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THE STATE BANK OF VIETNAM
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SOCIALIST REPUBLIC OF VIET NAM
Independence - Freedom – Happiness
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No.
11-NH5/TT
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Hanoi, July 6, 1992
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CIRCULAR
ON
GUIDANCE FOR PRESCRIBED COMPULSORY RESERVES.
The Governor of the State Bank
of Vietnam signed Decision No.117/QD-NH1 on 26 June, 1992 governing
"Prescribed Compulsory Reserves Ratios for banks and credit
organizations". The State Bank of Vietnam hereby provides some more
detailed guidance for the implementation of this Decision as follows :
1. Regulations on prescribed
compulsory reserves are applied to all state commercial banks, join-stock
banks, banks for investment and development that have been awarded new license
permits or are in the process of organizational and operational restoring in
order to obtain new license permits (including overseas bank subsidiaries and join-venture
banks that are operating in Vietnam) that include the mobilization of bank
deposits in terms of Vietnamese dong.
- Credit co-operatives in rural
areas and financial companies are not yet subject to regulation on prescribed
compulsory reserves, for the time being.
- In cases where certain credit organizations
are in severe default situations and are forced to continue to operate, or
those credit organizations that have gone bankrupt, until they are officially
shut down, depending on certain circumstances, the State Bank may consider and
permit those credit organizations to mobilize part or all of their prescribed
compulsory reserves.
2. Those credit organizations
that mobilize bank deposits in term of foreign currencies, until new rules and regulations are enacted for them
specifically, are subject to rules and regulations on prescribed compulsory
reserves, namely, compulsory reserves which are 10% of the value of their
mobilized bank deposits in term of foreign currencies.
Prescribed compulsory reserves
in terms of foreign currencies are to be deposited in the Exchange Bureau of
the State Bank or in those banks which are officially authorized by the
Exchange Bureau of the State Bank into a separate sub-account within their
prescribed compulsory reserves accounts, which are not allowed to be in terms
in Vietnamese dong converted from the foreign currencies mobilized, nor the
vice versa.
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Subsidiaries of credit
organizations do not have to open bank accounts of prescribed compulsory
reserves.
4. The basis for the calculation
of prescribed compulsory reserves in terms of Vietnamese dong is the deposits
in term of cash and liquid assets which are represented in the consolidated
accounts balance sheet of a credit organization (including operations of its subsidiaries).
The following kinds deposits in
terms of cash and liquid assets are the basis for the calculation of prescribed
compulsory reserves :
- Deposits which are payments
paid by organizations and individuals (including deposits at the State
Treasury, deposits made by jewellery and precious stones companies);
- Time deposits and sight
deposits made by organizations and individuals;
- Deposits made by economic
organizations;
- Time or sight savings deposits
made by the public;
- Amounts of money being kept on
behalf of the owners;
- Time Government bonds which
are valid less than one year.
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5. How to calculate the
prescribed compulsory reserves :
5.1 The following formula is to
be used :
Prescribed
compulsory reserves of this month
=
Average
value of the balance of the last month's deposits
x
required
ratio for prescribed compulsory reserves
5.2 How to calculate the average
value of the balance of the last month's deposits :
For the time being, the balance
of the accounts mentioned in part 4 of this documents represented in the last
month's accounts balance sheet must be used for the calculation purposes : the
value at the beginning of the month is added to the value at the end of the month, and then is divided by 2.
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Now the average value of the
balance for July, 1992 of credit organization A is as follows :
12,000,000,400
d + 13,000,000,200 d
=
12,000,000,800
d
2
With a ratio of 10% for the
prescribed compulsory reserves, the balance of prescribed compulsory reserves
for deposits to be carried forward to August, 1992 of credit organization A
should be as follows:
12,000,000,800
d
x
10
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1,000,000,028
d
100
5.3 The Exchange Bureau of the
State Bank or its provincial and city subsidiaries
should consider the real balance for prescribed compulsory reserves of credit
organization A to identify its surplus or deficit and to deal with accounting
practices and procedures.
6. In cases where the Governor
of the State bank declare those ratios for prescribed compulsory reserves which
are higher than 35%, the above - mentioned formula should still be applied.
