DECISION

ON THE ISSUANCE OF THE REGULATION ON THE ISSUANCE OF VALUABLE PAPERS BY CREDIT INSTITUTIONS FOR DOMESTIC FUNDS MOBILIZATION

THE GOVERNOR OF THE STATE BANK

- Pursuant to the Law on the State Bank of Vietnam dated 12 December 1997 and the Law on the amendment, supplement of several articles of the Law on the State Bank of Vietnam dated 17 June 2003;
- Pursuant to the Law on Credit Institutions dated 12 December 1997 and the Law on the amendment, supplement of several articles of the Law on Credit Institutions dated 15 June 2004;
- Pursuant to the Decree No. 86/2002/ND-CP dated 05 November 2002 of the Government providing for the function, assignment, authority and organizational structure of the Ministries and Ministerial level agencies;
- Upon the proposal of the Director of Monetary Policy Department,

DECIDES:

Article 1. To issue in conjunction with this Decision "the Regulation on the issuance of valuable papers by credit institutions for domestic funds mobilization".

Article 2. This Decision shall be effective after 15 days since its publication in the Official Gazette and replace the Decision No. 1287/2002/QD-NHNN dated 22 November 2002 of the Governor of the State Bank on the issuance of the Regulation on the issuance of valuable papers by credit institutions for domestic funds mobilization.

Article 3. The Heads of units of the State Bank; General Managers of the State Bank branches in provinces, cities under the Central Governments management; Chairperson of the Board of Directors, General Directors (Directors) of Credit Institutions shall be responsible for the implementation of this Decision.

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THE GOVERNOR OF THE STATE BANK OF VIETNAM




Le Duc Thuy

REGULATION

ON THE ISSUANCE OF VALUABLE PAPERS BY CREDIT INSTITUTIONSFOR DOMESTIC FUNDS MOBILIZATION
(Issued in conjunction with the Decision No. 02/2005/QD-NHNN dated 4 January 2005 of the Governor of the State Bank)

Chapter I

GENERAL PROVISIONS

Article 1. Governing scope and subjects of application

This Regulation shall govern the issuance of valuable papers by credit institutions to mobilize funds from organizations and individuals within the territory of Vietnam.

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1. Credit institutions issuing valuable papers shall be those that are established and operating in accordance with the Law on Credit Institutions and the Law on the amendment, supplement of several articles of the Law on Credit Institutions and satisfy the conditions stipulated in this Regulation, including:

- The State owned credit institutions.

- Joint stock credit institutions.

- The Central People's Credit Fund.

- Joint venture credit institutions.

- 100% foreign owned credit institutions and branches of foreign banks licensed to operate in Vietnam.

2. The financial leasing Companies shall only be permitted to issue valuable papers with the term of more than one year.

Article 3. Purchasers of valuable papers

Purchasers of valuable papers shall include:

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- Foreign organizations, which, foreign individuals, who are living and legally operating in Vietnam.

Article 4. Interpretation

In this Regulation, following terms shall be construed as follows:

1. Valuable papers shall be certificates issued by credit institutions to mobilize funds which confirm the obligation to repay a certain amount of money within a specific time, conditions for interest payment and other commitments undertaken between credit institutions and purchasers.

2. Short-term valuable papers shall be valuable papers with the term of less than 1 year, which include Bills of exchange, short-term deposit certificates, bills and other short-term valuable papers.

3. Long-term valuable papers shall be valuable papers with the term of one year upwards from the date of issue to the maturity date, which include bonds, long-term deposit certificates and other long-term valuable papers.

4. Non-bearer valuable papers shall be valuable papers issued in form of certificates or book entry with the name of the owner.

5. Bearer valuable papers shall be valuable papers issued in form of certificates without the owner's name. Bearer valuable papers belong to the ownership of their holders.

6. Face value shall be the principal value pre-printed or written on the valuable papers issued in form of certificates or written on the certificate of ownership in respect of valuable papers issued in form of a book entry.

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8. Term of valuable paper shall be the duration from the date when the credit institution recognizes the debt to the end of the day by which the credit institution commits to repay the entire debt.

9. Duration of issue shall be the time period from the date when the credit institution starts the issue to the end of the last day of the issuance.

10. Fixed interest rate shall be the interest rate that is unchangeable and applied during the term of the valuable paper.

