STATE
BANK OF VIETNAM
|
SOCIALIST
REPUBLIC OF VIETNAM
Independence-Freedom-Happiness
|
No.
17/1998/QD-NHNN7
|
Hanoi,
January 10th, 1998
|
DECISION
ON THE INSURANCE OF REGULATION ON FOREIGN EXCHANGE
TRANSACTION
GOVERNOR OF THE STATE BANK OF VIETNAM
Pursuant to the Ordinance on
the State Bank and the Ordinance on Banks, Credit cooperatives and Finance
companies promulgated by the Decree no. 37/LCT-HDNN8 and Decree No.
38/LCT-HDNN8 dated 24 May, 1990 of the Chairman of the State Council of the
Socialist Republic of Vietnam;
Pursuant to the Decree No. 15 CP dated 2 March, 1993 of the Government on the
assignment, authority and responsibility for State Management of Ministries and
ministry-level agencies;
Upon proposal of the Director of
the Foreign Exchange Control Department,
DECIDES
Article 1.
To issue
in conjunction with this Decision "Regulation on foreign exchange
transactions".
Article 2.
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Article 3.
The Head
of Governor office, relevant Directors of Departments in the State Bank
head-office and General Managers of State Bank branches in provinces and cities
shall be responsible for the enforcement of this decision
FOR
THE GOVERNOR OF THE STATE BANK
DEPUTY GOVERNOR
Le Duc Thuy
REGULATIONS
ON FOREIGN EXCHANGE TRANSACTIONS
(Issued in conjunction with Decision No. 17/1998/QD-NHNN7 dated 10 January
1998 of the Governor of the State Bank)
I. GENERAL
PROVISIONS
Article 1.
Purpose
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Article 2.
Forms of transactions
Foreign exchange transactions
are transactions for buying and selling foreign currencies. Forms of
transactions provided for in this Regulation shall consist of:
1. Spot foreign exchange
transactions (English abbreviation: SPOT)
The spot foreign exchange
transaction is a transaction for buying and selling an amount of foreign
currency between two parties at the spot exchange rate at the time of the
transaction and the transaction settlement shall be completed within two
working days from the date of commitment to buy and sell.
2. Forward foreign exchange
transactions (English abbreviation: FORWARD)
The forward foreign exchange
transaction is a transaction in which two parties commit to buy from or sell to
each other an amount of foreign currency at a determined exchange rate and the
transaction settlement shall be made in future.
3. Swap foreign exchange
transactions (English abbreviation: SWAP)
The forward foreign exchange
transaction is a foreign exchange transaction which consists of two
transactions taking place at the same time: a buying and a selling transaction
of the same amount of one currency for another currency (there are only two
currencies involved in the transaction), the settlement dates of these
transactions are different and the exchange rates of the two transactions are
determined at the time the contract is signed.
Article 3.
Entities participating in transactions
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1. Credit institutions;
2. Economic entities being a
Vietnamese legal entity;
3. Organisations and
individuals; and
4. The State Bank of Vietnam.
Article 4.
Scope of transactions
Entities mentioned in Article 3
can only carry out transactions within the following scope:
1. Credit institutions:
a. Credit institutions which are
not commercial banks:
Credit institutions which are
not commercial banks which satisfy conditions provided for in point a,
paragraph 1 of Article 5 shall be permitted to carry out spot transactions with
entities mentioned in Article 3 of this Regulation.
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Commercial banks and investment
and development banks which satisfy conditions provided for in point a,
paragraph 1 of Article 5 shall be permitted to carry out spot transactions with
entities mentioned in Article 3 of this Regulation.
Commercial banks and investment
and development banks which satisfy conditions provided for in point b
paragraph 1 of Article 5 shall be permitted to carry out the forward and swap
transactions with each other and with entities mentioned in Article 3, except
for those provided for in paragraph 3 Article 3.
2. Economic organisation being a
Vietnamese legal entity;
Economic organisation being a
Vietnamese legal entity which have foreign currency earnings or requirement to
enter into foreign currency transactions in accordance with current foreign
exchange currency control regulation shall only be permitted to carry out spot
transactions with credit institutions and forward and swap transactions with
commercial banks and investment and development banks.
3. Other entities
Other organisations and
individuals are only be permitted to carry spot transactions in compliance with
current foreign exchange control regulation and only with credit institutions.
