CIRCULAR

GUIDING THE IMPLEMENTATION OF THE REGULATION ON THE ISSUE AND USE OF CHECKS ISSUED TOGETHER WITH DECREE No.30-CP OF MAY 9, 1996 OF THE GOVERNMENT

On May 9, 1996 the Government issued Decree No.30-CP promulgating the Regulation on the Issue and Use of Checks (Regulation for short). The Governor of the State Bank hereby provides the following guidance for the implementation of the Regulation:

Part I

GENERAL PROVISIONS

1. The checks as defined in this Regulation are checks used for both individuals and legal persons.

2. The terms in the Regulation are construed as follows:

2.1. Account holder is the person in whose name an account is opened for payment and also the owner of the amount of money recorded in that account or his/her representative.

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- Legal person account holder is the lawful representative of the legal person in whose name the account is opened for payment by that legal person as stipulated by the State bank.

2.2. The check issuer is the owner of the account or the person mandated by him/her according to the legislation on delegation of powers.

2.3. The check payee is the person entitled to the ownership of the amount of money recorded on the check. For a signed check he is the person named on the check; for an unnamed check, he is the holder of the check.

2.4. The check assigner is an individual or the lawful representative of the legal person in whose name the right of benefiting the check is assigned to another person.

2.5. The payment unit is the unit holding the account of the account holder which is allowed to conduct the service or task of payment as stipulated in Article 2 of Decree No.91-CP of November 25, 1993 of the Government on the organization of non cash payments, and Article 1 of Decision No.144-QD/NH1 of June 30, 1994 of the Governor of the State Bank on the conditions for non- cash payment of the popular credit funds.

2.6. An assigned unit is a unit of the same as or different from the system of the payment unit which is allowed to conduct payment service or duty, which receives the checks deposited by the payee in order to receive the money on his/her behalf.

2.7. A signed check is a check which records the family name, proper the name and address of the individual, or the name and address of the legal payee of the check. A signed check when assigned must record clearly the family name, name of the individual or the name and address of the assigned legal person.

2.8. An unnamed check is one which does not record the family name and proper name of the individual or the name of the legal person beneficiary of the check. The issue and use of an unnamed check can be used only when there are enough technical conditions and legal environment. The Governor of the State Bank shall provide a written guidance thereof later.

3. Responsibility with regard to the check: the issuer of the check and the assigners all have to bear responsibility for the check. This responsibility includes the obligation to pay the sum recorded on the check and the joint responsibility of settling complaints or initiate a legal action when the check is refused payment.

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5. Scope of payment of checks in the immediate future:

- Checks for transaction among customers who have opened deposit accounts at the same unit or different units which belong to the same system of credit organizations or State Treasuries;

- Checks for transaction among customers who have opened deposit accounts at different units or different credit organizations or State Treasuries. This case shall apply only when these units take part in clearings on the territory of the same province or city.

The credit organizations and State Treasuries shall inform their customers thereof in order to use the checks within the prescribed scope.

Part II

FORMS AND CONTENTS OF THE CHECKS

1. The forms of the checks must be designed according to unified models prescribed by the State Bank. The contents of the check must be printed or written in Vietnamese.

1.1. Components of a check:

+ If the check payee is a legal person, the check must record his/her name and address, the serial number of his/her account and the name of the holder of his/her account.

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- If the check issuer is a legal representative, the check shall record his/her name and address and the serial number of his/her account.

- If the check issuer is an individual, the check shall record his/her family name, proper name and address and the serial number of the account holder.

1.2. A valid check must gather all the elements and contents defined in Point 1.1, bearing no trace of erasure, correction or addition as to the interest rate and payment conditions and the amount written in letters and that written in figures must match together.

1.3. A check eligible for payment is one which is:

- Valid;

- Presented within the acceptance term;

- Without an order for suspension of payment;

- The signature and seal (if any) of the check issuer must correspond with those already registered at the payment unit;

- No signing for check issue beyond the competence defined at the assignment document;

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- The signatures of assignment (if any) on a named check must be continuous.

2. With regard to the payment units catering customers who are foreigners, besides the Vietnamese language, the check may also print the English language below the Vietnamese; the size of the English words must be smaller than that of the Vietnamese words.

3. The forms of the checks of the credit organizations and State Treasuries must be ratified by the Central State Bank and must be kept at the model ratifying agency. The credit organizations and State Treasuries shall have to notify the other credit organizations, the other State Treasuries and customers of the ratified forms of checks. The units attached to the credit organizations and State Treasuries shall have to use the forms of checks of their own systems. The forms of checks which are not ratified by the State bank are not allowed circulation.

