CIRCULAR

AMENDING AND SUPPLEMENTING A NUMBER OF ARTICLES IN CIRCULAR NO. 21/2012/TT-NHNN , OF JUNE 18, 2012 OF THE GOVERNOR OF THE STATE BANK REGULATING ON ACTIVITIES OF LENDING, BORROWING; PURCHASE AND SALE WITH TERM OF VALUABLE PAPERS AMONG CREDIT INSTITUTIONS AND BRANCHES OF FOREIGN BANKS

Pursuant to the Law on the State bank of Vietnam No.46/2010/QH12, of June 16, 2010;

Pursuant to the Law on credit institutions No.47/2010/QH12, of June 16, 2010;

Pursuant to the Government’s Decree No.96/2008/ND-CP, of August 26, 2008, defining the functions, tasks, powers and organizational structure of the State bank of Vietnam;

At the proposal of Director of Credit Department;

The Governor of the State bank of Vietnam amends and supplements a number of articles of the Circular No. 21/2012/TT-NHNN , of June 18, 2012, regulating on activities of lending, borrowing; purchase and sale with term of valuable papers among credit institutions and branches of foreign banks (hereinafter referred to as Circular 21),

Article 1. To amend and supplement a number of articles of the Circular 21:

1. To amend and supplement Article 1 as follows:

"Article 1. Scope of regulation

1. This Circular provides for activities of lending, borrowing; purchase and sale with term of valuable papers among credit institutions and branches of foreign banks.

2. Activities of capital balancing between cooperative banks with people’s credit funds; activities of lending, borrowing among people's credit funds; activities of lending, borrowing among branches in Vietnam of a same foreign bank; Overdraft on payment account among credit institutions, branches of foreign banks and activities of lending aiming to ensure solvency of securities transactions on the Stock Exchange between payment banks selected by State Securities Commission and members of Stock Depository Center being credit institutions, branches of foreign banks shall not be adjusted by this Circular."

2. To amend and supplement Article 3 as follows:

a) To amend clause 1 as follows:

“1. Transaction of lending and borrowing is the transaction in which a credit institution or branch of foreign bank (the lender) perform handing over or commit to hand over a sum of money for other credit institution or branch of foreign bank (the borrower) in order to use with a definite purpose in a definite time with the principle of repayment of principal and interest.”

b) To supplement clauses 16, 17, 18 as follows:

“16. The extension for loans means that the lender accepts to prolong a period apart from the loan duration prescribed in loan contract when the borrower has a request for prolong time limit of repayment because the borrower has no ability of punctual payment for all or a part of principal and/or interest and the lender considers, assesses that the borrower has ability to pay debt in the extended time.

17. Adjustment of repayment term means the lender and the borrower may agree on change of debt payment term of principal and/or interest prescribed in the loan contract on the basis of proposal of the borrower and the lender considers and assesses that the borrower has ability to pay debt in according to durations agreed for adjustment by two parties.

18. Transfer into overdue debts means that the lender transfers all or a part of principal balance into overdue debts because the borrower fails to punctually pay debt fully or a part of principal and/or interest and fail to be accepted by the lender in extension for loans or adjustment of repayment durations.”

3. To amend and supplement clause 2 Article 4 as follows:

“Apart from conditions specified in clause 1 this Article, at the time of performing transaction of borrowing, credit institutions, branches of foreign banks are not permitted to have debts being overdue from 10 days or more at other credit institutions, branches of foreign banks, unless they are permitted by the State bank."

4. To amend and supplement clause 3 Article 5 as follows:

“3. Transactions in Vietnam dong among credit institutions, branches of foreign banks being members of system of inter-bank electronic payment, must perform payment via that system, except for the following cases:

a) Transactions do not occur in the operation time of the system of inter-bank electronic payment;

b) Transactions of remittance for payment of principal and interest of loans;

c) Transactions of not performing the principal remittance of loans;

d) Remittance in order to perform transactions of purchase and sale with term of bonds listed at the Stock Exchange shall comply with current provisions of law on securities.”

5. To amend and supplement clause 2 Article 6 as follows:

“2. All agreements in performance of transaction must be confirmed in writing (called as the transaction confirmation paper) or other forms of confirmation being agreed by two parties in conformity with law provisions.”

6. To amend and supplement clause 2, clause 3 Article 8 as follows:

“2. Performing only at head offices of credit institutions, branches of foreign banks in Vietnam.

The head offices of credit institutions shall implement approval, grant of transaction limit, sign transaction contracts with customers and be permitted to authorize in writing for branches to implement disbursement, remittance in payment, management of amounts from lending, borrowing.