4. The State Bank
The State Bank shall carry out foreign
exchange transactions (spot, forward, and swap) with credit institutions in the
foreign currency inter-bank market.
Article 5.
Conditions for carrying out foreign transactions and procedures for
consideration of issuance of spot, forward, and swap license.
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a. Credit institutions shall
have to possess a foreign exchange license granted by the Governor of the State
Bank in order to enter into spot foreign exchange transactions.
b. Only commercial banks and
investment and development banks which satisfy the following conditions shall
be considered for a forward and swap transactions licence by the State Bank:
- Provisions stipulated in point
a paragraph 1 Article 5 are completely satisfied;
- Process well functioning
information and reporting systems which are able to capture foreign exchange
positions of branches and the total position of the entire bank during the
business day;
- The submission of regular and
complete report to the State Bank on the volume of transactions foreign currency
position is complied with;
- There are well-trained group
of people who are familiar with foreign exchange transactions.
2. Application procedures for
license
Commercial banks and investment
and development banks shall file application for a license (in the form
attached) to the State Bank (Department of Foreign Exchange Control). Within 30
days from the date of receipt of the application, the State Bank shall consider
and examine the real status of the bank concerned, the compliance with the
reporting requirement in order to make decision on whether or not to grant the
forward and swap license .
Article 6.
Transaction currency
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2. Considering the practical
situation, the General Directors (Directors) of credit institutions shall
provide in detail foreign currencies for their transactions.
3. In the case of necessity, the
State Bank might decide on the currencies prohibited for transactions.
Article 7.
Transaction fee
The State Bank shall provide for
the maximum transaction fee applied to fees which credit institutions are
permitted to charge.
Article 8.
Transaction maturity of forward and swap transactions
The maximum transaction maturity
permitted for forward and swap transactions shall be 6 months from the date of
signing of the contract.
Article 9.
Principles of transactions rate quotation.
Credit institutions authorised
to engage in foreign currency shall have to quote both buying and selling
exchange rates.
II. DETAILED
PROVISIONS ON TRANSACTION TECHNIQUES
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1. Spot rate
The Spot rate is the exchange
rate quoted by credit institutions at the time of transaction or agreed mutually
by both parties, a spot rate shall have to be within the limits provided for by
the State Bank of Vietnam.
2. Settlement
The settlement between parties
shall have to be completed within 2 working days at the latest from the date of
commitment to buy and sell. Parties to a transaction shall be permitted to
agree on the timing of settlement within the 2 working days as mentioned.
Article 11.
Principles to carry out a forward transaction.
1. Forward rate is the exchange
rate quoted by the commercial banks and investment and development banks or
agreed mutually by two parties to a transaction; forward rate shall have to be
within the current limits provided for by the State Bank for the forward rate
at the time when the contract is signed.
2. Settlement:
a. Settlement date shall be the
last working day of the transaction maturity and expressed clearly in the
contract.
b. Parties shall only effect
settlement when the settlement is due. The settlement between the two parties
shall be effected and completed within two working days from the settlement
date at the latest.
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1. Swap rate
Swap rate is the exchange rate
applied to a swap transaction quoted by commercial banks and investment and
development banks or mutually agreed by parties concerned at the time the
contract is signed on the following principles:
In case a swap transaction
includes a spot transaction, the spot rate shall be in compliance with
provisions for forward rate mentioned in paragraph 1 Article 10 of this
Regulation.
In case a swap transaction
includes two forward transactions, the forward rate shall be in compliance with
provisions for forward rate mentioned in paragraph 1 Article 11 of this
Regulation.
2. Settlement:
In case a swap transaction
includes a spot transaction and a forward transaction, the settlement shall be
effected on the principle provided for spot and forward transactions.
In case a swap transaction
includes two forward transactions, the settlement shall be effected on the
principle provided for forward transactions.
Article 13.
Down payment
1. For the security of a forward
transaction contract or a swap transaction contract, General Directors
(Directors) of commercial banks and investment and development banks shall have
the right to request for a down-payment by their counterpart. The General
Directors (Directors) of commercial banks and investment and development banks
shall stipulate in detail the particular requirement for down-payment of
different customers. Commercial banks investment and development banks shall
pay interests for the down-payment at the rates for the deposits of similar
term .
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Article 14.
Modes of transaction
Parties to a foreign exchange
transaction can carry out the transaction directly through the telephone,
telex, fax and with the assistance of the computer network.
