DECISION

ON THE AMENDMENT OF ARTICLE 1, DECISION NO. 1081/2002/QD-NHNN DATED 7 OCTOBER, 2002 OF THE GOVERNOR OF THE STATE BANK ON FOREIGN CURRENCY POSITION OF CREDIT INSTITUTIONS PERMITTED TO ENGAGE IN FOREIGN EXCHANGE BUSINESS

THE GOVERNOR OF THE STATE BANK

- Pursuant to the Law on the State Bank of Vietnam No. 01/1997/QH10 dated 12 December, 1997; 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 Decree No. 86/2002/ND-CP dated 05 November, 2002 of the Government providing for the assignment, authority, responsibility for the State management of Ministries and ministerial-level agencies;
- Pursuant to the Decree No. 63/1998/ND-CP dated 17 August, 1998 of the Government on foreign exchange control and the Decree No. 05/2001/ND-CP dated 17 January, 2001 of the Government on the amendment, supplement of several Articles of the Decree No. 63/1998/ND-CP dated 17 August, 1998 of the Government on foreign exchange control;
- Upon the proposal of the Director of the Foreign Exchange Control Department.

DECIDES:

Article 1. To amend Article 1 of the Decision No. 1081/2002/QD-NHNN dated 7 October, 2002 of the Governor of the State Bank on the foreign currency position of credit institutions permitted to engage in foreign currency.

"Article 1. Governing scope and subjects of application

This Decision provides for the foreign currency position of credit institutions permitted to engage in foreign exchange business in Vietnam under the Law on credit institutions (hereinafter referred to as Credit institutions)".

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Article 3. The Director of the Administration Department, the Director of Foreign Exchange Control Department, the Chief Inspector of the State Bank of Vietnam, the Heads of related units of the State Bank, Managers of the State Bank branches in provinces and cities under the central Government's management, the Chairman of Board of Directors and General Directors (Directors) of credit institutions permitted to engage in foreign exchange activities shall be responsible for the implementation of this Decision.

FOR THE GOVERNOR OF THE STATE BANK
DEPUTY GOVERNOR




Phung Khac Ke

GUIDING THE PREPARATION OF REPORTING FORMS ON FOREIGN CURRENCY SALE AND PURCHASE VALUE AND FOREIGN CURRENCY POSITION

Subjects of application: Credit Institutions permitted to engage in foreign exchange business.

Time of submission:

For Form 01: By 13 pm of the following working day at the latest in respect of the data on foreign currency business and foreign currency position of previous day.

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Mode of submissions: By fax to the Foreign Exchange Control Department, Fax No. 04-9343468 or 04-8268789.

Requirement: General Directors (Directors) of Credit Institutions shall be responsible for the accuracy of reported data and the compliance with the limitation of foreign currency position in accordance with provision in Article 6 and Article 7 of the Decision.

Method of form preparation:

1. Form 01

A. Part I. Foreign currency purchase and sale with customers in VND

- Credit institutions shall only report transactions with customers, which are made between foreign currencies (US$, EURO, JPY) and VND and shall not report transactions between credit institutions in the inter-bank market.

- The Spot Transaction: To report by total value of sale, total value of purchase of foreign currencies with customers (detailed report of each transaction is not required).

- The Forward Transaction: For each foreign currency, to report by total value of purchase, sale of foreign currency for each term: less than 31 days, from 31-120 days; from 121-180 days (detailed report of each transaction is not required)

- The Swap Transaction: to report fully component transactions by Spot, Forward item in respective purchase/sale columns.

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B. Part II. The foreign currency position at the end of a working day (the accumulated turnover method)

- Purchase (Sale) column: The total value of purchase (sale) of foreign currency with customers, banks; conversion of foreign currency in domestic and international market. (Including both the spot, forward and swap transactions)

- In respect of other foreign currencies: Credit institutions shall only report foreign currencies with the foreign currency position that is >1% or < -1% of their own capital.

- The exchange rate used to convert the position of each foreign currency, shall be the spot rate applicable to transfer between that foreign currency with VND by credit institutions at the end of a working day.

- The position of a foreign currency shall be calculated under the accumulated turnover method:

The foreign currency position t (%) = The original position + Arising position

The foreign currency position t (%)

=

The foreign currency position (t-1) %

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(Purchase-Sale)* The position exchange rate * 100%

The own capital (VND)

Note: On the effective date of this Decision, credit institutions shall determine by themselves the original position (the foreign currency position (t-1)) on the basis of Form No. 2.

- The total foreign currency long position shall be the total positions of foreign currencies, which are in a long position.

- The total foreign currency short position shall be the total positions of foreign currencies, which are in a short position.

2. Form 02: Report on foreign currency position at the end of the month (the account balance method)

- The original foreign currency position shall be equal to the total balance of accounts 4911, 4921, 9231, 9232, 9233 and 9234. Any account that has the credit balance, shall take plus sign (+), any account that has the debit balance, shall take minus sign (-).

- Other foreign currencies: to report only foreign currencies with position that is > 1% or < -1% of the own capital.

