Circular No.05/2004/TT-NHNN of September 15, 2004, guiding the implementation of several contents of the Decree No. 159/2003/ND-CP dated 10 December 2003 of the Government on the supply and use of cheques

CIRCULAR

GUIDING THE IMPLEMENTATION OF SEVERAL CONTENTS OF THE DECREE NO. 159/2003/ND-CP DATED 10 DECEMBER 2003 OF THE GOVERNMENT ON THE SUPPLY AND USE OF CHEQUES

Pursuant to Paragraph 1, Article 50 of the Decree No. 159/2003/ND-CP dated 10 December 2003 of the Government on the supply and use of cheques (hereinafter referred to as Decree), the State Bank of Vietnam provides guidelines on the implementation of several contents of the Decree as follows:

Chapter I

GENERAL PROVISIONS

1. Scope of application and governed subjects

This Circular provides guidance on several contents concerning the activity of supply and use of cheques, including the supply, drawal, transfer, guarantee, payment, recourse for cheques provided by payment service suppliers, which are operating in the territory of Vietnam and procedures for the supply, control, circulation, treatment of documents and accounting in relation to the payment of cheques through the payment service suppliers operating in the territory of Vietnam.

1.1. Scope of application

Cheques are supplied by the payment service suppliers operating in the territory of Vietnam and used inside or outside the territory of Vietnam.

1.2. Governed subjects

1.2.1. Institutions that supply cheques and take part in the process of cheque payment, cheque collection on behalf of others, include the State Bank; commercial banks, development banks, investment banks, policy banks, cooperative bank and other types of banks; central people’s credit funds; non-bank credit institutions that are permitted by the State Bank to perform the supply, payment and collection of cheques on behalf of others; institutions, not being credit institution, which are permitted by the State Bank to perform the supply, payment and collection of cheques on behalf of others.

1.2.2. Organizations, which and individuals, who use cheques and are involved in the use of cheques, include drawers, payees, transferors, transferees, guarantors, guarantees, beneficiaries, representatives under laws or by authorization and other persons who are involved in the use of cheques.

2. Drawal, payment of cheques, where the amount is stated in foreign currency

2.1. In case where a Drawer is entitled to use account “payment in foreign currency” in accordance with provisions on foreign exchange control of the State Bank, he is entitled to draw cheques in foreign currency from his payment account to make payment to a payee who is permitted to collect foreign currency.

2.2. In order to be paid in foreign currency, the beneficiary of the amount stated in the cheque is responsible for proving himself a subject, who is permitted to collect foreign currency in the territory of Vietnam in accordance with provisions on foreign exchange control of the State Bank. The payment of that cheque is made as follows:

2.2.1. The beneficiary is, if he can prove himself  a subject permitted to collect foreign currency, entitled to receive the foreign currency amount as stated in the cheque;

2.2.2. If the beneficiary cannot prove himself  a subject permitted to collect foreign currency, the amount stated in the cheque should be converted into Vietnam Dong at the buying rate applicable to the foreign currency transfer, which is announced by the payer at the payment time of that cheque, for payment to the beneficiary.

2.3. In case where the cheque drawn in foreign currency is transferred to a payment service supplier, the payment currency and payment rate should be agreed upon by the transferor and the transferee. If the payment is to be made in foreign currency, the foreign currency payee must be a subject permitted to collect foreign currency in accordance with provisions on foreign exchange control of the State Bank.

3. Obligations of the drawer

Obligations of the drawer are:

3.1. To ensure the availability of the amount to be used at the payer to make payment for the entire amount stated in the cheque to the beneficiary at the time when the cheque is presented for payment within the presentation time limit. The amount to be used may be the balance on the payment account, which the drawer has the right to use; or the balance on the payment account and the overdraft limit that the drawer has the right to use in accordance with the agreement made with the payer.

3.2. To fully fill in contents of the cheque under provision in Point 15, Chapter III of this Circular. In case where the cheque is not drawn in accordance with provisions due to the fault of the drawer, which results in the refusal of payment to the beneficiary, the beneficiary has the right to request the drawer to draw another cheque for replacement. The drawer is obliged to satisfy this requirement of the beneficiary within the date of requirement or on the working day following that date of requirement.

3.3. In case where the payment of the cheque is refused because that cheque is not secured by the payment capacity or due to the fault of the drawer, the drawer should unconditionally return the cheques amount, which is recoursed, in accordance with provision in Article 41 of the Decree. The return of this amount  must be carried out by the payment mode, which is  requested by the recourse person and in line with provisions of applicable laws.

4. Acceptance of cheque in the payment

The acceptance of cheque in the payment is agreed upon by the drawer or the transferor (cheque returning party) and the payee or the transferee (cheque receiving party).

In the payment process, the cheque receiving party has the right to request the cheque returning party to present people’s identity card (or passport, identity card of soldier, national defense workers and staff or other papers with photo and seal), to provide address or other related information if necessary. The receiving party has the right to refuse the cheque receipt if its requirements are not satisfied by the cheque returning party. 

Chapter II

SUPPLY OF CHEQUES

5.The cheque suppliers make their own decision on the design of blank cheques they supply on the basis of reference to specimen cheque in Appendix 1.

In order to ensure the payment of cheques to be made through the automatic cheque clearing payment center of the State Bank or permitted by the State Bank, paper for printing cheque, size of cheque, elements and position of elements on the blank cheque should be designed according to conditions as provided for in Appendix 1 of this Circular and other specific technical standards of the center (if any).

