Quyết định 906/2002/QD-NHNN

DECISION

ON THE ISSUANCE OF THE REGULATION ON THE DISCOUNT, REDISCOUNT OPERATION OF THE STATE BANK WITH 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 Decree No. 15/CP dated 02 March, 1993 of the Government on the assignment, authority and responsibility for the State management of the ministries and ministry-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 with banks".

Article 2. This Decision shall be effective 15 days after the date of signing and replace the Decision No. 356/1999/QD-NHNN14 dated 6 October, 1999 of the Governor of the State Bank on the issuance of the Regulation on the discount, rediscount operation of the State Bank with 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; Chairpersons, General Directors (Directors) of banks shall be responsible for the implementation of this Decision.

THE REGULATION

ON THE DISCOUNT, REDISCOUNT OPERATION OF THE STATE BANK WITH BANKS
(issued in conjunction with Decision No. 906/2002/QD-NHNN dated 26 August, 2002 of the Governor of the State Bank).

Article 1. Scope and subjects of application

This Regulation shall provide for the implementation of the discount, rediscount operation of the State Bank with banks with the view to implementing the monetary policy and supplying resources of short-term funds for banks.

Banks which are entitled to discount, rediscount in accordance with this Regulation shall be the banks established and operating under the Law on the Credit Institutions (hereinafter referred to as banks).

Article 2. Interpretation

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

1. The discount operation shall be the purchase of short-term valuable papers by the State Bank from banks. These short-term papers have been bought by banks in the primary market or through the auction.

2. The rediscount operation shall be the purchase of short-term valuable papers by the State Bank from. These short-term papers have been bought or discounted by banks in the secondary market.

3. The discount, rediscount rate shall be the rate which is applied by the State Bank for the calculation of the amount that the State Bank shall pay to banks in the discount, rediscount of short-term valuable papers and the amount the State Bank shall re-pay to banks [1][1]by the end of the term of discount, rediscount, in case of term discount, rediscount.

4. The operating date shall be working days, excluding weekends, holidays and Tet holidays.

Article 3. Forms of the discount, rediscount operation

1. The discount, rediscount of the whole remaining term of short-term valuable papers: the State Bank shall purchase definitively valuable papers of banks.

1. The term discount, rediscount: Banks shall undertake to re-purchase the whole amount of short-term valuable papers which are discounted, rediscounted by the State Bank after a determined time.

Article 4. Conditions for short-term valuable papers which are discounted, rediscounted

1. The short-term valuable papers which are discounted, rediscounted by the State Bank shall include: the Treasury Bills, the State Bank bills and other valuable papers stipulated by the State Bank of Vietnam from time to time.

2. The short-term valuable papers as provided for in paragraph 1 of this Article shall be discounted, rediscounted upon the satisfaction of following conditions:

a. To be denominated in VND and are transferable;

b. The maximum remaining term shall be 90 days in case where the State Bank discounts, rediscounts short-term valuable papers for their whole remaining term.

c. The remaining term of valuable papers must be longer than the period for which the State Bank discounts, rediscounts, in respect of term discount, rediscount.

Article 5. The discount, rediscount rate

The State Bank shall determine and announce a general rate applicable to the discount and rediscount operation (hereinafter referred to as discount rate) in compliance with the objective of the monetary policy in each period of time.

Article 6. Modes for the performance of the discount, rediscount operation

1. The direct mode: Banks shall directly deal with the State Bank to discount, rediscount short-term valuable papers;

2. The indirect method: Banks shall conduct discount, rediscount procedures via the computer system connected with the State Bank or via Fax. The transactions conducted under the indirect mode must be secured.

Article 7. Assignment for the performance of discount, rediscount operation in the State Bank system.

1. The discount, rediscount of valuable papers by the State Bank for banks shall be made at the State Bank of Vietnam (Head-office in Hanoi) or at State Bank branches in provinces, cities.

