THE STATE BANK OF VIETNAM
Circular No. 20/2018/TT-NHNN dated August 30, 2018 of the State Bank of Vietnam on prescribing oversight and supervision of payment systems
Pursuant to the Law on State Bank of Vietnam dated June 16, 2010;
Pursuant to the Law on Credit Institutions dated June 16, 2010 and the Law on Amending and Supplementing certain Articles of the Law on Credit Institutions dated November 20, 2017;
Pursuant to the Government s Decree No. 16/2017/ND-CP dated February 17, 2017, defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam;
Pursuant to the Government s Decree No. 101/2012/ND-CP dated November 22, 2012 on non-cash payment and the Decree No. 80/2016/ND-CP dated July 1, 2016 amending and supplementing certain articles of the Government’s Decree No.101/2012/ND-CP dated November 22, 2012 on non-cash payment;
Upon the request of the Director of the Payments Authority;
The Governor of the State bank of Vietnam hereby promulgates the Circular prescribing oversight and supervision of payment systems.
Chapter I
GENERAL PROVISIONS
Article 1. Scope of adjustment
This Circular prescribes oversight and supervision of important payment systems.
Article 2. Subjects of application
1. Organizations operating important payment systems.
2. Organizations or individuals involved in oversight and supervision of important payment systems.
Article 3. Definition
For the purposes of this Circular, terms used herein shall be construed as follows:
1. Payment system means the system constituted by payment instruments, regulations, processes, procedures, technical infrastructure, operating organization and members involved in processing, clearing and settlement of payment transactions between participating members.
2. Important payment system means the payment system that plays key roles in serving payment needs of the subjects in the economy, is likely to cause systematic risks and meets at least one of the following criteria:
a) It is the sole payment system or accounts for a large proportion of transactions in total payment value to those carried out through payment systems of same kind; or
b) It is the system designed for processing of high-value payment transactions; or
c) It is the system used for settlement of transactions in lieu of other payment systems or of transactions arising on the financial market.
Important payment systems referred to herein shall comprise the National Interbank Payment System; the Foreign Exchange Settlement System (controlled by the Joint Stock Commercial Bank for Foreign Trade of Vietnam); the Securities Transaction Payment System; the System for Clearing and Switching of Financial Transactions.
3. Organization operating important payment system (hereinafter referred to as operating organization) means a body directly running an important payment system.
4. Settlement bank means a bank opening payment accounts held by members participating in a payment system to carry out the settlement of financial obligations arising from transactions between these members in that system.
5. Liquidity risk means a risk incurred from the situation where a member participating in a payment system fails to fulfill its financial obligations arising in that payment system by due date even though that member may implement these obligations in the future.
6. Credit risk means a risk incurred from the situation where a member participating in a payment system fails to fulfill its financial obligations arising in that payment system by due date and at any future time.
7. Systematic risk means a risk that is incurred from a member’s inability to secure its financial obligations in a payment system by due date which entails other members’ failure to fulfill their financial obligations by due dates, and is likely to be spread to other payment systems.
8. Settlement risks means a risk incurred in the situation where the settlement of obligations arising from transactions between members participating in payment systems does not occur or occur at the time which is not specified in the procedures for management and operation of payment systems.
9. Operational risk means a risk that interrupts or stops operation of a payment system due to errors arising from hardware, software, communication system, human faults or effects of external incidents.
10. Oversight and supervision of payment systems means the monitoring and assessment of operations of payment systems, issue of warnings and recommendations where necessary.
11. Supervising unit means a unit as part of the organizational structure of the State Bank of Vietnam (hereinafter referred to as State Bank) which is charged with overseeing and supervising payment systems.
12. Payment versus payment (PvP) means a mechanism in a foreign exchange settlement system to ensure that a final transfer of one currency occurs only if a final transfer of the other currency or currencies also takes place at the exchange rate agreed upon between parties involved in such exchange.
13. Delivery versus payment (DvP) means a settlement mechanism used in securities transactions to ensure that the delivery of securities takes place only if payment is made for them.
Article 4. Objectives of oversight and supervision of important payment systems
1. Ensure safety, stability and efficiency of important payment systems.
2. Ensure their compliance with legislative regulations.
3. Punctually detect and give warnings to operating organizations in order to minimize risks arising during the process of operating important payment systems.
4. Protect legitimate rights and interests of clients using payment services and increase the client’s trust in payment services.