- Since the accounting for domestic and international foreign currency conversion activities has not been consistent between banks (For example: most of banks have recorded these activities to the account 491, some other banks have recorded them to the accounts 499 and 561 or accounts 499 and 561 and then transfer to the account 491 when there is the balance in the account 491). Therefore, the new form mentions the account 491. During the process of implementation, if there is any obstacle, credit institutions should make their proposals to the State Bank on how to gather data under their own accounting method in order to ensure that the foreign currency position calculated under the account balance method (Form 02) can reflect fully foreign currency conversion transactions domestically and internationally. After the consideration of proposals of credit institutions, the State Bank of Vietnam shall provide written guidance on how to gather data for the calculation of the foreign currency position at the end of the month (Form 02), which is used as the basis for inspection activities.

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- The foreign currency position at the end of the month in accordance with Form 02 shall be the criteria to adjust and ensure the accuracy of daily foreign currency position in accordance with Form 01.

- In principle, the foreign currency position of each foreign currency in relation to the own capital at the last working day in the month under the accumulated turnover method (Part II Form 01) must approximately be equal to the foreign currency position data in relation to the own capital, which is calculated under the account balance method (Form 02) (there is a small error because of exchange rate difference).

- In case where the error is in the interval of 3%: credit institutions shall adjust by themselves the foreign currency position of the day where the foreign currency position calculated under the account balance method (on the 10th monthly at the latest) is available and use it as standard original position for the following day. In the form 02, Credit institutions should clearly state the specific error between foreign currency position of each foreign currency: EUR, USD, JPY which is determined under the account balance method (Form 02) and the accumulated turnover method (Form 01) of the last day of each month, at the same time clearly state the date where this error is adjusted.

- In case where the error is larger than 3%: credit institutions must submit a written explanation, stating clearly the reasons for the error, ways to tackle the erroneous situation and proposals; at the same time to adjust the data to make it accurate.

Ways to adjust the data:

Example: The following table is the collection of US$ positions of the bank A in days from 27 September, 2002 to 3 October, 2002 under the accumulated turnover method:

Date

The foreign currency position (t-1) %

Arising foreign currency position (%)1

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29 September, 2003

+ 12%

+ 2%

+ 14%

29 September, 2003

+ 14%

+ 3%

+ 17%

01 October, 2003

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- 11%

+ 6%

02 October, 2003

+ 6%

- 5%

+ 1%

03 October, 2003

+ 1%

- 4%

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As of 3 October, 20032, the bank A has calculated the foreign currency position of the date of 30 September, 2003 under the account balance method (Form 02) equal to +15% (the error is 2% compared with the accumulated turnover method). By then, the bank A adjusts by itself the foreign currency position at the date of 3 October, 2003 as follows:

The adjusted foreign currency position (3 October)

= the old foreign currency position (3 October) + the error

= -3% + (-2%)

= -5%

Therefore, the foreign currency position (3, October) would be 5% and is the original position to calculate the foreign currency position of the 4, October.

Name of Credit Institution

Tel No.:

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Form No. 01

REPORT ON FOREIGN CURRENCY BUSINESS AND DAILY FOREIGN CURRENCY POSITION

Date:........................

I. Foreign currency sale and purchase with customers in VND (excluding inter-bank transactions)

Unit: 1000

Transaction

Foreign currency

Purchase

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Transfer rate

Highest purchase

Lowest sale

The spot transaction

US$
EUR
JPY

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USD
under 31 days
31 120
121 180

EUR
under 31 days
31 120
121 180

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JPY
under 31 days
31 120
121 180

II. The foreign currency position at the end of a working day:

The own capital (VND):

Unit: 1000

Foreign currency

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Purchase

Sale

The position exchange rate

The foreign currency position at the end of a day t (%)

USD

EUR

JPY

Other foreign currencies

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* In respect of other foreign currencies, to report only foreign currencies with the foreign currency position that is >1% of their own capital.

The total of foreign currency long position compared with the own capital (%):

The total of foreign currency short position compared with the own capital (%):

DRAWER
(Sign and state clearly full name)

CONTROLLER
(Sign and state clearly full name)

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Name of credit institution

Tel No.:

Fax No.:

Form No. 02

REPORT ON FOREIGN CURRENCY POSITION AT THE END OF THE MONTH

Date:........................

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Account

Original foreign currencies

USD

EUR

JPY

Other foreign currencies (*)

Balance of account: foreign currency dealing (A)

4911

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Balance of account: foreign currency sold from other sources (B)

4921

Balance of account: commitment for spot purchase (C)

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Balance of account: commitment for spot sale (D)

9232

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Balance of account: commitment for forward purchase (E)

9233

Balance of account: commitment for forward sale (F)

9234

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Original foreign currency position

T = A B + C D + E F

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Position exchange rate

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Own capital (VND)

The total foreign currencies long position compared with own capital (%)

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The total foreign currencies short position compared with own capital (%)

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DRAWER
(Sign, clearly state full name)

CONTROLLER
(Sign, clearly state full name)

CONFIRMATION OF COMPETENT PERSON
(Sign, seal, clearly state full name)

1

The foreign currency position t (%)

=

The foreign currency position (t-1) %

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(Purchase-Sale)* The position exchange rate * 100%

The own capital (VND)

 2 As provided, the last term would be the 10th October, 2003.