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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.
204/QD-NH7
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Hanoi,
September 20, 1994
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DECISION
ON
PROMULGATION OF THE TEMPORARY STATUTE ON FOREIGN EXCHANGE, POSITION OF THE CREDIT
INSTITUTIONS UTHORIZED TO DO FOREIGN EXCHANGE TRADING
THE GOVERNOR
OF THE STATE BANK OF VIETNAM
Pursuant to the point 5,
article 50, chapter 5 of the Decree-Laws of the State Bank of Vietnam on the
organization and regulation of the local foreign exchange market and foreign
exchange transaction on international market;
Based on the Decree 15/CP of the Government dated 2 March, 1993 on the duties,
rights and state management responsibilities of ministries and ministry level
agencies.
On the proposal of the Head of foreign exchange control department.
DECIDES
Article 1.
To promulgate "the
temporary statute on foreign exchange position of credit institutions
authorized to do foreign exchange trading" in conjunction with this
decision.
Article 2.
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Article 3.
The Head of the governor's
office, head of exchange control department, the State Bank's chief inspector,
head of accounting department, director of banking operation center of the
State Bank of Vietnam, general directors of credit institutions authorized to
do foreign exchange trading are responsible to implement this decision.
FOR THE STATE BANK OF VIETNAM
DEPUTY GOVERNOR
Le Van Chau
TEMPORARY
STATUTE
OF
THE FOREIGN EXCHANGE POSITIONS APPLIED TEMPORARY STATUTE OF THE FOREIGN
EXCHANGE POSITIONS APPLIED FOR CREDIT INSTITUTIONS AUTHORIZED TO DO FOREIGN
EXCHANGE TRADING
(Promulgated in connection with Decision No 204/QD-NH7 dated 20
September 1994 of the Governor of the State Bank of Vietnam)
I GENERAL PROVISIONS
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The definition of foreign
exchange position Foreign exchange position is the difference between assets
and liabilities in each of those foreign currencies used by the bank including
relevant accounts in that foreign currency.
Open position of each currency
may long or short.
The position is long when assets
are higher than liabilities, short when liabilities are higher than assets.
Total foreign exchange position
of a credit institution is the total of (highest long or short) position in
foreign currencies.
Article 2.
The foreign exchange positions
are determined to guarantee safety in foreign exchange transactions of credit
institutions authorized to do foreign exchange trading.
Article 3.
The foreign exchange positions
shall be applied for credit institutions, including state owned commercial
banks, joint-Stock commercial banks, joint venture banks, banks for investment
and development, financial companies authorized to do foreign exchange trading.
Branches of foreign bank
operating in Vietnam shall have to submit a commitment letter to the State Bank
of Vietnam confirming that they shall duly observe the statute on the foreign
exchange positions promulgated by the State Bank of Vietnam. This letter shall
be certified by their parent banks.
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Credit institutions authorized
to do foreign exchange trading shall have to make comprehensive reports to the
State Bank of Vietnam on all accounting data and necessary information required
by the State Bank of Vietnam.
II. FACTORS IN CALCULATING FOREIGN EXCHANGE POSITION
Article 5.
Limit of the foreign exchange
position is the highest or lowest difference between assets and liabilities in
foreign currencies.
Limit of foreign exchange
position shall be determined on the basis of net owned capital of a bank. To
unify the mode of calculating foreign exchange position as well as the mode of
determining safety requirements in foreign exchange trading it is stipulated by
the governor that net owned capital is calculated on owned capital minus items
reducing owned capital.
a) Owned capital comprising:
- Registered capital (including
capital paid up by shareholders in case of joint-stock banks)
- Reserves
- Reserves for special purposes
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Added value of fixed assets (if
any) when assets are re-evaluated under regulations of the State Bank (the
whole or one part there of).
b) The items reducing owned
capital that need to be moved out from owned capital including:
- Reduced value of assets
determined by re-evaluating fixed assets (if any)
- Bad loans, which are neither
secured by a stand-by fund, nor are guaranteed.
- Expenditures exceed income.
III. PROVISIONS FOR IMPLEMENTATION
Article 6.
Limit of foreign exchange
positions at the end of a day for each currency shall not exceed 10% of net
owned capital of the credit institution, and total foreign exchange position
shall not exceed 30% of net owned capital of the credit institution.
Under this statute, gold and
gems, if used as foreign currencies in transactions, shall be included in total
foreign exchange position.
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Total foreign exchange positions
and foreign exchange positions of each foreign currencies of credit
institutions shall be in terms of Vietnamese dong based on the foreign exchange
rates quoted by the state Bank of Vietnam at the time of reporting.
Article 7.
Credit institutions authorized to
do foreign exchange trading shall at all times maintain total foreign exchange
positions and foreign exchange positions of each currency within the frame as
stipulated in this statute.
Accounting and internal
information systems of the credit institutions shall have to meet the following
requirements:
- Ability to show at any time
the positions of each foreign currency, total long positions and total short
positions of each currency.
- Ability of the cashiers of
credit institutions to receive information on foreign exchange positions on a
permanent basis.
Article 8.
Depending on situation and
business performance of each branch, general directors of credit institutions
shall stipulate concrete limits of risk levels for each branch, foreign
exchange trading unit and foreign exchange staff in accordance with this
statute, as follows:
- End-of the day total foreign
exchange positions and positions and positions of each currency.
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Head offices of credit
institutions shall be responsible for strictly monitoring and supervising these
regulations. General directors (directors) of credit institutions shall be
responsible to the governor of the State Bank of Vietnam to duly observe the
above-mentioned stipulations.
IV. MAKING REPORTS
Article 9.
Each day, prior to 10:00 am,
general directors or directors of credit institutions shall report to the State
Bank of Vietnam, by fax or telex, about their end-of-day foreign exchange
positions of the previous day for the whole system; total amount of foreign
currencies in transactions at the and of previous day, clarifying total amount
of foreign currencies bought and sold in foreign exchange interbank markets,
and the highest and lowest foreign exchange rate of the previous day.
Addition to daily reports in
foreign exchange positions, general directors, directors of credit institutions
authorized to do foreign exchange trading, at the end of each week, each month,
shall have to make weekly and monthly report to the State Bank of Vietnam on
integrated and detailed foreign exchange positions for the whole system which
shall be calculated at the last working day of each week and month as per the
form determined by the State Bank of Vietnam.
These reports shall be forwarded
to the State Bank of Vietnam (Foreign exchange control department).
Weekly and monthly reports shall
be submitted to the State Bank of Vietnam not later than the 3rd day from the
date of their compilation. In addition to these reports, credit institutions
authorized to do foreign exchange trading shall have to provide all necessary
information as required by the State Bank of Vietnam.
The foreign exchange control
department shall be in charge of receiving information on foreign exchange
positions and supplying relevant departments and centers of the State Bank with
the said information.
V. FINAL PROVISIONS
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Credit institution authorized to
do foreign exchange trading shall have to duly observe all provisions
stipulated in this statute. In case of violation depending on extent of
seriousness, penalties shall be applied in compliance with the provisions on
penalties and punitive measures stipulated in the Decree-Laws of the State Bank
of Vietnam issued according to the State Bank Governors Decision No 168/QD-NH3
dated 27 August 1992.
Article 11
Any amendment, supplement or
replacement to the provisions of this statute shall be decided by the Governor
of the State Bank of Vietnam.