DECISION

PROMULGATING THE REGULATION ON OVERDRAFTS AND OVERNIGHT LOANS APPLICABLE TO INTER-BANK ELECTRONIC PAYMENT

THE STATE BANK GOVERNOR

Pursuant to the Law on the State Bank of Vietnam and the Law on Credit Institutions of December 12, 1997;
Pursuant to the Government’s Decree No. 15/CP of March 2, 1993 on the tasks, powers and State management responsibilities of the ministries and ministerial-level agencies;
Pursuant to the Government’s Decree No.64/2001/ND-CP of September 20, 2001 on activities of payment through payment service-providing organizations;
At the proposal of the director of the Monetary Policy Department,

DECIDES:

Article 1.- To promulgate together with this Decision the Regulation on overdraft and overnight loans applicable to inter-bank electronic payment.

Article 2.- This Decision takes effect 15 days after its signing.

Article 3.- The heads of the units attached to the State Bank, the directors of the State Bank’s branches in the provinces and centrally-run cities, and the chairmen of the Managing Boards and general directors (directors) of banks being direct members of the inter-bank electronic payment system shall have to implement this Decision.

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FOR THE STATE BANK GOVERNOR
DEPUTY GOVERNOR




Phung Khac Ke

REGULATION

ON OVERDRAFTS AND OVERNIGHT LOANS APPLICABLE TO INTER-BANK ELECTRONIC PAYMENT
(Promulgated together with the State Bank Governor’s Decision No. 1085/2002/QD-NHNN of October 7, 2002)

Article 1.- Scope and objects of application

This Regulation prescribes the overdrafts and overnight loans provided by the State Bank of Vietnam to the banks being members directly joining the inter-bank electronic payment system (hereinafter called the banks for short) in order to defray the temporary capital shortage in inter-bank electronic payment.

Article 2.- Interpretation of terms

1. Overdraft in inter-bank electronic payment means that the banks are entitled to spend in excess of the balance of their payment accounts opened at the State Bank’s Transaction Bureau on payment days.

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Article 3.- Purposes of overdrafts and overnight loans

1. The banks shall be entitled to overdraw in order to defray temporary payment capital shortage on a day in inter-bank electronic payment.

2. The banks shall be provided by the State Bank of Vietnam overnight loans to liquidate their overdrafts at the end of a working day.

Article 4.- Conditions for overdrafts and overnight loans

To be entitled to make overdrafts and be provided with overnight loans, the banks must fully meet the following conditions:

1. Having written requests for overdrafts and overnight loans accepted by the State Bank;

2. Recognizing and abiding by the provisions of this Regulation;

3. Having collateral assets for securing loans.

Article 5.- Assets pledged for overdrafts and overnight loans

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a/ State Treasury bills;

b/ State Bank bills;

c/ Other valuable papers prescribed by the State Bank Governor in each period.

2. Conditions for pledged assets to be accepted:

Valuable papers shall be accepted by the State Bank of Vietnam as pledged assets when the following conditions are fully met:

a/ The banks are payees (for registered valuable papers), or lawful holders (for bearer valuable papers);

b/ Pledged valuable papers defined in Clause 2 of this Article have a remaining valid duration of at least 10 days;

c/ They can be traded or paid to the State Bank of Vietnam as the third party according to the provisions of law and commitments of payees;

d/ Where they are issued in the book-entry form, there must be certification and guarantee by the organizations liable to pay for such valuable papers that the payment shall be made to the State Bank when the banks unpaid debts become due.

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G

=

GT

1

+

Ls x n

365 x 100

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- G: The value of valuable papers at the time of valuation;

- GT: The value of valuable papers when they become mature:

+ For valuable papers issued in par-value form, GT shall be the amount paid for such valuable papers when they become mature (both principal and interest),

+ For valuable papers issued in discount form, GT shall be the denomination of such valuable papers;

- Ls: The interest rate applicable to the valuation shall be the bid-winning interest rate of Treasury bills, State Bank bills and other valuable papers at the trading session closest to the time of valuation (calculated by %/year) determined by the State Bank’s Transaction Bureau depending on each type of valuable papers.

- n: Remaining duration of valuable papers.

4. In cases where the value of valuable papers pledged at the State Bank’s Transaction Bureau is lower than the actual overdraft level, the banks shall have to additionally pledge short-term valuable papers to ensure that the value of pledged valuable papers is at least equal to 105% of the actual overdraft level.

Article 6.- Overdraft and overnight loan levels

1. The overdraft level shall be equal to actual payment capital shortage in inter-bank electronic payment transactions, but the total overdraft level must not exceed 95% of the value of pledged valuable papers.

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Article 7.- Overnight loan interest rates

Overnight loan interest rates shall be prescribed by the State Bank of Vietnam in conformity with the monetary policy’s objectives in each period.

Article 8.- Procedures for making overdrafts and providing overnight loans

1. Procedures for making overdraft:

When a bank falls short of capital in its payment deposit account and is unable to supplement it from its own capital source or through transactions in the monetary market, the inter-bank electronic payment system shall automatically raise a maximum amount equal to 95% of the value of pledged assets in the bank’s payment deposit account to execute the payment orders. As soon as the capital in the bank’s payment deposit account is supplemented, the payment system shall automatically make deductions to repay the overdraft.

2. Procedures for providing overnight loans:

a/ At the end of a working day, if the payment deposit account balance is not enough to liquidate the overdraft, the inter-bank electronic payment system shall automatically convert such unliquidated overdraft into overnight loan, and the bank shall have to bear overnight loan interest.

b/ On the next working day, the bank shall repay the overnight loan principal and interest to the State Bank’s Transaction Bureau. In cases where the bank has not yet fully repaid the overnight loan, the unrepaid overnight loan debt shall be converted into overdraft of such working day.

Article 9.- Handling of cases where the banks are unable to repay overnight loans

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Article 10.- Responsibilities of the banks

1. To repay overnight loan principals and interests within the time limit.

2. To add short-term valuable papers for pledge to ensure that the value of pledged valuable papers be at least equal to 105% of the actual overdraft level.

Article 11.- Powers and responsibilities of the State Bank of Vietnam

1. To refuse overdrafts and overnight loans for banks which fail to fully meet the conditions prescribed in Article 4 of this Regulation.

2. To keep and preserve valuable papers pledged by the banks.

3. To handle pledged valuable papers to recover debts if the banks are unable to repay overnight loans.

Article 12.- Organization of implementation

The banks participating in the inter-bank electronic payment system shall have to implement this Regulation. The amendment and supplementation of this Regulation shall be decided by the State Bank Governor.

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FOR THE STATE BANK GOVERNOR
DEPUTY GOVERNOR




Phung Khac Ke