable papers is 10 days for those provided for in point a, b, c, d, dd, Paragraph 1 of this Article; is 30 days for those provided for in point e, g, Paragraph 1 of this Article;

c. They are permitted for use in transactions with and payment to the State Bank of Vietnam in accordance with provisions of applicable laws;

d. In case where mortgaged valuable papers are issued in form of book-entry, it is required to have a written confirmation by the organizations, which are responsible for the payment, to the extent that they shall make payment to the State Bank of Vietnam when banks cannot make debt repayment.

3. Value of mortgaged valuable papers at the time of valuation shall be determined in form of discount. Banking Operation Department of the State Bank of Vietnam shall provide specific guidance on the determination of the value of mortgaged valuable papers according to the formulas corresponding to the issuance mode of mortgaged valuable papers and corresponding to the actual conditions of monetary market.

4. In case where the value of valuable papers mortgaged at the Banking Operation Department of the State Bank of Vietnam is lower than the actual overdraft level, banks must supplement the mortgaged short-term valuable papers to ensure that the value of the mortgaged valuable papers is at least equal to 105% of the actual overdraft level.

Article 6. The level of the overdraft and overnight lending

1. The overdraft level shall be equal to the actual deficit of payment funds in the inter-bank electronic payment transaction, but the total overdraft level shall not be in excess of 95% of the value of mortgaged valuable papers at the time of valuation.

2. The overnight lending level shall be equal to the actual overdraft balance at the end of a working day, but shall not be in excess of 95% of the value of mortgaged valuable papers at the time of valuation.

3. The determination of the transaction value of mortgaged valuable papers which are bonds provided for in point e, g, Paragraph 1, Article 5 of this Decision upon calculating the level of overdraft and overnight lending shall be performed in accordance with the provisions in Article 3, 4 of the Decision No. 1909/QD-NHNN dated 30 December 2005 of the Governor of the State Bank of Vietnam on the use of several types of bonds by credit institutions in refinancing transactions of the State Bank of Vietnam, other related legal documents and guidance of the Banking Operation Department of the State Bank of Vietnam.

Article 7. Overnight lending interest rate

The interest rate applicable to overnight lending shall be stipulated by the Governor of the State Bank of Vietnam in accordance with the target of monetary policy from time to time. Time of calculation, collection of interests of overnight loans shall be guided by the Banking Operation Department of the State Bank in line with the provisions of the State Bank of Vietnam on the methods of calculation and accounting for the collection and payment of interests by credit institutions.

Article 8. Process of the overdraft and overnight lending

1. Overdraft process:

When there is not enough funds in the banks clearance account and the banks can not supplement funds from their own fund sources or through transactions in the monetary market, the inter-bank electronic payment system shall automatically increase the amount to a maximum level as provided for in Article 6 of this Decision in the banks clearance account for performing the payment order. When funds in the clearance account of the banks are supplemented, the payment system shall automatically deduct the overdraft amount from the account (including principal and interest)

2. Process of overnight lending

a. At the end of a working day, if the balance of clearance account is not sufficient to settle the overdraft amount, the inter-bank electronic payment system shall automatically transfer the unpaid overdraft amount to overnight lending account and the bank shall be subject to overnight lending interest.

b. By the following working day, the bank shall perform the payment of principal and interest of the overnight loan to the Banking Operation Department of the State Bank of Vietnam. In case where the bank has not fully paid overnight loan, the remaining overnight loan shall be classified as the overdraft amount of that working day.

Article 9. Dealing with cases where bank is not able to pay overnight loan

In case where, after 02 consecutive working days from the arising date of the overnight loan, a bank fails to fully pay the overnight loan, the State Bank of Vietnam shall give a notice to the bank and request for the payment. If after 02 following working days from the date of notice, that bank still fails to fully pay the overnight loan, the State Bank of Vietnam shall dispose of mortgaged assets to recover the overnight loan and consider deleting the name of that bank from the inter-bank electronic payment system.

Article 10. Responsibilities of parties

1. Responsibilities of the banks:

a. To pay principal and interest of the overnight loan in due course.

b. To supplement mortgaged valuable papers to ensure that the minimum value of mortgaged valuable papers to be equal to 105% of the actual overdraft level.

2. Responsibilities of the State Bank of Vietnam

a. To refuse to extend the overdraft and overnight loan to the bank which does not satisfy conditions in accordance with provisions in Article 4 of this Decision.

b. To keep and preserve valuable papers mortgaged by banks;

c. To dispose of mortgaged valuable papers for debts recovery if the bank is not able to pay overnight loan and consider deleting the name of that bank from the inter-bank electronic payment system.

Article 12. Implementing organization

1. This Decision shall be effective after 15 days since its publication in the Official Gazette, replace the Decision No. 1085/2002/QD-NHNN dated 7 October 2002 of the Governor of the State Bank of Vietnam on the issuance of the Regulation on overdraft and overnight lending applicable in inter-bank electronic payment and the Decision No. 185/2004/QD-NHNN dated 24 February 2004 of the Governor of the State Bank of Vietnam on the amendment, supplement of paragraph 1, 2, 3, Article 5 of the Regulation on the overdraft and overnight lending applicable in inter-bank electronic payment issued in conjunction with the Decision No. 1085/2002/QD-NHNN dated 7 October 2002.

2. Director of Administrative Department, Director of Monetary - Policy Department, Heads of units of the State Bank of Vietnam, Managers of the State Bank Branches in provinces, cities under the central Governments management; Chairperson of the Board of Directors and General Mangers (Managers) of banks shall be responsible for the implementation of this Decision.