Circular No. 49/2018/TT-NHNN dated December 31, 2018 of the State Bank of Vietnam on term deposits

THE STATE BANK OF VIETNAM

Circular No. 49/2018/TT-NHNN dated December 31, 2018 of the State Bank of Vietnam on term deposits

Pursuant to the Law on the State Bank of Vietnam dated June 16, 2010;

Pursuant to the Law on Credit Institutions dated June 16, 2010 and the Law on the amendments to the Law on Credit Institutions dated November 20, 2017;

Pursuant to the Ordinance on Foreign Exchange dated December 13, 2005 and the Ordinance on amendments to the Ordinance on Foreign Exchange dated March 18, 2013;

Pursuant to the Government s Decree No. 16/2017/ND-CP dated February 17, 2017 defining the functions, tasks, entitlements and organizational structure of the State Bank of Vietnam;

At the request of the Director of Department of Foreign Exchange Management and the Director of the Financial Policy Department;

The Governor of the State bank of Vietnam promulgates a Circular on term deposits.

Article 1. Scope of adjustment and subjects of application

1. This Circular sets forth term deposits between credit institutions, branches of foreign banks (hereinafter referred to as credit institutions) and organizations or individuals.

2. This Circular does not set forth term deposits between credit institutions.

Article 2. Term deposit-taking credit institutions

Term deposit-taking credit institution means a credit institution incorporated and operating in accordance with the Law on Credit Institutions, including:

1. Commercial banks.

2. Cooperatives banks.

3. Non-bank credit institutions.

4. Microfinance institutions.

5. People s credit funds.

6. Branches of foreign banks.

Article 3. Term deposit-making entities

Term deposit-making entities (hereinafter referred to as customers) include:

1. Residents being organizations or individuals.

2. Non-residents including:

a) Diplomatic missions, consulates, representative bodies of international organizations in Vietnam; representative offices, project offices of foreign organizations in Vietnam;

b) Vietnamese citizens not prescribed in Point e and g Clause 2 Article 4 of the Ordinance on Foreign Exchange (amended);

c) Foreign individuals permitted to reside in Vietnam for at least 06 months.

Article 4. Interpretation of terms

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

1. “Term deposit” means a sum of money of a customer held at a credit institution for a fixed term as agreed upon between the customer and the credit institution with the principle of full payment of principal and interest to the customer.

2. “Joint term deposit” means a term deposit jointly made by at least two customers.

3. “Identity proof of individual being Vietnamese citizen” refers to an identification card, citizen card, or passport which remains valid or a birth certificate of individual aged under 14 years.

4. “Identity proof of individual being resident and foreign individual being non-resident” refers to a visa or another paper identifying a certain period permitted for residence in Vietnam issued by the competent authority of Vietnam which remains valid.

5. “Identity proof of corporation” means an establishment decision or operation license or business registration certificate or business registration certificate or any of other equivalent papers as per the law.

Article 5. Principles of carrying out term deposit transactions

1. A credit institution shall take term deposits in accordance with its scope of operation permitted by law and its establishment and operation licenses.

2. A customer may only make a term deposit and receive payment thereof via his/her checking account.

3. A customer shall, by himself/herself or through his/her legal representative, make a term deposit or receive payment thereof under guidance of the credit institution as per the law. If the customer is a person with limited legal capacity, legally incapacitated person as per the law or a person aged under 15 years, he/she shall make a term deposit or receive payment thereof via his/her legal representative; if the customer is a person with limited recognition and behavior control under law, he/she shall make a make a term deposit or receive payment thereof via his/her guardian (hereinafter referred to as legal representative).

4. Regarding a joint term deposit, the customers shall make deposit or receive payment thereof via their joint checking account. Residents and non-residents may not jointly make a joint term deposit. Organizations and individuals may not jointly make a joint term deposit in foreign currency.

5. The deposit term shall be determined according to the agreement made between the credit institution and the customer. With regard to a foreign organization or individual who is a non-resident, or a foreign individual who is a resident, the deposit term may not exceed the remaining validity period of their identity proof prescribed in Clause 4 and Clause 5 Article 4 hereof.