Article 5. Tasks involved in the process for oversight and supervision of important payment systems
The supervising unit shall carry out oversight and supervision of important payment systems with respect to supervised issues specified in Chapter II hereof by performing the following tasks:
1. Keeping track of the performance of important payment systems through:
a) Collecting materials, data and information from the following sources:
(i) Reports prescribed by existing laws on the reporting and statistical regime applied to credit institutions and foreign bank branches;
(ii) Data about the performance of the National Interbank Payment System as provided in the Appendix I hereto attached, which are collected and mined from relevant information systems of the State Bank;
(iii) Other reports of an operating organization as provided in Article 7 hereof;
(iv) Assessment reports on the performance of the National Interbank Payment System according to the Appendix V hereto attached, which are made by the supervising unit once every 3 years;
(v) Tools and software designed for oversight and supervision of important payment systems of the State Bank;
(vi) Materials, information and data collected through on-the-spot checks and inspections of operating organizations as provided in Article 6 hereof;
(vii) Information relating to important payment systems which are published on mass media;
(viii) Information provided by competent regulatory authorities;
(ix) Feedbacks received from members participating in important payment systems and payment service clients;
(x) Other information sources serving the needs of oversight and supervision of important payment systems;
b) Comparing, collating and checking the accuracy of data:
(i) Comparing and collating collected materials, information and data with historical data in order to detect any abnormalities;
(ii) Comparing and collating materials, information and data collected from different sources as per point a of this clause in order to ensure consistency;
(iii) Judging and assessing the rationality of materials, information and data. If any shortcoming, error or inappropriacy is found in materials, information and data, the operating organization shall be requested to make a timely report and re-send correct ones;
c) Synthesizing and analyzing materials, information and data collected, compared, collated, checked or inspected as per point a and b of this clause.
2. Assessing important payment systems
Based on materials, information and data collected in accordance with clause 1 of this Article, the supervising unit shall carry out the assessment of each important payment system and prepare reports for submission to the State Bank s Governor, including:
a) Reports on the performance of the National Interbank Payment System, made every quarter, in the first half of the reporting year or every year;
b) Reports on the performance of the foreign exchange payment system, the securities payment system and the clearing and switching system for financial transactions, made in the first half of the reporting year or every year;
c) Ad-hoc reports on risks and incidents arising from operations of important payment systems.
3. Giving warnings and recommendations
In case where the supervising unit discovers any potential risks posing danger to safety and stability of important payment systems or resulting in the consequence that operating organizations breach legislative regulations relating to important payment systems, the supervising unit shall report to the State Bank s Governor and recommend him to issue a written document stating warnings and recommendations to these operating organizations.
Article 6. On-the-spot check and inspection
1. The supervising unit shall counsel the State Bank’s Governor to issue the policy for establishment of the inspection group to pay an inspection visit to the office of the operating organization in the event that the supervising organization discovers that any error, mistake or inappropriacy found in materials, information and data and is yet to be corrected, or that there are issues relating to risks about which more materials, information or data must be collected.
2. Depending on contents and nature of each case, the State Bank’s Governor shall decide composition of members and working duration of the inspection group.
3. The State Bank sends the operating organization a written notification for at least 05 working days before any check and inspection occurs, clearly stating working agenda, time, location and composition of members of the inspection group involved in the check and inspection.
4. The operating organization shall be obliged to make required preparations based on the informed inspection contents; provide reporting materials, information and data and grant access to its information technology system for inspection purposes; clearly explain and interpret presented information and reports upon request.
5. The inspection group makes a report on inspection activities with signatures of the representative of the inspection group and the operating organization.
6. The inspection group reports to the State Bank’s Governor on the inspection results within 30 working days from the date of completion of the inspection.
