Circular No. 38/2016/TT-NHNN dated December 30, 2016 of the State Bank of Vietnam on methods of calculating and accounting of revenues and payments of interests in depositing and lending operations between the State Bank of Vietnam and credit institutions and other organizations

THE STATE BANK OF VIETNAM

Circular No. 38/2016/TT-NHNN dated December 30, 2016 of the State Bank of Vietnam on methods of calculating and accounting of revenues and payments of interests in depositing and lending operations between the State Bank of Vietnam and credit institutions and other organizations

Pursuant to the Civil Code No. 91/2015/QH13 dated November 24, 2015;

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

Pursuant to the Law on credit institutions No. 47/2010/QH12 dated June 16, 2010;

Pursuant to the Law on Accounting No. 88/2015/QH13 on dated November 20, 2015;

Pursuant to the Government s Decree No. 156/2013/ND-CP dated November 11, 2013 defining the functions, tasks, entitlements and organizational structure of the State bank of Vietnam;

Pursuant to Decision No. 08/2013/QD-TTg dated January 24, 2013 of the Prime Minister on accounting regulations applicable to the State Bank of Vietnam;

At the request of the Director of Department of Finance and Accounting;

The Governor of the State bank of Vietnam promulgates a Circular on methods of calculating and accounting of revenues and payment of interests in depositing and lending operations between the state bank of Vietnam and credit institutions and other organizations.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of adjustment

This Circular deals with:

1. Methods of calculating and accounting of payments of interests on required reserve deposits and excess reserve deposits of credit institutions, branches of foreign banks; deposits of other organizations at the State Bank of Vietnam;

2. Methods of calculating and accounting of revenues of interests on loans made between the State Bank of Vietnam and credit institutions or branches of foreign banks.

Article 2. Subject of application

1. The State Bank of Vietnam (hereinafter referred to as the State Bank).

2. Credit institutions, branches of foreign banks prescribed in the Law on credit institutions (hereinafter referred to as credit institutions).

3. Other organizations other than credit institutions that are eligible for making deposits at the State Bank as prescribed by law (hereinafter referred to as other organizations).

Article 3. Interpretation of terms

For the purposes of this Circular, the terms below shall be construed as follows:

1.Deposits of credit institutionsinclude required reserve deposits, excess reserve deposits of credit institutions at the State Bank.

2.Deposits of other organizationsmean deposits of other organizations at the State Bank.

3.Interestmeans a sum that a credit institution pays the State Bank for using a sum of loan or a sum that the State Bank pays a credit institution or another organization for receiving a sum of deposit.

4.Deposit balance eligible for interest (of credit institution)means deposit balance in excess of reserve requirement or deposit balance meeting reserve requirement in reserve maintenance period determined in accordance with regulations on reserve requirement of the State Bank in each period.

5.Deposit balance of other organizationmean an actual sum of other organization deposited at the State Bank.

6.Interest durationmeans a period of time beginning from the date succeeding the date on which the State Bank disburse a loan to the date on which principal and interests are fully repaid or from the date succeeding the date on which the State Bank receive a deposit to the date on which principal and interests are fully repaid.

7.Interest periodmeans a period of time in an interest duration in which the State Bank determines interests of deposits or loans of credit institutions and other organizations.

8.Actual loan balancemeans due principal balance, overdue principal balance, and late payment interest used for calculating interests agreed upon in a loan contract and as prescribed by law.

Chapter II

SPECIFIC PROVISIONS

Section 1. TAKING DEPOSITS OF CREDIT INSTITUTIONS

Article 4. Methods of calculating interests of deposits of credit institutions

The State Bank and credit institutions will calculate an interest of each interest period as follows:

Where:

+ Number of days maintaining reserve requirement: number of days in which the same interest rate of reserve maintenance period in the interest period.

+ Interest rate: interest rate of deposits of credit institutions decided by the Governor of the State Bank in each period (% per year).

Article 5. Paying interests on deposits of credit institutions

Interests on required reserve deposits or excess reserve deposits shall be paid in accordance with regulations of the State Bank on reserve requirement applicable to credit institutions.