2. Based on the amount of money supply intended for the discount, rediscount operation that are approved from time to time, the Director of the Credit Department shall decide on the discount, rediscount proposals of value of up to VND 200 billion and submit to the Governor for decision in respect of proposals for discount, rediscount of value of over VND 200 billion. In case where necessary, the Governor shall authorize State Bank branches in provinces, cities to determine, decide on the discount, rediscount of valuable papers for local banks. State Bank branches in provinces, cities shall only be entitled to decide on the discount, rediscount within the authorized level.

3. The State Bank Operation Department (in case where the Head-office of the bank that requests for a discount, rediscount locates in Hanoi) or State Bank branch in the province or city (where the head-office of the bank that requests for a discount, rediscount locates) shall organize the performance of the discount, rediscount operation, including the delivery, receipt of short-term valuable papers, determine and settle the discount, rediscount amount with banks, determine the payment of resold short-term papers to banks upon the expiry of discount, rediscount period (in case of term discount, rediscount), account, follow up, keep short-term valuable papers and settle short-term valuable papers with issuing organizations upon their expiry.

Article 8. Procedures for the performance of discount, rediscount operation

1. Banks (Head-offices) that require for discount, rediscount of short-term valuable papers shall submit the application for discount (in accordance with the Form No. 01) to the State Bank in working days.

2. Based on the application for discount, rediscount of by banks and the available resource of funds for this operation, the State Bank shall determine, decide on and inform the acceptance (in accordance with the form No. 02) or inform the non-acceptance (in accordance with the form No. 03) within one working day from the receipt of the application for discount, rediscount.

Article 9. Cases of non-acceptance of discount, rediscount

1. Short-term valuable papers that fail to satisfy sufficiently conditions according to provisions at Article 4 of this Regulation;

2. The content of the application for discount, rediscount submitted to the State Bank fails to comply with the Form No. 01 or the signatory is incompetent;

Article 10. The formula to determine the payment for the discount, rediscount operation of short-term valuable papers of banks.

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

In which:

St : The payment made by the State Bank in the discount, rediscount of short-term valuable paper.

Gt : The payment value of the short-term valuable paper at maturity.

Tc : The remaining period to maturity of the short-term valuable paper (from the discount date to the maturity date of the short-term valuable paper)

Lst : Discount rate (per year) at the time of the discount, rediscount;

365 : The number of days of a year.

2. In case of term discount

a. The formula to determine the amount that the State Bank shall make a payment to banks on the discount, rediscount operation of short-term valuable papers: to be calculated following the formula provided for in paragraph 1 of this Article.

b. The formula to determine the amount that the Bank shall make a payment to the State Bank upon the expiry of discount, rediscount:

In which:

Gv : Payment made by banks upon the resale of valuable papers;

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

Lm : Discount rate (per year) at the resale time.

Tm : The term for which the State Bank performs the discount, rediscount (number of day).

Article 11. Delivery, receipt of short-term valuable papers and payment upon the discount, rediscount at the State Bank.

1. After the receipt of announcement on the acceptance of discount, rediscount operation from the State Bank, banks requesting for the discount, rediscount shall make the procedures of transfer of short-term valuable papers and receive the payment from the State Bank at the Banking Operation Department of the State Bank or local State Bank branches. In case of term discount, rediscount, banks requesting for the discount, rediscount shall submit to the State Bank the commitment for the resale of valuable papers (in accordance with the Form No. 04) prior to the performance of transfer and receipt of payment.

2. Upon the expiry of discount, rediscount (in case of term discount, rediscount), banks shall receive short-term valuable papers, and at the same time, make a payment for the repurchase of short-term valuable papers to the State Bank in accordance with the commitment. In case, upon the expiry of discount, rediscount, Banks fail to get back short-term valuable papers and make payment to the State Bank in accordance with their commitment, the State Bank shall deduct their accounts for payment or classify amounts payable by the banks as overdue debts and those banks shall be subject to an overdue interest rate that is equal to 130% of the discount rate.