The printing of checks of the credit organizations and State Treasuries shall comply with Decision No.317-QD/NH2 of November 10, 1995 of the Governor of the State Bank.

All the old checks (except the negotiable checks) shall lose their use value after this Circular takes implementation effect. With regard to the old checks which were signed for issue before this Circular takes implementation effect but which have not expired their acceptance term, shall continue to be paid according to the old regulations.

4. A check used to draw cash money at a payment unit shall not have two parallel crossing lines on the upper left corner or the words "demand deposit" on the front side of the check. A check used to transfer an account shall have two parallel crossing lines on the upper left of the check or the word "demand deposit" on the front side of the check.

Part III

RIGHTS AND OBLIGATIONS OF THE ISSUERS AND USERS OF CHECKS

I. RIGHTS AND OBLIGATIONS OF THE CHECK ISSUER

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2. The checks already issued shall be refused payment in the following cases:

- The check issuer is an individual who has died or is reported missing. In this case, the payment of the check shall comply with the provisions of law; if the check issuer is an individual who has been declared by the court to have lost his/her capacity for civil acts or has his capacity for civil acts restricted, the payment of the check shall be done by the guardian or by decision of the court.

- If the check issuer is a legal person and he/she is declared bankrupt or dissolved, the payment of the check of this legal person shall be effected according to the legislation on bankruptcy or dissolution.

- In case the individual or legal person who issues the check has his/her account frozen, the payment of the check shall comply with the decision of the competent State agency.

II. RIGHTS AND OBLIGATIONS OF THE CHECK PAYEE

1. Within the acceptance term of the check, the payee of the check shall have to make a declaration of the checks and render it together with the checks to the payment unit or the assigned unit in order to claim payment.

If for a force majeure reason the payee of the check cannot remit the checks during the acceptance term, after the termination of the force majeure reason, he/she must remit the check immediately to the payment unit or the assigned unit together with a written attestation of the force majeure reason from the Peoples Committee of the commune or ward where he/she resides, works or installs his/her office.

2. The first payee is entitled to ask the check issuer to hand him/her the

3. The payee of the check has the

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- To terminate the subsequent assignment by writing before his/her signature the words "not to be further assigned" at the part reserved for the assignment before handing the check to the subsequent payee.

4. In case the check is refused payment, the payee of the check is entitled to ask the payment unit to certify the reason in writing.

III. RIGHTS AND OBLIGATIONS OF THE PAYMENT UNIT

1. When receiving the check asking for payment, the payment unit must check the conditions for payment.

In case the check is fully eligible for payment, the payment unit shall have to pay it immediately. If the check is received after the time of transaction with customers, the payment unit shall have to pay in the first hour of the following working day. In case the payment is delayed due to the fault of the payment unit and causes loss to the payee, the payment unit shall have to pay compensation to the latter. The compensation shall be calculated on the amount written on the check and the number of days of delayed payment at the interest rate of overdue debts of the ceiling interest rate of short term loans prescribed by the State Bank at the time of payment. The delayed payment period is calculated from the date when the payment unit receives the check.

2. In case many checks are sent at the same time to claim payment from an account which does not have enough money to pay all these checks, the priority of payment shall be determined according to the serial numbers of the

3. The payment unit is entitled to refuse payment and return the check to the assignee or the payee in case the check is not eligible for payment.

When refusing payment of the check the payment unit has to establish the refusal bill.

4. The payment unit must print in advance the model forms to supply customers on demand.

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1. When receiving a check from the payee, the assigned unit shall have to check the validity of the check and its acceptance term.

2. The assigned unit shall have to open a book to monitor the checks assigned to it. After receiving and checking the check, the assigned unit must transfer the check immediately to the payment unit. If the check is received after the time of transaction with customers, the assigned unit must transfer the check to the payment unit at the first hour of the next working day. In case the transfer of the check is delayed due to the fault of the assigned unit and causes losses to the payee, the assigned unit must pay compensations to the payee; the compensation shall be calculated on the amount of money written on the check and the number of days of the delay in the transfer at an interest rate applied to the ceiling interest rate of short term loans prescribed by the Vietnam State Bank at the time of the transfer of the check. The period of delay is calculated from the date when the customer renders the check to the date when the assigned unit transfers the check to the payment unit.

3. In case of a force majeure reason which prevents the assigned unit from rendering the check immediately, after the force majeure reason has terminated, the assigned unit must immediately send the check to the payment unit attached to the certification of the force majeure reason by the Peoples Committee of the commune or ward where it installs its office.

