CIRCULAR

ON AMENDMENTS TO THE REGULATION ON RESERVE REQUIREMENT FOR CREDIT INSTITUTIONS ISSUED TOGETHER WITH DECISION NO. 581/2003/QD-NHNN DATED JUNE 9, 2003 OF THE GOVERNOR OF THE STATE BANK

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

Pursuant to the Law on credit institutions No. 47/2010/QH12 dated June 6, 2010;

Pursuant to the Government's Decree No. 156/2013/ND-CP dated November 11, 2013 defining the functions, tasks, entitlements and organizational structure of the State bank of Vietnam;

Pursuant to Decision No. 48/2013/QD-TTg dated August 1, 2013 of the Prime Minister on compulsory purchase of shares and contribution of credit institutions under special control;

Pursuant to Decision No. 255/QD-TTg dated March 1, 2012 of the Prime Minister on supplementary measures for restructuring of the system of credit institutions in the period of 2011 – 2015;

At the request of the Director of the Financial Policy Department;

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Article 1. A number of Articles of the Regulation on reserve requirement for credit institutions issued together with Decision no. 581/2003/QD-NHNN dated June 9, 2003 of the Governor of the State bank (hereinafter referred to as the Regulation on reserve requirement) shall be amended as follows:

1. Article 3 shall be amended as follows:

“Article 3. Regulated entities of the Regulation on reserve requirement are credit institutions and branches of foreign banks established and operated under the Law on credit institutions (hereinafter referred to as credit institutions).”.

2. Article 6 shall be amended as follows:

“Article 6. The State bank shall decide interests on required reserves in the form of deposits and interests on excess reserves in the form of deposits applied to each type of credit institutions and each type of deposit in each period.”.

3. Article 8 shall be amended as follows:

“Article 8.

1.  The Operations Center of the State bank of Vietnam (SBV Operations Center) shall notify required reserves and pay interests on required reserves in the form of deposits and interests on excess reserves in the form of deposits in foreign currencies.

2. Each branch of the State bank of a province where credit institutions are located (hereinafter referred to as branch of the State bank) (excluding credit institutions selecting the SBV Operations Center with the written notifications sent to the SBV Operations Center and the branch of the State bank) shall notify required reserves and pay interests on required reserves in the form of deposits and interests on excess reserves in the form of deposits in Vietnamese dong.”.

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“Article 10.

1. Regarding each credit institution under special control, the Governor of the State bank shall consider reducing its required reserve ratio to the minimum level of 0%.

2. Regarding each credit institution undergoing an approved restructuring plan and each poor credit institution under an appointed restructuring plan, the Governor of the State bank shall consider reducing its required reserve ratio to a specific rate.”.

5. Article 16 shall be amended as follows:

“Article 16. Actions against credit institutions that fail to satisfy reserve requirements.

The State bank shall take actions against credit institutions that fail to satisfy reserve requirements as prescribed in law on penalties for administrative violations against currencies and banking and relevant law.”.

6. Article 19 shall be amended as follows:

“Article 19. Responsibilities of SBV Operations Center:

1. Within 3 first working days in a month, according to the daily closing balance of the payment account of each credit institution sent from the branch of the State bank, SBV Operations Center must consolidate data and calculate average balance of payment account in VND of the credit institution at the State bank in the maintenance period of the previous month; and then transfer such average balance of payment account in VND to the branch of the State bank where the credit institution’s headquarters is located.

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3. Within 7 first days of a month, according to the average balance of payment accounts of each credit institution at the State bank in the maintenance period of the previous month and notification of actual required reserves in the previous month, SBV Operations Center shall pay interests on required reserves in the form of deposits and interests on excess reserves in the form of deposits in the previous month to the credit institution in charge as prescribed in this Regulation.

4. Within 10 first working days in a month, SBV Operations Center shall make a final report on actual required reserves in the maintenance period of the previous month sent by credit institutions in charge and credit institutions in charge of the branch of the State bank and then send it to the Governor of the State bank and Bank Supervision and Inspection Agency and the Financial Policy Department using the form No. 3 issued herewith.”.

7. Article 20 shall be amended as follows:

“Article 20. Responsibilities of branches of the State bank:

1. Within 5 first working days in a month, according to the average balance of required reserves in the form of deposits in the maintenance period of the previous month sent by each credit institution, the branch of the State bank shall inspect, calculate and notify the amount of required reserves in that month and the actual required reserves in the previous month to the credit institution in charge using the Form No. 2 issued herewith.