3. Taking responsibilities by themselves for their decision on lending (unless the borrower violates provisions in clause 2 Article 4 of this Circular) and on borrowing”

7. To amend and supplement Article 9 as follows:

“Article 9. Purpose of lending, borrowing

Credit institutions, branches of foreign banks are entitled to perform lending and borrowing from each other to cover a temporary shortage of compulsory reserves, affordability and ability of capital business on the basis of capital source balance and capital use, assurance of business effectiveness and operation safety for Credit institutions, branches of foreign banks".

8. To amend and supplement Article 10 as follows:

“Article 10. Time limit of lending

Time limit of lending among credit institutions, branches of foreign banks is under 01 year maximally, unless credit institutions perform lending for financial leasing companies being subsidiary companies of those credit institutions.”

9. To amend and supplement clause 3 Article 15 as follows:

a) To annul the sentence at fourth line.

b) To amend and supplement the sentence at fifth line as follows:

“- Methods of lending, borrowing”.

c) To supplement to behind of the sentence at fifth line as follows:

“- Maturity date”.

10. To amend and supplement point c clause 2 Article 16 as follows:

“To extend the loan; adjust repayment duration; exempt from interest, adjust interest rate; transfer to overdue debts".

11. To annul point d clause 2 Article 17.

12. To amend and supplement Article 22 as follows:

“Article 22. Time limit of purchase and sale

Time limit of purchase and sale with term of valuable papers among credit institutions, branches of foreign banks is 01 day for minimum and under 01 year for maximum, unless credit institutions perform purchase with term of valuable papers for financial leasing companies being subsidiary companies of those credit institutions.”

13. To amend and supplement Article 28 as follows:

a) To amend and supplement the sentence leading clause 1 as follows:

“1. This Circular takes effect on September 01, 2012. Credit institutions and branches of foreign banks are entitled to postpone applicable time of provisions in Article 10 and Article 22 of this Circular for customers being financial leasing companies, consumer financial companies until the end of June 30, 2013 (credit institutions, branches of foreign banks are entitled to lend, purchase with term valuable papers with financial leasing companies, consumer financial companies with term of 01 year or more until the end of June 30, 2013). The following documents, regulations are invalid from the effective day of this Circular:”

b) To amend and supplement clause 2 as follows:

“3. Credit institutions, branches of foreign banks are not allowed to perform the deposit operation and receipt of deposit (excluding payment deposits and transactions of deposit and receipt of deposit with the maximum term of 03 months) at other credit institutions, branches of foreign banks from the date this Circular takes effect. Deposit and receipt of deposit with the maximum term of 03 months among credit institutions, branches of foreign banks must comply with the regulations:

a) To have to have internal regulations on professional activity process, risk management process for activities of deposit and receipt of deposit (including provisions on customer credit rating, process defining deposit limit, process performing transactions of deposit, receipt of deposit) which ensure safety and proper with regulation.

b) At time of performing transaction of receipt of deposit, credit institutions, branches of foreign banks are not permitted to have debts being overdue from 10 days or more at other credit institutions, branches of foreign banks, unless they are permitted by the Governor of State bank.

c) Being entitled to perform only at head offices of credit institutions, branches of foreign banks in Vietnam.

The head offices of credit institutions shall implement approval, grant of deposit limit, sign transaction contracts with customers and be permitted to authorize in writing for branches to implement consignment and receipt of payment, management of amounts from deposit.

d) Remittance for implementation of deposit transactions with term in Vietnam dong (except transactions of paying back deposit and interest of deposit) among credit institutions, branches of foreign banks being members of system of inter-bank electronic payment, must perform payment via that system, unless these transactions are performed in time which the system of inter-bank electronic payment does not operate.

e) Credit institutions, branches of foreign banks are entitled to consider agreements of application of methods of deposit operation and receipt of deposit for each times, in according to the limit level or other methods which ensure that transactions are performed safely, effectively and properly with provisions of current law.

c) To amend clause 4 as follows:

“4. The transactions that are performed before the date this Circular takes effect on the basis of contracts of lending, borrowing, purchase and sale with term of the valuable papers and contracts of deposit and receipt of deposit that have been signed among the credit institutions and branches of foreign banks, the credit institutions and branches of foreign banks will comply with the agreements as signed. For transactions of deposit and receipt of deposit which are expired after the effective day of this Circular, if being considered for extension, the maximum extended time shall be 03 months.”

Article 2. Effectiveness

1. This Circular takes effect on January 07, 2013

2. The Chief of officer, Director of Credit Department, Heads of relevant units under the State Bank, Director of State Bank branches in central-affiliated cities and provinces, Chairman of the Board of Directors, Chairman of Member Board, and the Directors General (Directors) of the credit institutions and branches of foreign banks are liable to implement this Circular.