4. The assigned unit is entitled to refuse the assignment and return the check to the payee in the following cases:

- The check is not valid;

- The check has expired its acceptance term without a certification of the force majeure reason prescribed in Point 1, Section II, Part III of this Circular.

5. The assigned unit is allowed to collect the fee for check clearance of the customer who asks it to collect the money as defined by the State Bank.

6. The assigned unit must print in advance the model forms in order to meet the demand of the customer when he/she so requires.

Part IV

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I. PROCEDURES OF CHECK SALE

1. When he/she needs to use the check, the account holder (or the person authorized by him/her) can put forth a proposal to sell the check and sends it to the payment unit.

The buyer of the check must take along his/her identity card or passport or the identity card of armyman, defense worker or personnel together with the proposal for check sale so that the payment unit can proceed to the sale of the check.

2. The payment unit shall sell the check only to a customer who has opened a deposit account payment at the unit.

- The payment unit shall check the proposal for check buying and the identity card or passport or identity card of armyman, defense worker and personnel of the check buyer. The payment unit shall have to print in advance or seal the name, address and codename of the payment unit; print, type or write the names, addresses and codenames of the account holders on all the checks before handing the checks to the customers. The maximum number of checks sold each time is one roll of checks to an individual and three rolls to a legal person (each roll comprises 10 checks).

- The payment unit shall open a book to monitor the name, the address and codename of the account of the check buyer, the quantity and the customer to sign reception.

- The payment unit has the responsibility to print in advance the necessary indications on the cover of the rolls of checks.

- The payment unit shall have to guide the customer how to use the check and other necessary indications and answer questions of the customer.

3. When receiving the check, the customer has to count the number of checks, check the number, name and marks of the account written on each check. If any error is detected, he/she must inform the payment unit in order to change for another check.

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II. PROCEDURES FOR ISSUING CHECKS

1. When issuing a check, the issuer shall issue only clearing checks within the scope defined in Point 5, Part I of this Circular. He/she must also:

- Write the check with an unerasable ink, not write it with a pencil or red ink and must not make any correction or erasing on the check.

- Write the amount of money at the prescribed place. The amount of money in words must match the amount in figures.

- Write the date, month and year of signing the check for issue; the amount of money and the name, address and marks of the account (if any) of the payee on the stub of the check which must correspond with the check.

- Write the first letter of the amount of money in the upper case and right at the beginning of the first line, not to space the lines or the letters or to add other letters between two letters already written close together.

2. Assignment of the signing for check issue:

- Only the account holder has the right to assign others to sign for the issue of the checks. The assignee shall not assign the check to another person.

- For an account holder who is an individual the assignment to another person to sign the issue of the check on ones behalf must comply with the provision of law. Assigning the signing of check issue may apply to each issue of checks or within a given period. The assignment must be done according to the form and must be sent to the payment unit together with the model form of registration of the signature of the assignee.

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3. In case the legal person has a chief accountant the check must also bear the signature of the chief accountant (or the person assigned by the chief accountant); if the legal person has no chief accountant or does not register the signature of the chief accountant, the check issuer must write the word "not available" under the word "chief accountant".

The signature and seal on the check must correspond with the model already registered at the payment unit.

4. The account holder must not sign or affix the seal to the checks which have not gathered all the necessary elements (signed blank check). If the signed blank check is misused the account holder shall have to bear any resulting losses.

5. If the issue of the check is aimed only at paying through money order, the check issuer shall cross the two parallel lines crossing a corner or write and affix the seal on the word "demand deposit" at the left corner on the front of the check before handing the check to the payee.

6. With regard to the issue of a non negotiable check, the issuer must write the words "not negotiable" on the back of the check in the part reserved for the transfer.

7. Cashiers check:

a/ When the need of a cashiers check arises, the check issuer shall fill the check and render to the payment unit two sets of "demands for cashiers checks" according to the form defined together with the check filled with all the necessary elements, signatures and seals (if any) on the front side of the check.

- Write the mark number of the Credit and Debit accounts on the "demands for cashiers check".

- Write the day, month and year and sign and affix the seal of the payment unit at the prescribed place for the cashiers check on the front of the check.

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- To handle the sets of "demands for

+ One set to certify the Original Debit Account of the account holder, and write the Credit on the credit account of the deposit to ensure clearance of the check for the account holder.

+ One set to serve as Debit Note and hand it to the check issuer.