6.Prior to the printing of blank cheque under the new sample, the cheque supplier must carry out the registration of the blank cheque with the Monetary and Policy Department of the State Bank. Registration file of the blank cheque includes:

- An official registration letter of the blank cheque enclosed with the design of size, colour, detailed elements of the blank cheque;

- A copy of the operation licence, which is certified by the State Public Notary (for the first registration), of the cheque supplier.

7.The Monetary - Policy Department of the State Bank is responsible for considering and responding the cheque supplier of the blank cheque sample within 10 working days from the date of receipt of the registration file of the blank cheque sample of the cheque supplier.

8.The cheque supplier carries out the printing of blank cheques upon receiving the written response from the State Bank, Prior to the supply of blank cheques to cheque users, the cheque supplier should send a sample of printed blank cheque to the Monetary - Policy Department and Accounting - Finance Department of the State Bank for keeping.

9.Cheque suppliers are entitled to select a printing house to enter into a printing contract of blank cheques on the basis of self-responsibility for technical  and anti-fake elements of the blank cheques, which are supplied by them.

10.Cheque suppliers are responsible for giving notice of their blank cheque to related parties (including payment service suppliers involved in the service of cheque collection on behalf of others, cheque clearing payment center and payment service users).

11. Cheque suppliers are responsible for the stipulation and agreement with cheque users about the conditions and clauses on the use of cheques supplied by them. Subjects entitled to be provided with blank cheques must be those, who satisfy following conditions:

11.1. Being permitted to use payment account at the cheque supplier.

11.2. Not  forbidden for using cheques or being deprived of the right to draw cheques;

11.3. Other conditions shall be provided for by the cheque supplier.

12. The cheque supplier shall take self-responsibility for:

12.1. Deciding on the quantity of blank cheques to be supplied to each  subject of customers and at each  time of supply on the basis of ensuring the conformity with requirements and the reliability in the payment of each specific subject.

12.2. Setting up process, procedures of prudence and assigning responsibility of related parties for the preservation, maintenance, transfer of blank cheques and cheques during the internal payment process of the cheque supplier;

12.3. Providing for, guiding and disseminating responsibility for the maintenance of blank cheques and requirements relating to the use of cheques for persons who are provided with cheques;

13. Procedures for cheque supply are performed as follows:

13.1. When there is a demand for the use of cheque, account holder or representative of the account holder shall make a written request for the supply of cheques then submit to the payment services supplier (cheque supplier) where his account is being maintained;

13.2. The cheque supplier is, upon receipt of the written request for the supply of cheques, responsible for examining the conditions of persons, who request for the supply of cheque, and their identity cards (or passporst, identity cards of soldier, national defense workers and staff or other papers with photo and seal);

13.3. The cheque supplier is, prior to the delivery of cheques to customer, responsible for having contents of elements as cheque number, name of payer, name of cheque drawer (name of legal entity, household family, cooperative group or full name of individual), elements on MICR: cheque number, bank code of payer , account number of the drawer, etc (in case where the payment of cheque is made through the automatic cheque clearing payment center of the State Bank) printed, pressed or written in each blank cheque. In case where the cheque supplier provides for the place of payment, the place of payment should be pre-printed, pressed or written in each sample of blank cheque.

The cheque supplier has the right to print, press or state additional statements on the blank cheque if it is deemed necessary and convenient for cheque users.

13.4. Cheque suppliers must open a book for following up name, address, code of account of persons who are provided with their cheques, quantity and symbol (serial number, number of cheque) of cheques supplied to  persons who are provided with cheques and request the supplied persons to sign for acknowledgement in the monitoring book.

13.5. Persons, who are supplied cheques, must tally the quantity of cheques, verify the accuracy of elements on the blank cheques  supplied. If there is any mistake, they must immediately inform the cheque supplier and change for another cheque.

After having received the blank cheque from the cheque supplier, the account holder must take full responsibility for any shortcomings or abuse of cheque, that may happen and for any damage, that may arise therefrom .

14.Persons who are provided with blank cheques must be obliged to hand in all blank cheques that are not yet used and cheques with wrongly drawn ones to the cheque supplier when they no longer use cheques or terminate agreement with the cheque supplier on the use of cheques.

chapter III.

ELEMENTS AND THE DRAWAL OF A CHEQUE

15. Contents stated on a cheque must be prepared in accordance with following requirements:

15.1. The cheque  must be drawn on a blank cheque supplied by a payer; if a cheque is drawn on a blank cheque which is not supplied by the payer, the payer has the right to refuse the payment of that cheque.

15.2. Elements on a cheque must be printed or clearly stated by a fountain pen or a ball-point pen, must not be written by pencil of all kinds or in red ink, not be corrected or erased. Figures stated on the cheque must be Arabic ones (for example 0, 1, 2, 3, 4, 5, 6, 7, 8, 9).

15.3. The designation of the payee must be stated in accordance with one of 3 modes, which are stipulated in Paragraph 1, Article 17 of the Decree.

15.4. The money amount must be clearly stated in the stipulated place in words and in number. Numerals and words must be written continuously, the first letter must be capitalized; it is not permitted to write intermittently, to write away from the beginning of a line, to insert a new word between two words, which are written next to each other , the unused space shall be crossed.