2. Within 7 first days of a month, according to the average balance of payment accounts in VND of the credit institution at the State bank in the previous month sent by SBV Operations Center and notification of actual required reserve in the maintenance period of the previous month, the branch of the State bank shall pay interests on required reserves in the form of deposits and interests on excess reserves in the form of deposits in the maintenance period of the previous month to the credit institution in charge as prescribed in this Regulation.

3. Within 7 first working days in a month, the branch of the State bank shall make a final report on observance of required reserves in the maintenance period of the previous month sent by credit institutions in charge and send it to the State bank of Vietnam (SBV Operations Center) using Form No. 3 issued herewith.”.

8. Article 22 shall be amended as follows:

“Article 22. Responsibilities of the Department of financial policy:

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a) Required reserve ratio for each type of credit institution and each type of deposits in each period;

b) Interest rates on required reserve in the form of deposits and interests on excess reserves in the form of deposits applied to each type of credit institutions and each type of deposit in each period.

2. The Department of financial policy shall, at the request of Bank Supervision and Inspection Agency, request the Governor of the State bank to decide the required reserve ratio applicable to credit institutions under special control, credit institutions undergoing an approved restructuring plan and poor credit institutions under an appointed restructuring plan.”.

9. Article 24 shall be amended as follows:

“Article 24. Responsibilities of Bank Supervision and Inspection Agency:

1. The Bank Supervision and Inspection Agency shall, according to the plan for organization and operation improvement and the plan for restructuring of credit institutions, request the Financial Policy Department to reduce the required reserve ratio for credit institutions under special control, credit institutions undergoing an approved restructuring plan and poor credit institutions under an appointed restructuring plan, which clarify specific required reserve ratio, start month of required reserves and application period.

2. Within 15 working days, from the date on which the report on actual required reserves of the credit institutions is received, the Bank Supervision and Inspection Agency shall take actions within their competence or request the Governor of the State bank to take appropriate actions against credit institutions having a deficit in required reserves according to current regulations. The Bank Supervision and Inspection Agency shall send reports to the Governor of the State bank and send decisions on actions against credit institutions having a deficit in required reserves to the Financial Policy Department and SBV Operations Center.

3. The Bank Supervision and Inspection Agency shall inspect the adherence to this Regulation by credit institutions; take actions within their competence or request the Governor of the State bank to take appropriate actions against credit institutions having a deficit in required reserves according to current regulations.”.

Article 2.

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2. The phrase “tài khoản tiền gửi thanh toán” (“payment deposit account”) shall be replaced with “tài khoản thanh toán”(“payment account”) in the Regulation on reserve requirement.

3. The phrase “thừa dự trữ bắt buộc” (“surplus of required reserves”) shall be replaced with “vuợt dự trữ bắt buộc” (“excess reserves”) in the Regulation on reserve requirement.

4. The Form No. 2 issued together with the Regulation on reserve requirement shall be replaced with the Form No. 2 issued herewith.

Article 3. Effect

1. This Circular comes into force from January 28, 2016.

2. From the effective date of this Circular, the following regulations shall be annulled:

a) Article 4 of Decision No. 923/QD-NHNN dated July 20, 2004 of the Governor of the State bank on interests of required reserves in the form of deposits for credit institutions;

b) Decision No. 1130/2005/QD-NHNN dated August 1, 2005 of the Governor of the State bank on amendments to the Regulation on reserve requirement for credit institutions issued together with Decision No. 581/2003/QD-NHNN dated June 9, 2003 of the Governor of the State bank.

Article 4. Implementation

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PP. GOVERNOR
DEPUTY GOVERNOR




Nguyen Thi Hong

FORM NO. 2

THE STATE BANK OF VIETNAM
ORGANIZATION
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SOCIALIST REPUBLIC OF VIETNAM
Independence - Freedom - Happiness
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NOTIFICATION

OF REQUIRED RESERVES IN THE MAINTENANCE PERIOD OF ................. [MONTH] AND ACTUAL RESERVES IN…………..[MONTH] FOR CREDIT INSTITUTION (CREDIT INSTITUTION'S NAME........)

- Pursuant to Decision No. 581/2003/QD-NHNN dated June 9, 2003 of the Governor of the State bank on promulgation of the Regulation on reserve requirement for credit institutions and guiding documents…………

- Director of SBV Operations Center/Branch of the State bank notifies:

Currency

Required reserves in the maintenance period of.................[month] ……………[year]

Actual  reserves in the maintenance period of the previous month

Notified required reserves

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Excess (+)/ deficit (-) of required reserves

In VND

In foreign currency

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HEAD OF ORGANIZATION