DECISION

ON THE USE OF SEVERAL TYPES OF BONDS BY CREDIT INSTITUTIONS IN REFINANCING TRANSACTIONS OF THE STATE BANK

THE GOVERNOR OF THE STATE BANK

- Pursuant to the Law on the State Bank of Vietnam No. 01/1997/QH10 dated 12 December 1997 and the Law on the amendment, supplement of several Articles of the Law on the State Bank of Vietnam No. 10/2003/QH11 dated 17 June 2003;
- Pursuant to the Law on Credit Institutions No. 02/1997/QH10 dated 12 December 1997; the Law on the amendment, supplement of several Articles of the Law on Credit Institutions No. 20/2004/QH11 dated 15 June 2004;
- Pursuant to the Decree No. 52/2003/ND-CP dated 19 May 2003 of the Government providing for the function, assignment, authority and organizational structure of the State Bank of Vietnam;
- Upon the proposal of the Director of the Monetary Policy Department,

DECIDES:

Article 1. Credit institutions being participants to refinancing transactions shall be entitled to use Governments Bonds, which are issued by the Fund for Development Support, Bonds of the local governments, which are issued by the Peoples Committee of Hanoi city and Hochiminh city (hereinafter referred to as bonds) in the refinancing transactions of the State Bank, including the following forms:

1. Term purchase in open market operation

2. Lending secured by the mortgage of valuable papers

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4. Overdraft and overnight lending applied in inter-bank electronic payment

Article 2. Bonds which are used in the refinancing transactions of the State Bank in accordance with provisions in Article 1 of this Decision must fully satisfy the following conditions:

1. Being issued in Vietnamese Dong

2. Being under the legal ownership of a credit institution. The credit institutions are responsible for payment in case where the bonds suffer from payment risks

3. Being deposited at the State Bank

4. Their remaining term to maturity is longer than the payment term in the refinancing transactions.

Article 3. Bonds and value of the bonds which are entitled to participate in each refinancing time (session) shall be considered and announced prior to performing the refinancing transaction by the heads of units of the State Bank of Vietnam as stipulated in Article 5 of this Decision. The transaction value of the bonds which are entitled to participate in each refinancing time (session) shall be equal to 50% of the value of that refinancing transaction at the maximum.

Article 4. The bond value at the time of valuation in the refinancing transactions shall be determined by the form of discount. The amount which the State Bank uses for purchase, lending secured by the mortgage, for discount, overdraft and overnight lending of bonds shall be calculated as follows:

1. In respect of Governments bonds issued by the Fund for Development Support, the maximum amount shall be 80% of the bonds value at the time of valuation.

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Article 5. Responsibilities of units of the State Bank:

1. Head of the management committee of open market operation shall decide on bonds and value of the bonds for each transaction session of the open market operation;

2. The Banking Operation Department shall

a. Issue a specific operational procedure for implementing this Decision at the Banking Operation Department and the State Banks provinces, cities which are authorized to perform the transactions of refinancing.

b. Decide on bonds and the value of bonds for each time of discount, overdraft and overnight lending

3. The Credit Department shall decide on bonds and the value of bonds for each time of lending secured by the mortgage of bonds

4. The Monetary - Policy Department shall coordinate with related units in solving difficulties, obstacles which may arise during the implementation process.

5. The Banking Informatics Technology Department shall take the lead and coordinate with related units of the State Bank in setting up an informatics software program for carrying out the refinancing transactions by bonds as stipulated in Article 1 of this Decision.

Article 6. This Decision shall be effective from 1 February 2006. Credit institutions using the bonds in the refinancing transactions of the State Bank shall comply with the provisions in this Decision and current provisions of the State Bank applicable to each related form of refinancing.

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FOR THE GOVERNOR OF THE STATE BANK
DEPUTY GOVERNOR




Nguyen Dong Tien