For the amount stated in number, it is required to place a stop mark (.) after the figure of thousands, millions, billions, thousand billions, million billions, billion billions; and to place a comma (,) in case where there is some figure to be added after the unit digit.

In case of inconsistency between the amount stated in words and that stated in number, the amount to be paid is the smaller one.

15.5. Name of payer must be the name of a unit that manages the account with the amount the drawer is entitled to use by the drawal of cheque. The name of the payer may be the name of a branch of a payment services supplier, which has provided the drawer with blank cheques and permits him to use payment account with an amount to make cheque drawal in accordance with agreement with that branch. In case where the payment services supplier performs the centralized management for payment accounts which are opened at its branches by the drawers through the on-line payment system, the name of the payer is the name of the payment services supplier.

15.6. Place of payment is the place where the cheque is paid and stipulated by the payer. The payment place may be the address of the payer or of a payment services supplier which act as an agent for cheque payment in lieu of the payer. In case where the cheque is paid at any branch of the payer, the payment place must be stated in the words  “every branch”. If the payment place is not mentioned in the cheque, the cheque is construed being  presented for payment at the address of the payer. If the address of the payer is not clear, the cheque must be presented to make payment at the head office of the payer.

15.7. The date of drawal must be the date stated on the cheque by the drawer.

15.8. The signature of the drawer must be handwritten by a fountain pen or a ball-point pen in accordance with the sample signature registered with the payer enclosed with the full name of the drawer.

16.In order to designate the amount on the cheque to be paid to the account of the beneficiary, the drawer or transferor must write or stamp the words “Paid to the account” in the front side of the cheque right below the word “cheque”. These words take effect for any beneficiary of the cheque.

17.In case where the payee of the cheque is an organization, the cheque must be written or stamped with the words “paid to the account”, except for the case where the cheque is drawn to withdraw cash from the payment account in accordance with provisions of applicable laws.

18.In case of wrong statement, wrongly stated blank cheques are cancelled by crossing on it. Wrongly stated cheques or damaged cheques must be preserved and returned to the cheque supplier.

19. It is not permitted to sign the cheque when contents subject to the drawer’s responsibility have not yet been fully stated.

A person who signs the cheque but does not fully fill in contents subject to his responsibility and enables unfilled contents to be continuously inserted after he has signed the cheque; or who fails to comply with requirements of the statement of money amount in words and in number and these mistakes are abused as to falsify the money amount; or who does not comply with other provisions and eables the misuse of the cheque, must take full responsibility for the losses and be subject to the compensation for losses caused to related parties by the misuse of the cheque.

20.In case where the drawer is a representative or an authorized person, the account holder must complete full procedures of notice, sample signature registration, limit stipulation, etc with the payer.

Chapter IV

CHEQUE TRANSFER BY ENDORSEMENT

21. The continuity of the transfer signatures 

21.1. For the cheque transferred by the endorsement, the continuity of the transfer signatures must be as follows:

21.1.1. In the first transfer of the cheque, the name of the transferor must be the name of the payee as stated in the front side of the cheque.

21.1.2. In the second transfer of the cheque, the name of the transferor must be the name of the transferee in the first transfer transaction; and it must be continued till the last transfer transaction.

21.2. In case where the name of a transferor in any transfer is not the name of the transferee in the preceding transfer transaction, those transfer signatures are  uncontinuous.

21.3. Person who holds a cheque, that has been transferred, is the beneficiary of the amount stated on the cheque if he is the last transferee in the continuous transfer signatures as above stipulated in Point 21.1.

The payer of a cheque that has been transferred by endorsement, is responsible for examining the continuity of the transfer signatures to ensure that the amount stated on the cheque is paid to the right beneficiary.

22. Transfer of cheques to payment services suppliers

22.1. In order to be paid the amount stated on the cheque, the beneficiary to the cheque may transfer it by endorsement of that cheque to a payment services supplier in accordance with agreements between two parties for that organization to present the cheque under applicable provisions. The above-mentioned payment services supplier (transferred organization) is entitled to agree on the acceptance of the cheque transfer, to make decision on the immediate payment to the endorser, or the payment after having the payment result of the cheque from the payer on the basis of taking its self-responsibility for the payment capability of the cheque and the possibility of recourse for the amount stated on the cheque in case where the cheque is not paid.

22.2. The organization that accepts the transfer of a cheque must be responsible for examination to ensure that:

- That cheque is permitted to be transferred and may be presented within the presentation time (take notice of the time required for the presentaton of the cheque)

- The transferror is the lawful beneficiary of that cheque in accordance with provisions in Paragraph 6, Article 4 of the Decree. In case where the cheque has been transferred by  endorsement, it must be transferred continuously to that person without any limitation by the words “no further transfer”.

22.3. In case it cannot directly present that cheque at the payment place under provisions, the organization that accepts the transfer of the above -mentioned cheque has the right to continue transferring that cheque to another payment services supplier with which it has a correspondent relation, in accordance with the agreement between two parties in the capacity as a representative of the person who has transferred the cheque to it, so that this latter institution can present the cheque.

22.4.The organization, that accepts the cheque transfer, has all the rights of the beneficiary of the cheque.

22.5. The organization, that accepts the cheque transfer, must verify all information relating to the validity of contents stated on the cheque and the payment capability of the drawer. The payer  has the right to provide urgent information at above-mentioned request from the transferree by the notification mode, which is agreed between two parties.