3. In case where banks requesting for the discount, rediscount fail to transfer valuable papers as provided for in the list in the announcement on acceptance of the discount, rediscount in the period stipulated by the State Bank, they shall be considered to have cancelled the requirement for discount, rediscount. A bank which cancels the requirement for discount, rediscount twice shall not be permitted to participate in discount, rediscount operation with the State Bank for a period of 6 months, from the date of second violation.

Article 12. Responsibilities of related units of the State Bank

1. The Monetary Policy Department: to advise the Governor of the State Bank shall:

a. determine the total amount of money supply intended for the discount, rediscount operation from time to time;

b. determine and announce the discount rate from time to time;

c. supplement or adjust the list of short-term valuable papers which are discountable, re-discountable by the State Bank when necessary.

2. The Credit Department shall:

a. receive, appraise requests for the discount from banks and consider, decide on the need for discount, rediscount with the value of up to VND200 billions.

b. submit to the Governor for consideration and decision on the discount, rediscount with the value of over VND 200 billions.

c. notify to the Banking Operation Department or State Bank branches in provinces, cities and related units for acknowledgment and performance of discount, rediscount operation;

d. submit to the Governor of the State Bank the authorization to State Bank branches in provinces, cities for consideration, decision on the discount, rediscount for banks in respective locality when necessary.

3. The Banking Operation Department shall:

a. organize the performance of discount, rediscount operation with banks.

b. consolidate monthly results of the performance of discount, rediscount operation 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 be responsible for the guidance on the accounting of discount, rediscount operation at the Banking Operation Department and State Bank branches in provinces, cities;

5. The State Bank branches in provinces and cities shall:

a. receive, appraise a file and decide on the discount, rediscount for banks in their respective locality within the competence authorized by the Governor of the State Bank of Vietnam;

b. organize the performance of the discount, rediscount operation for banks Head offices of which locate in their respective locality;

c. report monthly results of the discount, rediscount operation in their locality to the Banking Operation Department for consolidation and report to the Governor of the State Bank of Vietnam.

Article 13. Any amendment, supplement of result to this Regulation shall be decided upon by the Governor of the State Bank of Vietnam.

Form No. 01

REQUEST FOR THE DISCOUNT, REDISCOUNT

To: The State Bank of Vietnam

(The Credit Department or authorized State Bank branches in provinces, cities)

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

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

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

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

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

requests the State Bank of Vietnam to discount, rediscount following short-term valuable papers:

Unit: VND million

Purpose requested for the discount, rediscount ....................................................................

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

If the State Bank accepts to discount, we undertake to comply strictly with provisions of the Regulation on the discount, rediscount of the State Bank with banks.

Form No. 04

COMMITMENT FOR REPURCHASE OF SHORT-TERM VALUABLE PAPERS DISCOUNTED, REDISCOUNTED BY THE STATE BANK

To: The State Bank of Vietnam

(The Credit Department or authorized State Bank branch in province, city)

Pursuant to the Notification No. dated ......../.../20.. of the Banking Operation Department (or the authorized State Bank branch) on the acceptance of the State Bank for the term discount, rediscount for..... days in respect of short-term valuable papers of the Bank ....

I (Name) .................... , position ..............., representative of the Bank ................, undertakes to repurchase all short-term valuable papers stated in the following list upon the expiry date of discount, rediscount of the State Bank.

Unit: VND million

I would like to undertake that above valuable papers shall be taken back and the repurchase amount shall be fully paid to State Bank on ........ (the expiry date of discount, rediscount) in accordance with the Regulation on the discount, rediscount of the State Bank for banks. In case where the payment for the repurchase of short-term valuable papers is delayed, I shall be subject to an overdue interest rate equal to 130% of the discount rate at the time of payment which is calculated on the amount discounted, rediscounted by the State Bank and the delayed time.

[2][1] This is corrected by the Official Correspondence No. 384/CV-TD of the SBV Credit Department