11. Periodically adjusted interest rate shall be the interest rate that is changed periodically according to the market, which is agreed upon between the credit institution and the purchaser upon issuing.

12. Prepayment of interest shall be the sale of value papers at the price lower than their face value and the purchaser shall be paid an amount equivalent to the face value of valuable papers upon their maturity.

13. Payment of interest one time at maturity shall be the payment of interest at maturity together with the principal amount (face value).

14. Periodical payment of interest shall be the payment of interest on the basis of a coupon after a period of 6 months or 1 year in respect of long-term valuable papers.

Article 5. Forms of issuance

1. Credit Institutions shall issue valuable papers in form of a non-bearer certificate, bearer certificate and book entry.

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Article 6. Form and elements of valuable papers

1. Valuable papers issued in form of a certificate must contain following elements:

- Name of the issuing credit institution.

- Name of the valuable papers (bills of exchange, bills, short-term deposit certificates, long-term deposit certificates, bonds, etc.)

- Face value.

- Term.

- Date of issue

- Maturity date

- Interest rate; modes of interest payment; time and place of interest payment.

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- Place of repayment of the principal value of valuable papers.

- Stating clearly whether valuable papers are a non-bearer or bearer one.

In case of non-bearer valuable papers, clearly stating: name of the institution, number of establishment license or business registration, address of the purchaser of valuable papers (if the purchaser is an organization); name, Identity card number, address of the purchaser of valuable papers (if the purchaser is an individual).

- Signature of the General Director or authorized person and other signatures stipulated by the credit institution.

- Code, serial number of issue.

- Conditions, clauses on the transfer, discount, and mortgage of valuable papers at the issuing credit institution; dealing with risks, cases of non-payment.

2. Apart from elements provided for in Paragraph 1 of this Article, issuing credit institutions may stipulate notes and other instructions relating to valuable papers.

3. In respect of valuable papers issued in form of book entry, elements provided for in Paragraph 1 of this Article must be stated on the certificate of purchaser's ownership of valuable papers.

4. In respect of valuable papers with interest to be paid periodically, the interest coupon attached to valuable papers must contain elements relating to the valuable papers (serial number, face value), interest rate, the amount to be received, the period of interest receipt.

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Article 7. The currency of issue and payment

1. Valuable papers shall be issued in VND or foreign currency.

2. The issue, payment and transfer of valuable papers in foreign currency must comply with provisions on foreign exchange control of the Socialist Republic of Vietnam.

Article 8. Modes of issue

Credit institutions shall issue valuable papers under following modes:

1. To directly issue valuable papers.

2. To issue through a credit institution acting as an agent or issue valuable papers under entrustment.

Article 9. Duration of issue

Duration of an issue shall not exceed 60 days including weekends, holidays in accordance with provisions of applicable laws. Credit institutions shall only be entitled to issue beyond of the above-mentioned duration upon the approval of the State Bank.

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Interest rate of valuable papers shall be stipulated by the issuing credit institution in line with the market interest rate to ensure the business efficiency and operational prudence for the credit institution.

Article 11. Procedures of issuance and payment of valuable papers

Procedures of issuance and payment of valuable papers shall be stipulated by the credit institution in line with the management characteristics and model of the credit institution to ensure the security and accuracy of the issue and payment of valuable papers.

Article 12. Repayment of principals and interests

1. Credit institutions shall repay the principal to the purchaser of valuable papers when they become due.

2. Credit institutions shall negotiate the payment of interests under the fixed or periodically adjusted interest rate.

3. Credit institutions shall pay interests under the mode of pre-payment or payment at the due date or periodical payment.

Article 13. Transfer of valuable papers, dealing with dispute and other risks

1. Ownership of valuable papers shall be transferred by modes of purchase, sale, donation, gift, exchange and inheritance in accordance with the provisions of applicable laws.

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3. The settlement of disputes relating to valuable papers shall be performed in accordance with the provisions of the current laws of the Socialist Republic of Vietnam.

Article 14. Mortgage, discount and rediscount of valuable papers

1. Valuable papers can be used as mortgaged assets at credit institutions according to provisions of applicable laws on loan security upon the approval by those credit institutions.

2. Valuable papers can be discounted, rediscounted in accordance with the current provisions of the law on the discount and rediscount of valuable papers.