22.6. For a cheque drawn from abroad, which is transferred to payment services suppliers in the territory of Vietnam, the first organization, that has accepted the transfer of the cheque in the territory of Vietnam is responsible for the implementation of provisions from Point 22.1 to 22.5 of this Chapter.

Chapter V

SECURITY FOR THE PAYMENT OF CHEQUES

23. Guarantee for the cheque payment

23.1. In order to carry out the guarantee for the cheque payment,  a cheque must fully satisfy following conditions:

23.1.1. To be fully, clearly filled in with elements stated in Point 15, Chapter III of this Circular;

23.1.2. The drawer has sufficient balance on his account to ensure the payment of the cheque, or the drawer does not have sufficient balance on the account but he is granted an overdraft line by the payer to such a limit to ensure the payment of the cheque amount;

23.1.3. The drawer requests for the  payment guarantee for that cheque

23.2. The payer is entitled to refuse the payment guarantee of a cheque if the cheque does not satisfy one of conditions as provided for in Point 23.1 of this Chapter.

23.3. The payer must, in order to secure the payment of the cheque upon its  presentation, place the amount of the cheque, which is guaranteed in a separate account or freeze that amount on the account (blocking the balance of the account) of the drawer from the time where the cheque guarantee is performed untill the expiration of the time for presentation.

23.4. Procedures for the cheque guarantee are carried out as follows:

23.4.1. Where the deposit account is used to secure the cheque payment:

When there is a demand for cheque guarantee, the drawer must prepare and submit to the payer a “payment order” (The number of the payment order copies is stipulated by the payer but he has to ensure the sufficient copies for the accounting, payment and the record) and the cheque with full elements, signatures and seal (if any) in its front side  to the payer.

The payer must control, verify the “payment order”, review conditions for the performance of cheque guarantee in accordance with provision in Point 23.1 of this Chapter, if conditions are fully satisfied, he shall proceed as follows:

- To state date, month, year and sign his name, seal the word “guarantee” on the front side of the cheque;

- To deliver the cheque for which the guarantee procedure is completed to the customer; 

Copies of the payment order are processed as follows:

- One sheet is used as a voucher to debit the account of the drawer and to credit the drawer s account for guarantee of the cheque payment.

- One sheet is used as a Debit advice delivered to the drawer.

23.4.2. Where the deposit account is not used to secure the cheque payment:

Payment services supplier that provides the cheque guarantee may freeze the balance of the drawer s payment account, which is equivalent to the amount guaranteed for the cheque payment. When taking this measure to guarantee a cheque, the bank must ensure its control over the payment capability of the drawer, avoiding any potential illiquidity which may severely affect related parties.

23.5. Once a cheque is guaranteed, the payer is responsible for ensuring the payment of the amount stated on the cheque untill the expiry of the presentation time of the cheque.

After the presentation time, the payment services supplier is no longer responsible for the security of payment capability of the cheque when it is presented. The drawer has the right to request the payer to terminate the deposit or freeze of the amount, which is used to guarantee the payment of that cheque.

Chapter VI

PRESENTATION AND PAYMENT OF THE CHEQUE

24.A cheque is considered “presented” if the cheque in form of paper document (for the case of documentary payment) or in form of electronic data (in case of electronic payment) is delivered to the presentation place as provided for in Point 25 or Point 26 of this Chapter.

The payer is responsible for making payment to the beneficiary or person authorized by the beneficiary within the date of presentation or on the working day following that date, if the cheque is presented within 30 days from the date of drawal and the drawer possesses an amount of money, which is sufficient to pay the amount stated on the cheque,.

25.The beneficiary or person authorized by the beneficiary (including authorized collector) present the cheque at following places (place of presentation):

25.1. Place of payment, which is stated on the cheque;

25.2. If the payment place is not stated on the cheque, the presentation of the cheque must be made at the address of the payer;

25.3. If the beneficiary or the person authorized by the beneficiary does not know the payer’s address, he must present the cheque at the head office of the payer.

26.If the person who presents the cheque is a payment services supplier, that organization is entitled to, in addition to above-mentioned places of presentation, present the cheque at the cheque clearing payment center provided that organization is a direct member of the clearing payment center and the payment of that cheque is made through the clearing payment center under the agreement between the center and members.

27.The collection of cheque under the authorization is performed as follows:

27.1. If the beneficiary does not directly present the cheque, it may hand in the cheque to the payment services supplier where his account is being maintained; or hand in the cheque to a payment services supplier which provides the cheque collection service (hereinafter referred to as an authorized collector) to authorize that organization to present the cheque at the place of presentation. The time for the delivery of cheque for presentation shall be agreed upon by the two parties.

27.2. The authorized collector may still carry out the collection of cheques, the presentation time of which expires but is not later than 06 month from the date of drawal. For a cheque, the payment of which is refused, the authorized collector must return it to the beneficiary and is not responsible for this refusal.

27.3. The authorized collector has the right to stipulate the fee for cheque collection service applicable to the beneficiary. In case where the cheque payment refusal does not result from the authorized collector’s fault, he is not obliged to refund the collection service fee to the beneficiary.

27.4. In case where the cheque is refused due to the fault of the authorized collector, he is  responsible for damage compensation to the beneficiary according to the agreement between the two parties. In case where the two parties cannot come to an agreement, the settlement is made in accordance with provisions of applicable laws.

