Circular No. 07/2012/TT-NHNN dated March 20, 2012 of the State Bank of Vietnam providing for the foreign currency position of credit institutions, foreign bank's branches

THE STATE BANK OF VIETNAM

Circular No. 07/2012/TT-NHNN of March 20, 2012, on foreign currency positions of credit institutions and foreign bank branches

Pursuant to June 16, 2010 Law No. 46/2010/QH12 on the State Bank of Vietnam;

Pursuant to June 16, 2010 Law No. 47/2010/QH12 on Credit Institutions;

Pursuant to December 13, 2005 Ordinance No. 28/2005/PL-UBTVQH11 on Foreign Exchange;

Pursuant to the Government’s Decree No. 160/2006/ND-CP of December 28, 2006, detailing the implementation of the Ordinance on Foreign Exchange;

Pursuant to the Government’s Decree No. 96/2008/ND-CP of August 26, 2008, defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam;

At the proposal of the director of the Foreign Exchange Management Department;

The State Bank of Vietnam issues this Circular to provide for foreign currency positions of credit institutions and foreign bank branches operating in Vietnam which are licensed to conduct foreign exchange operations.

Article 1. Subjects and scope of regulation

This Circular provides for foreign currency positions of credit institutions and foreign bank branches operating in Vietnam which are licensed to conduct foreign exchange operations.

Article 2. Interpretation of terms

In this Circular, the terms below are construed as follows:

1. Foreign currency means the currency of another country or territory or the Euro zone’s common currency or another common currency which is used in international and regional payment.

2. Original currency position of a foreign currency means the difference between total assets and total liabilities in this foreign currency, including corresponding off-balance sheet commitments.

3. Foreign currency’s position exchange rate shall be applied under the following provisions:

a/ The exchange rate between Vietnam dong and US dollar is the inter-bank average exchange rate announced by the State Bank on the reporting date.

b/ The exchange rate between Vietnam dong and another foreign currency is the account-transfer spot selling rate applied by a credit institution or foreign bank branch at the end of the reporting date.

4. Position of a foreign currency of a credit institution or foreign bank branch means the original currency position of such foreign currency which is converted into Vietnam dong at the position conversion rate.

5. Total positive foreign-currency positions means the total position of foreign currencies with positive position.

6. Total negative foreign-currency positions means the total position of foreign currencies with negative position.

Article 3. Principles of calculating foreign currency positions

1. Foreign currency position of a credit institution or foreign bank branch shall be determined at the end of a workday.

2. Original currency position of a foreign currency shall be calculated on the basis of the balance of relevant accounts provided in the Appendix to this Circular (not printed herein).

3. Original currency position of each foreign currency shall be converted into Vietnam dong at the position conversion rate.

4. Positive foreign currency positions shall be added up for calculating the total positive foreign-currency position. Negative foreign currency positions shall be added up for calculating the total negative foreign-currency position.

Article 4. Limit of total foreign currency position

1. Limit of the total foreign currency position is the ratio of the total positive foreign-currency position or total negative foreign-currency position to own capital of a credit institution or foreign bank branch.

Own capital used for calculating the limit of the total foreign currency position of a credit institution or foreign bank branch is the own capital of the month preceding the reporting period of such credit institution or foreign bank branch.

2. End-day total positive foreign-currency position of a credit institution or foreign bank branch must not exceed 20% of its own capital.

3. End-day total negative foreign-currency position of a credit institution or foreign bank branch must not exceed 20% of its own capital.

4. Vietnam-based foreign bank branches having own capital of USD 25 (twenty-five) million or less may apply the limit of total foreign currency position as follows:

End-day total positive foreign-currency position converted into US dollar must not exceed USD 5 (five) million.

End-day total negative foreign-currency position converted into US dollar must not exceed USD 5 (five) million.

5. When necessary and approved by the Governor of the State Bank of Vietnam, credit institutions and foreign bank branches may maintain their foreign currency positions exceeding the limits specified in Clauses 2, 3 and 4 of this Article.

Article 5. Reporting regime

By 14:00 hours of a workday at the latest, credit institutions and foreign bank branches shall send reports on their foreign currency positions of the preceding workday to the State Bank of Vietnam (the Foreign Exchange Management Department), made according to the form in the Appendix to this Circular (not printed herein).

Article 6. Implementation provisions

1. This Circular takes effect on May 2, 2012, and replaces Decision No. 1081/2002/QD-NHNN of October 7, 2002, promulgating the Regulation on foreign currency positions of credit institutions licensed to conduct foreign exchange operations, and Decision No. 1168/2003/QD-NHNN of October 2, 2003, amending Article 1 of Decision No. 1081/2002/QD-NHNN of October 7, 2002, of the Governor of the State Bank of Vietnam.

2. The Finance-Accounting Department shall guide credit institutions and foreign bank branches licensed to conduct foreign exchange operations in calculating foreign currency positions according to regulations on the system of accounts.

3. The Information Technology Department shall, within the ambit of their functions and tasks, guide credit institutions and foreign bank branches licensed to conduct foreign exchange operations in reporting on foreign currency positions in case electronic reporting is required.

4. The Chief of the Banking Inspection and Supervision Agency and directors of the State Bank’s provincial-level branches shall examine, inspect and supervise the implementation of this Circular and handle violations under law.

5. The Chief of the Office, the director of the Foreign Exchange Management Department and heads of units under the State Bank of Vietnam; chairpersons of boards of directors, chairpersons of members’ councils, directors general (directors) of credit institutions and directors general (directors) foreign bank branches shall implement this Circular.-

For the State Bank Governor
Deputy Governor
LE MINH HUNG