Article 15. Preservation, delivery and transport of valuable papers

Preservation, delivery and transport of valuable papers of credit institutions shall be performed in accordance with the current provisions of the Government and the State Bank.

Chapter II

ISSUANCE OF SHORT-TERM VALUABLE PAPERS

Article 16. Face value of short - term valuable papers

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Article 17. Conditions of the issue of short - term valuable papers

Credit institutions shall only be permitted to issue short-term valuable papers when they have fully complied with the prudential limits according to the provisions of the Law on Credit Institutions, the Law on amendment, supplement of several articles of the Law on Credit Institutions and the guidance of the State Bank.

Article 18. Organization of the issuance of short-term valuable papers

1. Credit institution shall take the initiative of organizing short - term valuable paper issues in the year.

2. Credit institutions shall, at least 20 working days prior to the time of each issue, give an issuance notice of the expected issue to the State Bank.

The issuance notice shall include following contents:

- Name of the issuing credit institution.

- Name of valuable papers (bills of exchange, bills, short-term deposit certificate, etc.)

- Total face value of the issue.

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- Date of issue

- Interest rate; modes of interest payment; time, place of interest payment.

- Modes of repayment.

- Place of repayment of the principal value of valuable papers.

- Results of previous issues of short-term valuable papers in the financial year (if any).

- Other contents of the notice made by the issuing credit institution.

Chapter III

ISSUANCE OF LONG-TERM VALUABLE PAPERS

Article 19. Face value of long-term valuable papers

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2. The face value of long-term valuable papers, which are denominated in foreign currency and issued in form of certificates shall be USD 100 or equivalent amount of other foreign currencies at the minimum, USD 100,000 or equivalent amount of other foreign currencies at the maximum. Face values that are greater than the minimum face value shall be multiples of the minimum face value.

3. The face value of long-term valuable papers, which are bonds issued in form of certificates shall be pre-printed on the valuable papers.

4. The face value of long-term valuable papers, which are long-term deposit certificates issued in form of certificates shall be pre-printed or negotiated between the issuing credit institution and the purchaser.

5. The face value of long-term valuable papers issued in form of book entry shall be negotiated between the issuing credit institution and the purchaser.

Article 20. Issue date and maturity date of long-term valuable papers, which are bonds

Long-term valuable papers, which are bonds and issued in the same issue, shall have the same issue date and maturity date.

Article 21. Conditions of the issue of long-term valuable papers

A credit institution shall be permitted to issue long-term valuable papers upon full satisfaction of following conditions:

1. To comply with prudential limits in accordance with the provisions of the Law on Credit Institutions, the Law on amendment, supplement of several Articles of the Law on Credit Institutions and guidance of the State Bank.

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Article 22. Application file for the issue of long-term valuable papers

Application file for the issue of long-term valuable papers includes:

1. The application for issuing long-term valuable papers.

2. The plan of issuing long-term valuable papers in the fiscal year, which clearly states the issuing purpose, the plan of use, number of expected issues, total issuing face value, face value, names of the valuable papers, issuing terms, interest rate and scope, modes and place of repayment of principal and payment of interest; conditions and clauses on rights and obligations of the credit institution and the purchaser. Plan of issuing long-term valuable papers must be approved by the Board of Directors.

3. Financial statements of the two latest consecutive years to the time of the application for issue. Credit institutions, which have been operating for less than two years, shall send the financial statements prepared from the time when their operation is commenced to the time of the application for issue. Financial statements must be audited by a qualified independent auditing organization in accordance with the provisions of the State Bank. The contents of the financial statements shall be in accordance with current provisions of the Governor of the State Bank on reporting regime applicable to credit institutions.

4. Business plan, plan of source and use of funds for the financial year.

5. Charter and operation license (in respect of credit institutions, which make the first issue).

6. Changes in organizational structure and other changes (if any).

Article 23. Form and time limit for consideration and decision

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2. The time limit for consideration and decision on the issue of long-term valuable papers of financial year by the credit institution shall not exceed 15 working days since the receipt of the sufficient application file for issue from the credit institution.

Article 24. Organization of the issuance

1. Credit institutions shall take the initiative of organizing long- term valuable paper issues within the scope of approved issuing plan of the financial year. Credit institutions shall only be entitled to issue in excess of the approved plan upon obtaining the written decision on the additional issue from the State Bank.