27.5. Procedures for the delivery, receipt and verification  of cheques by the authorized collector are as follows:

- Based on cheques, the beneficiary must prepare a list of cheques to be handed in (under the form of Appendix No. 2 -  The number of copies of the List of cheques to be handed in is provided for by the payer, but he must ensure the sufficient copies for accounting, payment and record). Each payer should prepare a separate list of cheques to be handed in, enclosed with cheques to deliver to the authorized collector.

In case where there is discrepancy on a cheque between the amount in number and that in words, the smaller amount must be declared in the list of cheques, which are handed in for payment.

When making the list of cheques, the beneficiary must state fully, clearly elements  stipulated on the list and is not permitted to make any correction or erasure.

- The authorized collector must, upon receipt of the copies of the list of cheques and cheques which are handed in, verify elements stated on each cheque to ensure that:

+ The person requesting for the payment is a legal beneficiary of that cheque in accordance with provisions in Paragraph 6 of the Decree;

+ The cheque is fully filled in with compulsory elements in accordance with provisions in Paragraph 1 and 2, Article 14 of the Decree;

+ The cheque is not in excess of 6 months from the date of drawal (attention is paid to the time required for presentation of the cheque).

+ The continuity of the transfer signatures on the cheque (if any).

+ The cheque number, amount on the cheque and the amount declared in the list of cheques to be handed in must be the same.

+ For the sum of amounts of cheques in the list, the sum in words is equivalent to that in number.

- Upon discovery of any error in the list of cheques or the lack of above-mentioned conditions required for the cheques, the authorized collector must return the cheques to the deliverer and request him to make a new list of qualified cheques for replacement;

- If there is no error, the authorized collector must sign for confirmation of his acceptance of the collection at request of the beneficiary, take note in the book for following up the cheques sent for collection (using it as a basis for treatment in case where delivered cheques are lost or late) and send the cheques and the list of cheques to the place of presentation within the time and by the mode as agreed with the beneficiary and in conformity with current provisions of the payer.

28.The direct delivery and receipt of cheques between the authorized collector and the payer must be stated in the monitoring book of the document delivery and receipt and acknowledged by signatures. In case where the authorized collector and the payer cannot make direct delivery and receipt of cheques with each other, they can apply other measures of delivery and receipt but they must ensure that cheques are delivered to the payer promptly, fully, accurately and safely.

29.The delivery and examination of cheque by the payer are made as follows:

29.1. Upon receipt of the copies of the list of cheques and the cheques from the beneficiary or the authorized collector, the payer must verify elements stated on each cheque to ensure:

+ The person requesting for the payment is a legal beneficiary of that cheque in accordance with provisions in Paragraph 6, Article 4 of the Decree (in case where the beneficiary directly presents the cheque);

+ The cheque is drawn on a blank cheque supplied by him and is fully filled in with elements in accordance with provisions in Article 14 of the Decree;

+ The cheque is not in excess of 6 months from the date of drawal;

+ No order of payment suspension is issued if the cheque is presented after 30 days since the date of drawal;

+ The signature and seal (if any) of the cheque drawer or the drawer’s representative must be corresponding to the sample, which is registered with the payer;

+ It is not permitted to draw cheques beyond the competence provided for in the document on the drawing representation;

+ The continuity of the transfer signatures (if the cheque is transferred) on the cheque;

+ + The cheque number, the amount on the cheque and the amount declared in the list of cheques to be handed in must be the same.

+ For the sum of amounts of cheques in the list, the sum in words is equivalent to that in number.

+ Other elements under related provisions.

- Upon discovery of any error in the list of cheques or lack of above-mentioned conditions required for the cheques, the payer must return the cheques to the deliverer and request him to make a new list of qualified cheques for replacement; If there is no error, the payer shall sign for confirmation of his acceptance of the cheques at request of the authorized collector or the beneficiary.

29.2. In case where the words “payable to the account” is not stated on the cheque, the payer may make payment in cash at the request of the beneficiary at the place of presentation stated in Point 25 of this chapter;

The cash receiver must clearly state his full name, identity card number (or passport, identity card of soldier, national defense workers and staff or other papers with photo and seal) in the place stipulated for the cash receipt in the back side of the cheque.

29.3. Where any violation of provisions on cheque control results in the bribery, misuse, loss of assets, the violator is responsible for compensation.

30.For the cheque that is verified in accordance with provisions in Point 29 of this Chapter, the payer shall examine the payment capability of the cheque and carry out the accurate and safe treatment; use the account to make accounting of payment transactions and keep secret of the balance of payment account of customer in compliance with provisions of applicable laws and carry out the treatment under sequence and procedure as stipulated from Point 31 to Point 33 of this Chapter.

31.If the balance on the payment account of the cheque drawer, or the balance added with the overdraft limit on the payment account of the cheque drawer (for the case where the drawer is permitted to make overdraft) is enough for making payment of the entire amount stated on the cheque, the payer states the payment date, month, year, signs on the cheques and copies of the list of cheques then proceeds with following treatment:

31.1.Cheques are used as documents to debit the payment account of the drawer, or to charge to the account “payment security deposit” (in case where the cheque is guaranteed by the payer through the freeze of the cheque amount).

31.2. Copies of the list of cheques are used as vouchers to credit such appropriate accounts as: payment account of the beneficiary (where the beneficiary maintains his account at the payer); “cash” (where the beneficiary withdraws the cash); “clearing payment”, “deposit at the SBV” (in case of clearing payment or payment made  through the SBV); account of the authorized collector (where the payment is made under the agreement on correspondent relationship), etc… Appropriate payment documents are then prepared to send for clearing payment (if the authorized collector takes part in the clearing payment) or transfer documents are prepared to send to the authorized collector to credit the account of the beneficiary.