8. When receiving the check, the payee shall have to check the validity of the check.

III. PROCEDURES FOR THE ASSIGNMENT OF CHECK

1. The assignment of a check must be effected within the acceptance term of the check.

2. When assigning a signed check for payment by money transfer, the assignor of the check must write the name, address and the number of the account and the name of the unit holding the account (if any) of the assignee, the day, month and year of the assignment and sign or affix the seal (if any) to the back of the check (on the part devoted to the assignment).

When assigning a signed check for payment in the assignor, besides writing the above elements, must also write the serial number, the date and place of issue of the identity card or passport or the identity card of the defense armymen or workers or personnel of the assignee; write the day, month and year of assignment and sign to the back of the check (on the part devoted to the assignment).

IV. PROCEDURES FOR CHECK REMITTANCE

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In order to be paid the amount written on the check, the payee shall base himself/herself on the check to form three sets of declarations to remit the check according to each payment unit (each unit shall form a separate declaration) attached to the checks and remit them to the assigned unit or the payment unit within the acceptance term of the check.

When making the declaration for remitting the check, the payee must write clearly and fully the elements prescribed in the declaration, and shall not make any correction or erasing.

The payee is entitled to remit the check to the payment unit or the assigned unit (where he/she opens his/her account). In the absence of an account, the payee shall remit the check to the payment unit or the assigned unit in the province or city where the payee has registered his/her residence.

1.1. In case the payee remits the check to the payment unit, the following must be done:

Upon receiving three sets of declaration together with the checks remitted by the payee, the payment unit shall check:

- The payment conditions of the checks according to Point 1.3, Part II of this Circular.

- To compare, and ensure that the number of checks and amounts on the checks correspond with the remittance declaration.

- To make a sum total of the amounts on the declarations and ensure that the amount written in words match that written in figures.

If the check meets all the conditions for payment the payment unit shall sign acknowledgment with the payee (the signing must be recorded in the receipt book).

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1.2. In case the payee remits the check to the assignee, the following must be done:

Upon receiving the three declarations on check remittance together with the checks remitted by the payee, the assignee shall have to check:

- The validity of the checks according to Point 1.2, Part II of this Circular.

- The acceptance term of the check.

- The continuity of the row of signatures of assignment (if any) on each check.

- To compare in order to ensure that the number and amount of money on the check correspond with those on the declarations for check remittance.

- To make the sum total of the whole amount on the declarations and see that the amount in words corresponds with that written in figures.

If no error is detected and it agrees to receive the check, the assigned unit shall sign to the book to monitor the remittance of checks of the payees and transfer the checks immediately to the payment unit as stipulated at Point 2, Section IV, Part III of this Circular.

1.3. In case the payee does not have an account he/she may ask the payment unit or the assigned unit to open an account for him/her depending on each specific case of the check to be remitted to the payment unit or the assigned unit before filling the check drawing procedures as stipulated in Points 1.1 and 1.2 in this Section.

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V. PROCEDURES FOR PAYING A CHECK

1. If the check is paid within the same system (on the same territory or in another province or city), the procedures for paying the check shall be made under the concrete guidance of the General Director of the credit organizations and the General Director of the State Treasury and shall apply to the attached units or its customers in order to ensure timely, prompt, accurate and safe payment and conformity with current regulations.

2. If the check is paid among units of different systems on the same province or city and with the participation of clearing payment, the process of clearing payment shall apply as prescribed by the State Bank.

Part V

HANDLING OF LOSS OF CHECK

1. When a check issuer loses his/her check he/she must immediately inform the payment unit and the payee (if it is written on the check). This notice takes legal effect only when it is sent in writing.

The time when the payment unit receives the notice on loss of check shall be determined as follows:

- It is the time when the payment unit receives the notice on loss of check sent by the post, based on the book of acknowledgement between the payment unit and the post. If the document is sent by registered mail the envelope must be clearly inscribed with the words "Notice on check loss" so that the clerk may send it immediately to the accountant.

- It is the time when the payment unit certifies at the part specified, if the check loser directly hands the notice to the payment unit.

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3. When receiving the notice on the loss of check, the payment unit must immediately check to see if the announced lost check has been paid. If it is not yet paid, the paying unit shall have to issue to its personnel an order to stop paying the said check and shall have to take responsibility for paying compensation to the customer if the check is misused for drawing money after the unit has received the notice on the loss of the check. If the time when the payment unit receives the notice on the loss of the check happens after the time when the check has been paid, the payment unit must immediately inform the check loser and the latter shall have to take responsibility for the damage caused by the loss.

4. The announcer of the loss of the check shall be held responsible for the truthfulness of the announcement. If it is found out that the announcement is not truthful, the announcer shall, depending on the seriousness of the case, be sanctioned administratively or handled according to law.