The application file for the supplement to the issuing plan of long-term valuable papers of the financial year shall include: the application for the additional issue of long-term valuable papers, the adjusted plan of issuing short-term valuable papers and the adjusted business plan of the financial year.

2. Credit institutions shall, at least 20 working days prior to the time of issuance, give a notice of the issuing plan of long term valuable papers to the State Bank (the Department of Monetary - Policy). If there is no written opinion from the State Bank 10 working days prior to the expected issuing plan, the credit institutions shall be entitled to organize the issuance of long-term valuable papers.

3. Notice of the issuance of long-term valuable papers shall include following contents:

- Name of the issuing credit institution.

- Name of valuable papers (bonds, long term deposit certificate, etc.)

- Total face value of the issue.

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- Date of issue

- Date of maturity

- Interest rate; modes of interest payment; time, place of interest payment.

- Modes of repayment.

- Place of repayment of the principal of valuable papers.

- Results of previous issues of long-term valuable papers in the financial year (if any).

- Other contents of the notice made by the issuing credit institution.

Chapter IV

RESPONSIBILITIES OF CREDIT INSTITUTIONS, UNITS OF THE STATE BANK OF VIETNAM AND STATE BANK BRANCHES IN PROVINCES, CITIES

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1. To submit the application file for the issuance of long-term valuable papers of the financial year to the State Bank (the Department of Monetary Policy).

2. To send notice of issuing long-term and short-term valuable papers in each issue to the State Bank (the Department of Monetary Policy).

3. To announce publicly the issuance of valuable papers and to organize the issuance of valuable papers in accordance with provisions in Articles 18 and 24 of this Regulation.

4. To make full and timely repayment of the principal and interest to the purchasers of valuable papers.

5. Credit institution shall, after 10 working days at the latest since the completion of the issue, submit a written report on the result of the issuance of valuable papers to the State Bank (the Department of Monetary Policy) and the State Bank branches in provinces, cities where its head office is located.

Article 26. Responsibilities of the State Bank branches in provinces, cities

To coordinate with the Monetary Policy Department (when necessary) to propose to the Governor for consideration, decision on the annual issuance of long-term valuable papers by local credit institutions.

Article 27. Responsibilities of units of the State Bank of Vietnam

1. The Monetary Policy Department

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b. To take the lead, cooperate with related units to consider applications for annual issuance of long-term valuable papers by credit institutions to submit to the Governor of the State Bank for decision.

c. To research the performance of valuable papers issuance by credit institutions in order to recommend to the Governor of the State Bank for amendment of, supplement to provisions on the issuance of valuable papers by credit institutions.

2. Banks and Non-Bank Credit Institutions Department

a. To provide the Monetary Policy Department with information relating to the organization, operation of credit institutions and their changes, which are accepted by the State Bank.

b. To cooperate with the Monetary Policy Department to consider and give opinions on dealing with the applications for the annual issuance of long-term valuable papers of credit institutions.

3. State Bank Inspection

a. To provide the Monetary Policy Department with the performance of the compliance with prudential limits in the activity of credit institutions, which apply for the issuance of long-term valuable papers in accordance with provisions of the Law on Credit Institutions; the Law on the amendment, supplement of several Articles of the Law on Credit Institutions and guidance of the State Bank.

b. To provide the Monetary Policy Department with the assessment by the State Bank Inspection on the operation and the financial status of credit institutions, which apply for the issuance of long-term valuable papers through their on-site inspection and off-site supervision.

c. To cooperate with the Monetary Policy Department to consider and give opinions on dealing with the applications for the annual issuance of long-term valuable papers of credit institutions.

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4. The Foreign Exchange Control Department

To cooperate with the Monetary Policy Department to consider and give opinions on dealing with the applications for the annual issuance of long-term valuable papers in foreign currency by credit institutions.

5. The Accounting - Finance Department

To provide guidance on the accounting of the issuing operation of short and long-term valuable papers of credit institutions.

6. The Issuing and Vault Department

To advise credit institutions on the design of sample and the printing of valuable papers to ensure the high counterfeit features upon request of credit institutions.

Article 28. Dealing with violations

Organizations, individuals that violate provisions in this Regulation shall, depending on the nature and seriousness of the violation, be subject to the punishment for administrative violations committed in the monetary area and banking activities or be prosecuted for criminal liability.

Article 29. Amendment, supplement

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