6. The currency used in payment of principal and interest of the term deposit is the currency that the customer previously used to make the deposit.

Article 6. Agreement on term deposit

1. An agreement on term deposit between a credit institution and a customer must be made in writing, at least containing:

a) Details of customer:

(i) As for an individual customer: Full name, nationality, resident or non-resident, number and issuing date of his/her identity proof and details of his/her legal representative in a case where the term deposit is made through the legal representative;

(ii) As for an organization customer: Name, resident or non-resident, number and issuing date of its identity proof; details of its legal representative, including: full name, number and issuing date of his/her identity proof;

(iii) As for a joint term deposit: Details of all customers jointly owning such joint term deposit;

b) Details of credit institution: Name of credit institution; full name and position of credit institution’s legal representative who enters into the term deposit transaction with the customer;

c) Amount, currency, deposit term, deposit date, maturity date;

d) Interest rate, interest payment method;

dd) Agreement on premature withdrawal, deposit term extension;

e) Details of the checking account of the customer used to make a term deposit and receive payment thereof include: name of checking account holder, number of checking account, name of credit institution which opens such checking account;

g) Actions taken in a case where the customer’s checking account is frozen, closed, temporarily locked and the checking account’s status is changed;

h) Method of access to term deposit account;

i) Actions against the case where the agreement on term deposit is crumpled, torn, or lost;

k) Rights and obligations of customer, credit institution;

l) Validity of agreement.

2. Apart from details prescribed in Clause 1 hereof, the parties may come to an agreement on other matters in accordance with this Circular and relevant laws.

3. The agreement on term deposit prescribed in Clauses 1, 2 hereof shall be made in a specific agreement or a framework agreement and a specific agreement.

4. If the sample contract and general transaction conditions are used in the agreement on term deposit, the credit institution must:

a) Post up the sample contract and general transaction conditions at legal transaction offices under the operation network of the credit institution (hereinafter referred to as transaction offices) and post on the credit institution’s website (if any);

b) Provide the customer adequate information about the sample contract and general transaction conditions before entering into the agreement on term deposit and have the customer certified such provision of adequate information.

Article 7. Interest rate

1. Each credit institution may set forth term deposit interest rates in conformity with regulations of the State Bank of Vietnam on interest rates in every period.

2. Term deposit interest calculation method shall be accordant with regulations of the State Bank of Vietnam.

3. The deposit term interest payment method shall be determined according to the agreement made between the credit institution and the customer.

Article 8. Method of access to the term deposit account and notification upon changes to the term deposit

1. The credit institution must provide the customer a method of access to term deposit account.

2. Apart from the method prescribed in Clause 1 hereof, the credit institution and the customer may come to an agreement on other methods enabling the customer to access to the term deposit account and notification given to the customer upon any change to the term deposit.

Article 9. Deposit term extension

1. The deposit term extension upon the maturity date of the term deposit shall be carried out according to the agreement made between the credit institution and the customer

2. As for a non-resident who is a foreign organization or individual and a resident who is a foreign individual, the agreement on deposit term extension shall be made in accordance with Clause 5 Article 5 hereof.

3. If the conditions for deposit term extension prescribed in Clause 2 of this Article are not met, on the maturity date of the term deposit, the credit institution shall transfer the principal and interest (if any) to the checking account of the customer.

Article 10. Premature payout of term deposit

1. The premature payout of term deposit shall be carried out according to the agreement made between the credit institution and the customer.

2. The interest rate applied to the premature payout of the term deposit shall be determined in accordance with regulations of the State Bank of Vietnam on interest rate charged for premature withdrawal at the payout time.

Article 11. Pledging term deposit as collateral

The term deposit may be pledged as collateral under guidance of the credit institution and laws and regulations on secured transactions.

Article 12. Transfer of ownership of term deposit

The credit institution shall guide customers to carry out the transfer of ownership of term deposits in accordance with relevant law provisions. Except for transfer of ownership under inheritance, the transferee must meet the requirements prescribed in Article 3 and Clause 5 Article 5 of this Circular.