31.3. Procedures for the payment, circulation of documents for the case where both the drawer and the beneficiary open their account at the same bank’s branch, or at two branches of the same payment services supplier and that institution has an online payment system for which the General Director (Director) of that unit or institution takes responsibility for issuing provisions and guidance in line with provisions of this Circulation.

32.If the amount the drawer is entitled to use at the payer is not sufficient to pay for the entire amount stated on the cheque, the payer carries out the following treatment:

32.1. To give notice to the drawer of the fact that the cheque can not be paid. This notice should clearly state the cheque number, date of drawal, amount stated on the cheque, the amount which can not be paid, the beneficiary of the cheque within the presentation date or the working day following the presentation date of that cheque. This notice may be given via telephone, telegraph or another appropriate communication means. The payer preserves  the right to charge the drawer a fee for this service.

At the same time the same notice is to be made to the cheque presenter (including the beneficiary or the authorized collector) within the presentation date or the working day following the presentation date by the urgent communication mode in accordance with the agreement between the two parties.

32.2. The beneficiary has the right to request or through the authorized collector to request the payer to carry out one of 3 following modes:

32.2.1. To prepare a confirmation on the payment refusal for the entire amount stated on the cheque and return him that cheque;

32.2.2. To make partial payment of the amount stated in the cheque equivalent to the amount, at the maximum, the drawer is entitled to use at the payer and prepare a confirmation on the payment refusal for the remaining amount on the cheque that is  not yet paid (in this case the beneficiary should draw a collection order under the form of Appendix No. 03).

32.2.3. To request the drawer to fully hand in the amount of the cheques, which is not paid to the account of the drawer to enable the payment of that cheque within a certain period of time (upon the request of the beneficiary) (the beneficiary should prepare a collection order under the form in Appendix No. 03) but not in excess of 5 working days from the preparation of the collection order. If the drawer has delivered full amount to the payment account upon the above mentioned request, the payment of the cheque is performed in accordance with stipulated sequences and procedures, if he has not done, the payer is entitled to refuse the payment of the entire amount stated on the cheque.

32.3. The payer is responsible for carrying out requests made by the presenter of the cheque upon his receipt of the collection order in case where the cheque is not in excess of 6 months from the date of drawal.

32.4. Upon receipt of the collection order that requests for the partial payment of the cheque amount from the beneficiary, the payer proceeds as follows:

32.4.1. To verify the legality, validity of the collection order;

32.4.2. Based on the collection order and the current payment capability of the drawer at the time of the request, the payer makes following entries:

Debit the payment account of the cheque drawer;

Credit the appropriate account (Payment account of the beneficiary, Cash; Clearing payment; Deposit account at the SBV, account of the authorized collector, etc…)

And makes a clearing payment document (if the authorized collector takes part in the clearing payment) or a transfer document for the authorized collector to credit the account of the beneficiary.

The payer must open a book to monitor cheques, which are partially paid.

32.4.3. Upon making partial payment, the payer should proceed as follows:

- To make a written confirmation of the payment refusal for the cheque amount, which is not  paid and state the words “presented on……, a partial payment of ….. (the amount) is made, the payment of the remaining of ….. (the amount) at…… (presentation place) is refused, payment date……” on the front side of the cheque,  and to deliver the confirmation of the payment refusal and cheque and other payment documents to the beneficiary or the authorized collector;

- To prepare a notice of the payment refusal of the cheque, which clearly states the cheque number, drawing date of the cheque, name, address of the beneficiary of the cheque, the cheque amount, the amount to be refused and  send it to the drawer to request him to perform repayment obligation for the amount, the payment of which is refused, together with the warnings of the possible consequences if he does not perform his repayment obligation for that refused amount.

Information concerning to the cheque drawer who lacks payment capability should be treated in accordance with provisions in Point 37, Chapter VII of this Circular.

32.4.4. In case where the payer fails to receive the Collection Order after 5 working days from the sending date of the notice of the payment incapability, it should perform procedures to make the refusal for the entire cheque amount, to make  a written confirmation of the payment refusal together with the cheques to return them to the beneficiary or the authorized collector; at the same time to make a notice of the payment refusal of the cheque and send it in accordance with provision in Point 32.4.3 of this Chapter.

32.5. Upon making a partial payment of the amount stated on the cheque, the payer shall request the beneficiary (where the payment is made to the payment account of the beneficiary, which is maintained at the payer or for the case of cash payment) or the authorized collector (where the payment is made through the authorized collector) to make a receipt (under the form in Appendix No. 04) for record.

33.In case where several cheques are delivered at the same time to claim money from the drawer and the drawer is not able to make payment for all these cheques, the payment priority are determined by the drawing dates and in accordance with the ordinal number of the cheques drawn, that means cheques drawn first should be paid first, in case of the cheques with the same drawing date, the cheque with the smaller ordinal number should be paid first.

34. Treatment procedures at the authorized collector:

34.1. For cheques which are paid wholly;

34.1.1. In respect of cheques, which are used to make payment to the account, the authorized collector should use the cheque payment documents for his accounting, when he receives them from the payer:

Debit: Appropriate account (Clearing payment, Deposit at the SBV, Deposit of the payer, etc…)

Credit: Payment account of the beneficiary

And send the Credit Advice to the beneficiary.