However, the calculation of the interests of prescribed compulsory reserves
with ratios of 35% or higher should be carried out in two steps as follows:
6.1 Step 1 :
Prescribed
compulsory reserves with ratios higher than 35%
=
the
new ratio for prescribed compulsory reserves
-
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x
average
value of last month's deposits balance
For example : In May, 1993, the
Governor of the State bank declared a ratio of 40% for prescribed compulsory
reserves. Assuming that the average value of prescribed compulsory reserves for
May, 1993 was 12,000,000,800 d, applying the above-mentioned formula, now we
have :
(45-35)
x 12,000,000,800 d
=
640,000,000
d
100
Or
(12,000,000,800
d x 40)
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12,000,000,800
d x 35)
=
640,000,000d
100
100
6.2 Step 2 : Calculation of
interest
After having carried out part 7
of this document, the real value of the prescribed compulsory reserves account
that exceeds the ratio of 35% (namely, 640,000,000d) will be paid interest by
the State Bank applying interest rates for sight deposits of credit
organizations at the State Bank since the day full amounts of prescribed
compulsory reserves according the new ratios are deposited.
7. How to deal with situations
where prescribed compulsory reserves surplus or deficit occurs :
7.1 On the 15th of every month,
credit organizations have to check the balances in their prescribed compulsory
reserves accounts at the State bank against the amounts of prescribed
compulsory reserves they are subject to and then they have to report the
results to the State Bank where they open their main deposit accounts.
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a. How to deal with deficit
situations : If in their main deposit accounts in the State Bank there is no
money left for immediate payments, credit organizations are required to
pay in cash or obtain a loan within 30
days. If after 30 days, credit organizations still being unable to pay for the
deficits will be considered as violating rules and regulations on prescribed
compulsory reserves and will be punished for those deficits compulsory reserves and will be punished for
those deficits according to rules and regulations on disciplinary measures
issued by the Governor of the State Bank.
b. How to deal with surplus
situations : The State Bank takes the initiatives to make transfer from the
prescribed compulsory accounts to the main deposits accounts of the credit
organizations. After 3 days, if the State Bank fails to make any transfers, it
will be subject to disciplinary actions by the Governor of the State Bank according
to rules and regulations on disciplinary measures.
c. To deal with surplus and
deficit situation against prescribed compulsory reserves, the State Bank will
also have to :
- Calculate and pay interest to
credit organizations in cases of surplus from day 1 to the day interest
payments are made;
- Calculate and collect interest
payments made by credit organizations for their deficits from day 1 to the day
interest payments are paid.
The basis for calculation of
prescribed compulsory reserves in term foreign currencies are those deposits in
term of cash or liquid assets represented in the consolidated accounts balance
sheet of credit organizations, specifically including the following grade 1
accounts :
- Account 17 : Deposit account
in terms of foreign currencies by foreigners;
- Account 22 : Deposit account
in terms of foreign currencies by Vietnamese individuals or organizations,
and joint-ventures with foreigner.
The way to calculate prescribed
compulsory reserves in term foreign currencies and the way to deal with surplus
and deficit situations are the same with those stated in parts 5 and 7 of this
Circular regarding the Vietnamese Dong.
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9.1 No later than 5 days working
days after receipt of letters of complaints on prescribed compulsory reserves
placed by credit organizations, director of the State Bank subsidiaries located
in provinces and cities, or the director of the Exchange Bureau of the State
Bank have to quickly consider and solve them or transfer them to the State Bank
of Vietnam for solution. Until their complaints are settled, credit
organizations will have to carry out
decisions by the State Bank subsidiaries concerned.
10. On 25th of every month, the
State Bank subsidiaries located in provinces and cities, and the Exchange
Bureau of the State Bank have to collect
reports on the implementation of prescribed compulsory reserves (according to
the attached form).
10.1 State Bank subsidiaries
located in provinces and cities from Quang Binh province have to produce two
copies of their reports :
- 1 copy to be sent to the
Department for Banks Credit Organizations of the State Bank of Vietnam (in
Hanoi);
- 1 copy for file
10.2 State Bank subsidiaries
located in provinces and cities from Quang Tri province have to produce three
copies of their reports :
- 1 copy to be sent to the
Department for Banks and Credit Organizations of the State Bank of Vietnam (in
Hanoi);
- 1 copy to be sent
representative office of the Department for Banks and Credit Organizations of
the State Bank of Vietnam based in 17 Ben Chuong Duong, Ho Chi Minh City.
- 1 copy for file
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During the course of implementation,
should any problems or difficulties arise, they should be reported to the State
bank of Vietnam (for the attention of the Department for Banks and Credit Organizations)
for further guidance on the solution.
FOR THE GOVERNOR OF THE STATE BANK OF VIETNAM
DEPUTY GOVERNOR
Chu Van Nguyen