Article 13. Taking and payout of online term deposit

1. The credit institution shall provide guidance on procedures for taking and payout of online term deposits through checking accounts of depositors held at the credit institution in accordance with this Circular, regulations of law on electronic transactions, anti-money laundering and relevant law provisions, ensuring that the term deposit taking or payout is made accurately and safely as to the depositor and the operation of the credit institution

2. The credit institution must maintain all information associated with the taking and payout of online savings deposits to meet the requirements of the depositors concerning trace requests, verification and dispute settlement.

Article 14. Actions to be taken upon risks

The credit institution shall provide guidelines for actions against crumpled, torn or lost agreement on term deposit and other risks as to term deposits in accordance with relevant law provisions, management model, business characteristics and conditions of the credit institution and protect legitimate rights of the customer.

Article 15. Internal regulations

1. Pursuant to the Law on Credit Institutions, this Circular and relevant law provisions, the credit institution shall promulgate internal regulations on savings deposit transactions of the credit institution in conformity with its management model, characteristics, business conditions, ensuring that the savings deposit payout is made accurately and safely as to the depositor and the operation of the credit institution.

2. The internal regulations must specify responsibilities and obligations of each department and individual relating to term deposit transactions and contain at least the following:

a) Taking of term deposit, at least containing: recognition and update information about customer, preparation and conclusion of agreement on term deposit, taking of term deposit (including taking of term deposit through legal representative), recording in accounting book of term deposit;

b) Paying out of term deposit, at least containing: collation of customer information, payout of principal and interest of term deposit (including payout of term deposit under inheritance, payout of term deposit through legal representative), recording in accounting book of term deposit payout;

c) Taking actions against risks prescribed in Article 14 of this Circular;

d) Pledging term deposit as collateral;

dd) Transferring ownership of term deposit;

e) Methods enabling the customer to access their term deposits as prescribed in Article 8 of this Circular;

g) Taking and paying out online savings deposits (applied to credit institutions taking and paying out online term deposits).

Article 16. Public posting up

1. The credit institution must post up publicly at its transaction offices and post on its website (if any) the following:

a) Term deposit interest rates; fees (if any);

b) Available currencies upon taking of term deposits;

c) Procedures for taking and payout of term deposit between the credit institution and customers;

d) Method offered to customers to access to term deposit accounts;

dd) Actions against the case where the agreement on term deposit is crumpled, torn, or lost.

2. The credit institution must comply with its regulations publicly posted up as prescribed in Clause 1 of this Article.

Article 17. Implementation provisions

1. This Circular takes effect on July 05, 2019.

2. With regard to any term deposit made before effective date of this Circular, the credit institution and the customer keep abiding by their agreement on term deposit until the maturity date. If the agreement on term deposit stipulates the term or condition of deposit term extension but the depositor and deposit term are not conformable to Article 3 and Clause 5 Article 5 of this Circular, the credit institution and the customer may not extend the deposit term.

3. Vietnam Bank for Social Policies shall, pursuant to this Circular, provide guidelines for term deposit transactions at Vietnam Bank for Social Policies in accordance with laws and regulations on organization and operation of Vietnam Bank for Social Policies.

4. This Circular amends certain articles of Circular No. 16/2014/TT-NHNN dated August 01, 2014 of the Governor of the State bank of Vietnam on guidelines for use of foreign currency and Vietnamese dong accounts of residents, non-residents held at authorized banks:

a) Add the third dash to Point d Clause 1 Article 3, the third dash to Point d Clause 1 Article 5 as follows:

“Foreign currency receipts from term deposit payout of principal and interest in foreign currency in accordance with regulations and laws on term deposits.”

b) Add Point k to Clause 2 Article 4, Point k to Clause 2 Article 5, Point i to Clause 2 Article 6 as follows:

“Wire transfer of foreign currency cash to term deposit account held at authorized credit institutions in accordance with regulations and law on term deposits.”

Article 18. Implementation organization

The Chief officers, Director of Department of Foreign Exchange Management, Director of the Financial Policy Department, Heads of affiliates of the State bank, Directors of the State Bank branches of provinces and central-affiliated cities, President of the Board of Directors, President of the Board of members and Director General (Director) of credit institutions, branches of foreign banks shall implement this Circular.

For the Governor

The Deputy Governor

Nguyen Thi Hong.