34.1.2. In respect of cheques without the words “payable to the account”, the authorized collector may make payment of the amount stated on the cheque in cash at the request of the beneficiary. Cash receiver must clearly state his name, identity card number (or passport, identity card of soldier, national defense workers and staff or other papers with photo and seal) in the place stipulated for the cash withdrawal in the back side of a cheque.

The authorized collector should use documents sent by the payer to make following accounting:

Debit: Appropriate account (Clearing payment, Deposit at the SBV, Deposit of the payer, etc…)

Credit: Cash account

34.2. In case where the cheque is partially paid according to the notice of the payer:

- The authorized collector should, based on the amount already paid, use documents on the partial payment of that cheque, which is sent to him by the payer to make following accounting:

Debit: Appropriate account (Clearing payment, Deposit at the SBV, Deposit of the payer, etc…)

Credit: Appropriate account (Payment account of the beneficiary; cash) (where the collector is authorized to receive cash for the beneficiary).

Or Credit: Account “Other amounts pending payment” - to open detailed account for each beneficiary (where the collector is not authorized to receive cash for the beneficiary).

and to make a credit advice of the already paid amount to send to the beneficiary (where the payment is made to the account of the beneficiary).

The beneficiary or the authorized collector (in the capacity as a person authorized by the beneficiary) should make a receipt (under the form in Appendix No. 04) to deliver to the payer.

When the authorized collector receives the receipt from the beneficiary, he shall, based on the Receipt, prepare a transfer slip and make following accounting:

Debit: Account “Other amounts pending payment” - to open detailed account for each beneficiary.

Credit: Appropriate account (payment account of the beneficiary, cash).

And send a copy of the Receipt to the payer.

If the authorized collector does not yet received the Receipt after 5 working days from the date where he sends the credit advice of the partial payment of the cheque amount, the authorized collector shall return the amount of the cheque that is partially paid and make following accounting entries:

Debit: Account “Other amounts pending payment” - to open detailed account for each beneficiary.

Credit: Appropriate account (Clearing payment, Payment account at SBV, Deposit of the payer, etc…)

35.Cheques that are refused are not permitted to present again, except for the case where the payment of the cheque is refused due to the mistake of the payer.

36.The organization of payment should be carried out as follows:

36.1. General Director (Director) of the payment services supplier is responsible for providing and guiding the payment of cheques between branches, subsidiary units of that organization in line with current provisions of the laws and for giving notice and propagating to their customers for implementation;

36.2. The payment service supplier has the right to agree with other payment services supplier in the same locality or in other province, city of the organization on the payment of cheques to their customers, provide for the operational process, competences and responsibilities of related parties on the basis of taking self-responsibility for prudence during the cheque payment process and give notice, propagate to their customers for implementation.

36.3. The payment of cheques through the clearing payment center is performed as follows:

36.3.1. In respect of clearing payment centers of the SBV, the clearing payment process provided for by the State Bank is applicable to the payment of cheques through the clearing payment center;

36.3.2. In respect of clearing payment center, which is a payment services supplier  granted the operation licence by the State Bank, the payment of cheques through the center between member payment services suppliers should be performed in accordance with agreements between that center and members.

Chapter VII.

VIOLATION AND DEALING WITH VIOLATION 

37. Violation due to drawing of cheques without sufficient payment capability

37.1. The first violation

37.1.1. In case where the cheque is presented within the payment period, but the amount that the drawer is entitled to use for drawing the cheque at the payer is not sufficient to make payment of the entire amount stated on the cheque, the payer must, after preparing the written confirmation of the payment refusal according to applicable provisions, be responsible for sending a notice to the drawer and requesting him to perform his payment obligation for the amount stated on the cheque;

37.1.2. After directly making payment to the beneficiary, the drawer must give notice to the payer of the completion of his repayment obligation and enclose the already paid cheque. This case is considered as unintentional drawal of cheques without payment capability.

37.1.3. Within 5 working days from the date where the payment of a cheque is refused, if the payer does not receive the notice as provided for in Point 37.1.2 mentioned above from the drawer, the drawer is considered intentionally drawing the cheque without payment capability.

In this case, the payer is responsible for immediately and permanently suspending the drawing right of the violator, for requesting the violator to return all of the blank cheques he is supplied and giving notice to the credit information center of the State Bank of the violator and forms of treatment in accordance with the contents mentioned in Appendix No. 6 of this Circular.

In case where this person does not comply with the decision of the payer, the payer has the right to take necessary measures such as: blocking the drawer’s account, giving notice to his superior agency (if any), and giving notice to the public security agency for cooperative settlement.

37.1.4. The payer is responsible for preserving information of the cheque drawer who lacks the payment capability in his record file.

37.2. The second violation  is considered as repetitive one if it happens after less than 01 year from the first unintentional violation, the payer should, in addition to settlement procedure taken as for the first violation in case where the drawal of cheque without the payment capability is still unintentional, immediately suspend the right to draw cheques of the drawer for 3 months and take back the blank cheques and give notice to the credit information center of the State Bank of the violator in accordance with the contents as mentioned in Appendix No. 6 of this Circular.

After 3 months, the payer may consider and decide on the termination of the temporarily term of suspension of the right to draw cheques of the violator and give notice to the credit information center of the State Bank of his decision.