1. Transactions through
telephones, telex and fax:
After the confirmation of the
transaction, parties concerned can, in case of a spot transaction, reconfirm in
writing the amount of foreign currency to buy and sell the exchange rate, mode
of settlement or enter into a detailed contract as provided for in the Article
15 of this Regulation.
2. Transactions with the
assistance of the computer network
In case of transaction through
the computer network under code and other test keys of the computer network,
participating parties only have to confirm in writing; they are not required to
enter into a contract.
Article 15.
Foreign exchange transaction contract
A foreign exchange transaction
contract shall include following provisions:
- Types of transaction;
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- Account numbers of the
parties;
- Date of the contract;
- Maturity of the contract (if
any);
- Transaction currencies
(foreign currencies against foreign currency or foreign currency against
Vietnamese Dong);
- Number of transactions;
- Exchange rate of transactions;
- Modes of payment;
- Settlement date;
- Down-payment (if any);
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- Place of outgoing or 7 incoming
transfer of funds
- Confirmation signatures by
competent person from each party.
III.
REPORTING REQUIREMENTS
Article 16.
Credit
institutions permitted to engage in spot, forward and swap transactions shall
submit daily before 10am each day, a return of transaction value of foreign
currency bought and sold of the previous business day to the State Bank of
Vietnam (Department of Foreign Exchange Control) in the pro-forma return of
transaction value (attached to this Regulation).
IV. DEALING
WITH VIOLATIONS
Article 17.
Dealing with violations of contracts of transactions
In case of a violation of
contracts of transactions, the suffering party shall have the right to file the
case economic court.
If the party making the down -
payment refuses to implement the contract, the amount of down-payment shall
belong to the commercial banks and investment and development banks accepting
the down-payment which refuse to implement the contract; they shall have to
return the amount of the down-payment to the party making the down-payment and
interest accrued on the down-payment and an additional sum equivalent to the
amount of the down-payment. These banks may be subject to reprimand or have
their license withdrawn in the event of repeated violations.
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For payment settlement effected
later than the settlement date agreed upon in the contract to the following
penalty measures shall be applied:
- In case the settlement
currency is foreign currency, the maximum penalty to be applied shall be 150%
of the current ceiling rate of the short-term lending provided for by the
Governor of the State Bank, calculated for the days in default and the amount
involved.
- In case the settlement
currency is the Vietnamese Dong, the maximum penalty to be applied shall be
150% of the current ceiling rates of the short-term lending provided for by the
Governor of the State Bank, calculated for the days in default and the payment
amount involved.
Article 19.
Dealing with violations of provisions of this Regulation
1. Credit institutions shall
have to comply strictly with the reporting requirements, the pro-forma of the
return as provided for by the State Bank, the timing of the report, and ensure
the accuracy of the data reported.
Credit institutions upon
engaging in transaction forms: spot, forward and swap shall ensure the
compliance with provisions of this Regulation and maintain the foreign currency
position between the current limits stipulated by the State Bank (position in
forward transactions shall also be included in the calculation of foreign
currency position of a credit institution).
2. Credit institutions violating
the report requirement and provisions of the State Bank on the foreign exchange
transaction bands, fees of transactions, maturity of transactions, and other
provisions shall be subject to penalty provided by Laws or dealt with by one of
the following measures:
a. Violation on the reporting:
Warning in the case of late submission of returns. Termination of a part or of
the entire buying & selling activities in case of repeated late submission
or no submission of returns.
b. Violation of the foreign
exchange bands, fees of transactions, and maturity: Termination of the entire
foreign currency buying and selling activities or revocation of the foreign
currency business license.
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Article 20.
The
Director of the Department of Foreign Exchange Control shall be responsible for
co-operating with the relevant departments to disseminate and implement this
Regulation and to issue licenses to engage in forward and swap transactions to
commercial banks, investment and development and banks which meet the required
conditions.
Article 21.
The
Director of the Department of Accounting and Finance shall be responsible for
guiding the accounting of the forward and swap transactions.
Article 22.
General
Managers of State Bank branches of provinces and cities shall be responsible to
supervise the implementation of this Regulation by credit institutions in their
localities.
Article 23.
General
Directors (Directors) of credit institutions shall be responsible to the
Governor of the State Bank for organising the implementation of this Regulation
in their institutions.
Article 24.
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FOR
THE GOVERNOR OF THE STATE BANK OF VIETNAM
DEPUTY GOVERNOR
Le Duc Thuy