Section 2. TAKING DEPOSITS OF OTHER ORGANIZATIONS

Article 6. Methods of calculating interests of deposits of other organizations

The State Bank and other organizations will calculate interest of each interest period as follows:

1. Daily interest shall be calculated according to the formula below:

Interest in interest period equals (=) total daily interest of all days in the interest period.

2. If the number of maintenance days in which deposit balance is higher than 1 day in the interest period, the State Bank and other organizations shall calculate interest according to the reduced formula as follows:

Where: Number of days maintaining deposit balance is number of days in which deposit balance of other organizations remain unchanged.

3. Interest rates prescribed in Clause 1 and Clause 2 of this Article are interest rates of deposits of credit institutions decided by the Governor of the State Bank in each period (% per year).

Article 7. Paying interests on deposits of other institutions

Interests on deposits of other organizations shall be paid as prescribed by the State Bank.

Section 3. GIVING LOANS

Article 8. Time of overdue outstanding debts

Up to the due date in which a part of or full of principal and/or interests as agreed upon in the contract must be repaid but the credit institution fails to repay full of principal and/or interests to the State Bank, the State Bank shall mark the amount of unpaid principal and/or interests as overdue debt.

Article 9. Methods of calculating loans interest

1. Loan interests include interests on due principal balance, overdue principal balance, and late payment interests.

2. The State Bank and a credit institution will calculate interest of each interest period as follows:

a) Daily interest shall be calculated according to the formula below:

Interest in interest period equals (=) total daily interest of all days in the interest period.

b) If the number of maintenance days in which loan balance is higher than 1 day in the interest period, the State Bank and the credit institution shall calculate interest according to the reduced formula as follows:

Where: Number of days maintaining loan balance is number of days in which loan balance remains unchanged in the interest period.

3. Interest rate prescribed in Clause 2 of this Article is the interest rate applicable to due principal balance, overdue principal balance, late payment interests as agreed upon and in accordance with regulations of the State Bank (% per year).

Article 10. Collecting loan principal and interests

1. The State Bank shall collect loan interests as agreed upon with the credit institution.

In a case where a credit institution must pay principal and interest in the same period without any agreement on order of repayment of principal and interest in such period, if such credit institution fails to pay principal and interest in whole on time as agreed, the State Bank shall recover the principal before the interests

If the credit institution repays debt before the due date without any agreement on order of repayment of principal and interest, the State Bank shall collect principal and interests at the request of the credit institution.

2. In case of a foreign currency loan, the State Bank shall collect interests according to the type of foreign currency used in the loan. If the interests are collected in another foreign currency or Vietnamese dong, the contract concluded by the State Bank and the credit institution shall be executed in accordance with law on foreign exchange management.

3. If the day on which the interest is collected falls on the weekend or holiday, it will be moved to the following working day.

Section 4. ACCOUNTING

Article 11. Rules for accounting

1. The State Bank and credit institutions shall do accounting of interests of depositing, lending, and borrowing operations in conformity with accounting rules of "accrued interests" and financial regulations.

2. Revenues and payment of interests in foreign currencies shall be converted into Vietnamese dong or accounting currency to be included in income or expenditure.

3. Regarding the State Bank:

a) Accrued interest shall be calculated until the end day of the month and the last working day of the month;

b) Revenues from lending operation that were included in the revenues but they are unearned at the end of the collection period, the State Bank shall record a decrease in revenues (in the same accounting period) or record it to the expenditure (in different accounting periods) and include it in off-balance sheet to expedite the collection. When the amounts are received, they will be included in the revenues;

c) Interests receivable from overdue loans are not required to be included in the revenues. The State Bank shall monitor the off-balance sheet to expedite the collection, when an amount is received; it will be included in the revenues;

d) Competent persons shall install rules for calculating and accounting of interests in the Core-banking, Accounting, Budgeting applications and System Integration for SBV (hereinafter referred to as accounting application system) in accordance with this Circular and regulations of law on accounting. The calculating and accounting of interests are conducted in the accounting application system according to the aforesaid installed rules.

