DECISION

ON THE PERCENTAGE AND STRUCTURE OF THE OBLIGATORY RESERVE FOR BANKS AND CREDIT INSTITUTIONS

THE GOVERNOR OF THE STATE BANK

Pursuant to the Law on Organization of the Government of September 30, 1992;
Pursuant to the Ordinance on the State Bank and the Ordinance on Banks, Credit Cooperatives and Financial Companies promulgated under Order No.37/LCT-HDNN8 and Order No.38/LCT-HDNN8 of May 24, 1990 of the President of the State Council of the Socialist Republic of Vietnam;
Pursuant to Decree No.15-CP of March 2, 1993 of the Government on the tasks, powers and State management responsibilities of the ministries and ministerial-level agencies;
At the proposal of the Director of the Economic Studies Department,,

DECIDES:

Article 1.- The percentage of obligatory reserve for banks and credit institutions is 10% of the total amount of deposits prescribed in Article 11 of the Regulation on the Obligatory Reserve for Banks and Credit Institutions issued together with Decision No.396/1997/QD-NNHN1 of December 1, 1997 of the Governor of the State Bank. Time deposits of a type for which an obligatory reserve is required are under- 12-months time deposits

Article 2.- The structure of the obligatory reserve includes deposits in demand deposit accounts at the State Bank and cash as well as checks not yet matured at the fund of a bank or credit institution:

2.1 The obligatory reserve amount of a bank or credit institution deposited at a demand deposit account at the State Bank shall represent at least 70% of the total obligatory reserve of the bank or credit institution.

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In cases where the actual average amount of cash and checks not yet matured left at the fund of a bank or credit institution is larger than 30% of the obligatory reserve, 30% shall be taken as the obligatory reserve. If the actual average amount of cash and checks not yet matured left a the fund of a bank or credit institution is smaller than 30% of the obligatory reserve, the actual amount shall be taken as the obligatory reserve while the obligatory reserve deposited at the State Bank must be correspondingly increased to offset the deficit.

Article 3.- The State Bank shall pay interests on the excess amount of the obligatory reserves of banks and credit institutions deposited in demand deposit accounts at the State Bank as follows:

- For deposits in Vietnam Dong: The interest rate is 0.2%/month;

- For deposits in a foreign currency(ies): The interest rate is equal to the interest rate for demand deposits in foreign currency(ies) according to current regulations of the Governor of the State Bank on the interest rate for credit institutions' foreign currency deposits at the State Bank.

Article 4.- The State Bank shall fine banks and/or credit institutions for their obligatory reserve deficits during the period when such obligatory reserves must be kept as follows:

For the obligatory reserve deficit in Vietnam Dong during the period when such obligatory reserve must be kept, the fine level is equal to 200% of the interest rate for re-allocated capital loans announced by the State Bank at each period, applying to the deficit amount for the whole period.

For the obligatory reserve deficit a foreign currency during the period when such obligatory reserve must be kept, the fine level is equal to 200% of the ceiling interest rate for loans in US dollar lent to economic organizations stipulated by the Governor of the State Bank at each period, applying to the deficit amount for the whole period.

Article 5.- Joint stock commercial banks in rural areas shall be exempt from the obligatory reserve.

Article 6.- This Decision takes effect from April 1, 1998 and applies to the calculation of the obligatory reserve of April 1998. This Decision replaces Decision No. 397/1997/QD-NNHN1 of December 1, 1997 of the Governor of the State Bank.

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FOR THE GOVERNOR OF THE STATE BANK
DEPUTY GOVERNOR




Le Duc Thuy