Article 7. Reporting and information provision
1. b) The organization operating the foreign exchange payment system, the securities payment system and the clearing and switching system for financial transactions shall be responsible for reporting to and providing information for the State Bank on the payment system under its control as follows:
a) Making the data report on the performance of the foreign exchange payment system, the securities payment system and the clearing and switching system for financial transactions, made according to the Appendix II hereto attached;
b) Making the assessment report on operation of the important payment system, made in the first half of the reporting year or every year, according to the Appendix III hereto attached;
c) Informing the supervising unit immediately after detecting any breakdown causing an operational interruption of the payment system for more than 30 minutes in order to capture and keep track of the incident response process; send an incident notification issued according to the Appendix IV hereto attached within 30 days after completion of incident resolution;
d) Preparing an assessment report on the performance of the payment system by using the sample report given in the Appendix V hereto attached once every 3 years under regulations on the applied report submission methods, standards and duration in the State Bank’s written request;
dd) Providing information and materials relating to any change in functions of payment systems, internal processes and procedures for operation of payment systems within 15 working days after such change occurs;
e) The reporting form stated in point a and b of this clause shall be regulated as follows:
(i) Electronic report in the format of an electronic file transmitted via the computer network or sent via the information-bearing article, having the electronic signature of the legally authorized representative of the reporting organization by using symbols, information transmission codes and file structures regulated by the State Bank;
(ii) Written (paper) report which is accepted in the event of failure to make reports through the electronic reporting system and bears the signature of the legally authorized representative of the reporting organization;
g) Determination of the reporting period and deadline prescribed in point a and b of this clause shall be regulated as follows:
(i) The reporting day determined on the basis of a working day; operating organizations shall send this report no later than 14 hours in the working day following the reporting period;
(ii) The reporting month that starts on the first date to ends on the final date of that month; operating organizations shall send reports no later than the 12thday of the month following the reporting period;
(iii) The first half of the reporting year which starts on January 1 and ends on June 30; operating organizations shall send reports no later than the 15thday of the month following the reporting period;
(iv) The reporting year which starts on January 1 to ends on December 31; operating organizations shall send reports no later than the 15thday of the month following the reporting period.
2. The organization operating the National Interbank Payment System shall be responsible for providing the following information:
a) Informing the supervising unit immediately after detecting any breakdown causing an operational interruption of the National Interbank Payment System for more than 30 minutes in order to capture and keep track of the incident response process; send an incident notification by using the form given in the Appendix IV hereto attached within 30 days after completion of incident resolution;
b) Developing tools and software that the supervising unit uses to have remote access to the National Interbank Payment System for the online monitoring of the performance of this system in conformity with the principles that ensure information safety, security, avoidance of interruption or any impact on the processing speed of the National Interbank Payment System, including:
(i) Permission to have full access to the list of and basic information about members participating in the National Interbank Payment System;
(ii) Permission to oversee and supervise operation of the National Interbank Payment System;
(iii) Permission to have access to warning information about abnormalities of the National Interbank Payment System;
(iv) Permission to have access to information about the liquidity situation of each participating member, including information about balances of payment accounts, net debt limits, overdraft limits of participating members, those participating members have signs of liquidity difficulties (having transactions which have not been processed due to a lack of account balances or the deficiency in the payment capacity during the clearing and settlement process, or having transactions that are cancelled at the end of a day due to a lack of balances), and participating members giving rise to liquidity support demands.
Chapter II
TASKS OF OVERSIGHT AND SUPERVISION OF IMPORTANT PAYMENT SYSTEMS
Article 8. National Interbank Payment System
1. General situations of the National Interbank Payment System, including information about operating time, current conditions of participating members, current status of payment transactions with respect to specific services (e.g. high-value payment service, low-value payment service, foreign exchange payment service and net settlement service for other payment systems).
2. Situations and management of risks, such as operational risk, credit risk, liquidity risk and settlement risk, arising in the National Interbank Payment System.
3. Compliance with legislative regulations relating to management and operation of the National Interbank Payment System.
4. Changes in the operation of the National Interbank Payment System, including changes in functions of the system, internal processes and procedures of the system.
Article 9. Foreign exchange payment system
1. General situations of the foreign exchange payment system, including situations of participating members and payment transactions.
2. Situations and management of risks, such as operational risk, credit risk, liquidity risk and settlement risk, arising in the foreign exchange payment system.
3. Compliance with legislative regulations relating to management and operation of the foreign exchange payment system.
4. Changes in the operation of the foreign exchange payment system, including changes in functions of the system, internal processes and procedures of the system.
Article 10. Securities payment system
1. General situations of the securities payment system, including situations of participating members and payment transactions.
2. Situations and management of risks, such as operational risk, credit risk, liquidity risk and settlement risk, arising in the securities payment system.
3. Compliance with legislative regulations relating to management and operation of the securities payment system.
4. Changes in the operation of the securities payment system, including changes in functions of the system, internal processes and procedures of the system.
Article 11. Clearing and switching system for financial transactions
1. General situations of the clearing and system for financial transactions, including situations of participating members and transactions with respect to specific services.