4. Regarding credit institutions: Calculating and checking the accuracy of interests.

Article 12. Doing accounting

1. Depositing operation

a) Regarding the State Bank:

(i) Accounting of accrued interests: At the end of a month, an interest shall be included in the account earning deposit interest or the account earning accrued interest of the accrued interest period in the accounting application system according to the preinstalled accounting rules prescribed in Point d Clause 3 Article 11 hereof. A person in charge shall check the accuracy of transactions recorded in the system, print accounting vouchers and store them as prescribed.

If the end of the month falls on a weekend or a holiday, the accrued interest until the end of the month shall be calculated and recorded on the last working day of the month.

(ii) Accounting of interest payment: At the time of paying interests, a person in charge shall enter information and data into the accounting application system following the procedures for depositing operation; the person in charge shall check the accuracy of transactions which are processed and recorded in the system and print accounting vouchers and store them as prescribed;

b) Credit institutions:

Do accounting of depositing operation as prescribed in accounting regulations and financial regulations applicable to credit institutions and regulations of relevant law provisions.

2. Lending operation

a) Regarding the State Bank:

(i) Accounting of accrued interests: At the end of a month, an interest shall be included in the account earning loan interest or the accounting earning accrued loan interest of the accrued interest period in the accounting application system according to the preinstalled accounting rules prescribed in Point d Clause 3 Article 11 hereof. A person in charge shall check the accuracy of transactions recorded in the system, print accounting vouchers and store them as prescribed.

If the end of the month falls on a weekend or a holiday, the accrued interest until the end of the month shall be calculated and recorded on the last working day of the month;

(ii) Accounting of principal and interest: At the time of collecting principal and/or interest, according to the contract and regulations of this Circular, a person in charge shall enter information and data into the accounting application system following the procedures for lending operation.  The person in charge shall check the accuracy of transactions that are processed and recorded in the system, print accounting vouchers and store them as prescribed;

b) Credit institutions:

Do accounting of borrowing operation as prescribed in accounting regulations and financial regulations applicable to credit institutions and regulations of relevant law provisions.

Article 13. Making, circulating, controlling and storing documents

The State Bank and credit institutions must make sufficient valid and legitimate documents, inspect, control, circulate and store accounting vouchers as prescribed by the State Bank and relevant law provisions.

Chapter III

IMPLEMENTATION ORGANIZATION

Article 14. Responsibilities of the State Bank units

The State Bank units in charge of depositing and lending operations shall calculate and promptly and accurately record revenues and payment of interests and give Debit and Credit notices to credit institutions and other organizations in accordance with regulations of law.

Article 15. Rights and responsibilities of credit institutions

1. Each credit institution is entitled to request the State Bank to provide Debit and Credit notices as prescribed by law.

2. Each credit institution must do calculation and accounting as prescribed in this Circular.

Article 16. Rights and responsibilities of other organizations

Each of other organizations is entitled to request the State Bank to provide Debit and Credit notices and is responsible for cooperating with the State Bank in collation of interests as prescribed by law.

Article 17. Transitional provisions

The interests occurring from agreements on lending or depositing concluded before the effective date of this Circular shall be kept calculating as prescribed in Decision No. 652/2001/QD-NHNN dated May 17, 2001 of the Governor of the State Bank on promulgation of method of calculating and accounting of revenues and payment of interests of the State Bank and credit institutions. Any amendment to regulations on the method of calculating interests occurring from agreements on lending or depositing after the effective date of this Circular shall be consistent with this Circular.

After the effective date of this Circular, in case of an agreement with a provision of automatic extension, the calculation of interests after extension shall be consistent with this Circular. The State Bank units shall carry out depositing and lending operations and notify credit institutions and other organizations of any change to the method of calculating, collecting and paying interests.

Article 18. Implementation effect

1. This Circular takes effect on February 02, 2017.

2. From the effective date of this Circular, the calculating and accounting of interest collection and payment in depositing and lending operations between the State bank of Vietnam and credit institutions or other organizations shall be consistent with this Circular.

3. The Chief officers, the Director of the Department of Finance and Accounting, heads of relevant entities affiliated to the State Bank, Directors of branches of the State Bank of provinces and central-affiliated cities, Presidents of the Boards of Directors, Presidents of the Member assembly and Directors General (Directors) of credit institutions shall implement this Circular./.

For the Governor

The Deputy Governor

Dao Minh Tu