5. The payment unit must preserve the blank check according to the regulations on the preservation of important printed documents and has to take responsibility for the damage caused by the loss of blank checks.

Part VI

COMPLAINTS AND INITIATION OF LAWSUITS

I. COMPLAINTS

When receiving a check which is refused payment, the payee has the right to complain according to the following regulations:

1. He/she may file a complaint according to the form stipulated; hand or send the complaint attached to a copy of the payment refusal from the payment unit to the responsible persons for the check in order to ask for payment with specification of the time for settlement. The payee must preserve the original text of the payment refusal in order to initiate a lawsuit in case the complained does not meet his/her demand.

2. Time for sending the complaint is determined as follows:

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3. The receiver of the complaint shall have to reply to the sender of the complaint. If he/she accepts the complaint, he/she must pay immediately the amount written on the check to the complainant and is entitled to ask the complainant to return to him/her the check and the original of the refusal bill in order to end his/her responsibility for the check or to complain against the earlier assigners of the check (if any).

4. In case the check is refused payment because it has run out its acceptance term and though the payee has lost the right to lodge complaint, the check remains a valid basis for him/her to directly claim payment from the persons responsible for the check or start an action suit before the court if these persons refuse to pay.

II. STARTING A LAWSUIT

If the case cannot be solved by the complaint, the payee has the right to initiate a lawsuit against the persons responsible for the check to claim payment according to the following regulations:

1. The refusal note established by the payment unit and the check are evidences in the suing to claim back the money due to the refusal of payment of a check. The payee has the right to sue before the court. The sued persons may be one or all the following:

- The check issuer;

- The check assigners (if any).

The suit about the checks shall be settled by the court according to law.

2. The payment unit has the right to sue before the court the individuals or legal persons who take acts detrimental to it, ask for compensation for all the losses it has to incur due to the illegal drawer (s)

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FORBIDDANCES AND THE HANDLING OF VIOLATIONS

An organization or individual that violates the forbiddances stipulated in Article 40 of the Regulation shall, depending on the character and seriousness of the violation, be sanctioned according to the current provisions of law.

With regard to the issue of checks which exceed the balance, the payment unit shall handle as follows:

- In case of first violation, the violator shall be fined according to the regulations on the sanction against violations of contracts. The violator shall also be served notice in order to avoid a relapse.

- In case of second violation, apart from the fine stipulated in the first violation, the violator shall be suspended the right to issue checks within six months and all the unused checks of the violating organization or individual shall be withdrawn. Later the account owners must make a written commitment not to relapse before they can recover the right to issue checks. The list of the organizations and individuals that are banned from issuing checks must be publicized in the system of the commercial banks. If they continue to violate they shall be banned from issuing checks definitively.

Part VIII

IMPLEMENTATION PROVISIONS

1. This Circular takes effect on the 1st of April 1997.

The following documents have now lost their implementation effect: the regulations on "Payment by checks" in Decision No.22-QD/NH1 of February 21, 1994 of the Governor of the State Bank issuing the Modalities for Non-Cash Payment, Circular No.08-TT/NH2 of June 2, 1994 of the State Bank guiding the implementation of the Modalities for Non Cash Payment; and Decision No.105-QD/NH1 of April 10, 1995 of the Governor of the State Bank amending the model of individual checks mentioned in the "Modalities for Non-Cash Payment".

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Still remaining in effect are the regulations on the procedures for issuing and paying money order checks in Section B, Part II on the Modalities for Non-Cash Payment issued together with Decision No.22-QD/NH1 and in Section B, Part II of Circular No.08-TT/NH2 of June 2, 1994 of the Vietnam State Bank "Guiding the implementation of the Modalities for Non-Cash Payment

2. The Heads of departments at the Central State Bank, the Directors of the State Bank branches in the provinces and cities shall have to organize and supervise the observance of the Statute and the guidance in this Circular by the credit organizations. The General Directors of the State-owned Commercial Banks, and the Bank for Investment and Development, the Directors of the Stock Commercial Banks, the General Director of the Joint Venture Banks, the Branches of foreign banks, the General Director of the State Treasury and other credit organizations shall have to organize the implementation of this Circular.

In the process of implementation, if any problem arises, it should be reported in time to the Central State Bank for guidance and settlement.

3. All supplements and amendments to this Circular shall be decided by the Governor of the State Bank.

FOR THE GOVERNOR OF THE STATE BANK
DEPUTY GOVERNOR




Le Duc Thuy