2. Situations and management of risks, such as operational risk, credit risk, liquidity risk and settlement risk, arising in the clearing and switching system for financial transactions.
3. Compliance with legislative regulations relating to management and operation of the clearing and switching system for financial transactions.
4. Changes in the operation of the clearing and switching system for financial transactions, including changes in functions of the system, internal processes and procedures of the system.
Chapter III
RESPONSIBILITIES OF ORGANIZATIONS OR INDIVIDUALS INVOLVED IN OVERSIGHT AND SUPERVISION OF IMPORTANT PAYMENT SYSTEMS
Article 12. Responsibilities of the Payments Authority
1. Implement responsibilities of the supervising unit for important payment systems as provided in this Circular.
2. Collaborate with the Information Technology Department in establishing the electronic reporting system to receive, synthesize, mine and store reporting data in accordance with clause 1 Article 7 hereof.
3. Collaborate with the Information Technology Department in developing tools for collection and mining of data about the performance of the National Interbank Payment System as provided in the Appendix I hereto attached from relevant information systems of the State Bank.
4. Appeal to the State Bank Governor to request in writing the organization operating the foreign exchange payment system, the securities payment system and the clearing and switching system for financial transactions to make reports on assessment of important payment systems.
5. Preside over and collaborate with relevant affiliates of the State Bank in formulating reports on assessment of the National Interbank Payment System under point a (iv) clause 1 Article 5 hereof.
6. Provide information for the Bank Supervision and Inspection Agency when detecting any violation or breach of legislative regulations on organization and operation of important payment systems under the control of the operating organization.
Article 13. Responsibilities of the Information Technology Department
1. Inform the Payments Authority about the results of inspection and monitoring of implementation of and compliance with applicable laws related to technical infrastructure of operating organizations, assurance of safety and security for the information technology system intended for operation of important payment systems.
2. Collaborate with the Payments Authority in carrying out on-the-spot checks and inspections of operation of the foreign exchange payment system, the securities payment system and the clearing and switching system for financial transactions upon request.
3. Preside over and collaborate with the Payments Authority in establishing and maintaining operations of the electronic reporting system to receive, synthesize, mine and store reporting data in accordance with clause 1 Article 7 hereof.
4. Preside over and collaborate with the Payments Department in developing tools for collection and mining of data about the performance of the National Interbank Payment System as provided in the Appendix I hereto attached from relevant information systems of the State Bank.
5. Collaborate with the Payments Authority and relevant affiliates of the State Bank in formulating reports on assessment of the National Interbank Payment System under clause 5 Article 12 hereof..
6. Provide information about the National Interbank Payment System in accordance with clause 2 Article 7 hereof.
Article 14. Responsibilities of the Bank Supervision and Inspection Agency
1. Provide the supervising unit with the list of member credit institutions and foreign bank branches of important payment systems which are subject to the early intervention measure or special control decision.
2. Receive information from the Payments Authority as provided in clause 6 Article 12 and consider imposing sanctions under laws.
3. Collaborate with the Payments Authority in carrying out on-the-spot check and inspection at the operating organization wherever needed.
Article 15. Responsibilities of the organization operating the foreign exchange payment system, the securities payment system and the clearing and switching system for financial transactions
1. Implement responsibilities of the operating organization as provided by this Circular.
2. Collaborate with the supervising unit in developing tools and software for the joint online supervision to meet actual needs of supervision of the State Bank upon request.
3. Assign an in-charge officer to assume responsibility for cooperating with the supervising unit in reporting and provision of information, and dealing with risks and incidents that may arise; inform the supervising unit on time whenever there is any change in that officer.
4. Organize the implementation of the State Bank’s recommendations and report such implementation to the supervising unit.
Chapter IV
IMPLEMENTATION PROVISIONS
Article 16. Effect
This Circular takes effect on January 01, 2019.
Article 17. Implementation organization
The Office Chief, the Director of the Payments Authority, the Heads of affiliates of the State Bank, the Directors of the State Bank’s branches in centrally-affiliated cities and provinces, the Chairs of the Management Boards (the Members’ Boards), and the Director General (Director) of organizations operating important payment systems shall implement this Circular./.
For the Governor
The Deputy Governor
Nguyen Kim Anh
Vietnamese
Circular 20/2018/TT-NHNN DOC (Word)
Circular 20/2018/TT-NHNN PDF (Original)