37.3. The third violation act shall be considered repetitive one again if it happens after less than 01 year from the violation as provided for in above-mentioned Point 37.2 and the payer should, in addition to the settlement procedure as for the second violation, permanently suspend the right to draw cheques of the drawer and request the violator to return all the blank cheques and give notice to the credit information center of the State Bank of the violator in accordance with the contents as mentioned in Appendix No. 6 of this Circular.

37.4. Payment service suppliers are responsible for searching information of the person, who requests for the supply of blank cheques for the first time before making decision on the supply to that person. The credit information center of the State Bank is responsible for providing information, which is kept in its record as mentioned above, to the payment services suppliers within the date when it receives the request thereof or on the following working day.

38.The penalty interest rate applicable to the deferred cheque payment is equivalent to 200% of the basic interest rate announced by the State Bank at the applicable time. The fine for the deferred payment is paid to the cheque beneficiary.

Chapter VIII

IMPLEMENTING PROVISIONS

39.This Circular becomes effective after 15 days since its publication in the Official Gazette and replace the Circular No. 07-TT/NH1 dated 27 December 1996 of the Governor of the State Bank guiding the implementation of the Regulation on the drawal and use of cheques issued in conjunction with the Decree No. 20-CP dated 9 May 1997 of the State Bank of Vietnam guiding the payment of cheque in foreign currency.

40.Organizations, which and individuals who use cheques and are involved in the use of cheques shall refer any obstacle, which may arise during the implementation, to their payment services suppliers for consideration and settlement; payment services suppliers should report to the State Bank’s branches in provinces, cities under the center Government’s management in the same locality any obstacle that they cannot settle, for settlement; if it  cannot be settled, they should report to the State Bank for its study and resolution.

41.Cheque suppliers should base on this Circular to issue an operational process on the supply and use of cheques for their units and disseminate to their customers for implementation. Documents that guide and deploy this Circular should be sent to the State Bank (the Department of Monetary and Policy) for its information.

Appendix 01a

BLANK CHEQUE FORM THROUGH THE CLEARING PAYMENT CENTER OF THE STATE BANK

(the front of the cheque)

Appendix number 01b

 BLANK CHEQUE FORM THROUGH THE CLEARING PAYMENT CENTER OF THE STATE BANK

(continuous)
(the back side of the cheque)

Notes on standards of the cheque form:

1. Standard of paper and dimension of the body of cheque:

- Weight: 90 to 105 gram/m²(about 24 - 28 pound) .

- Length: 180 mm;

- Width: 90 mm;

- Paper vein: Length;

- Thickness: from 0.075 to 0.190 mm (from 0.003 to 0.0075 inch)

Front side:

2. Magnetic brand MICR:

- To be in compliance with the standard E13B

- Order to reflect codes: “Cheque number” “Code of the payer (branches or payment services supplier) “Account number of cheque drawal”...

- Place of MICR: The printing of the magnetic brand MICR must comply with following standards:

• In compliance with the printing standard of MICR.ANSI X9.27-1988
• Magnetic ink used to print must be incompliance with the standard ISO 1004-1977

3. Date of drawing: to enframe each figure square (date, month, year) for easy identification

4. Amount:

- Amount in words shall be stated in two lines; Each line shall be 100 mm in length at the minimum (4.1 inch); Space between each line shall be 10 mm (0.7 inch).

- Amount in number shall be enframed to easily identify the image

Back side

5. The standard of the transfer section:

- Wide enough to secure: at least 04 words lines in the standard size able to be contained;

- Able to contain at least 02 words lines in the widen size.

- Wide enough for the seal of the organization, individual that performs the cheque transfer.

6. The design of the content of cheque coupon and the back side of cheque is for reference only.

Appendix 02

CHEQUE RETURN/LIST

For customer only

Name of the beneficiary ........................................................................................................

Account Number:..................................................................................................................

At:........................................................................................................................................

Appendix number 03

Payer

(bank).....

For the customer only

….., Date…../……/…….

Pursuant to the Notice of the good bank on the sheet of cheque with the number.....................

date of drawal …/…/… drawer.......................................... which lacks the payment capability,

I am:............................................................. .(name of beneficiary)

Address:........................................................................................

ID number (in case of beneficiary is an individual)............................

Account number:............................................................................

At bank:.........................................................................................

Kindly request the bank(tick in one of two following modes – In case of making in both two modes, this document shall be considered invalid):

oTo make partial payment of the amount stated on the above-cheque to me under the current payment capability on the account of the drawer at the time of receipt of this collection order and payment refusal for the remaining amount

oTo request the drawer to make full payment to the account for cheque payment

Appendix number 04

RECEIPT

…..date…../……/…….

To:................................. .(Paying bank).........................................

I am:................................................. .(beneficiary or authorized collector)..............................

Address................................................................................................................................

ID number (in case of individual)............................................................................................

Writing the receipt on the fact that the cheque number……………drawing date…. /…../…..drawer …………….. the amount stated in the cheque  is (in number)…………………………..Due to the cheque lacks the payment capability and according to our request, the bank) ……….. (name of bank) ………………………….has collected for us a part of amount stated on cheque:

Amount (in number)...............................................................................................................

Amount (in words):................................................................................................................

Receipt Drawer shall sign in one of two following appropriate space

Appendix No. 05

CONFIRMATION ON THE PAYMENT REFUSAL OF THE CHEQUE

To:(The beneficiary of the cheque).................................................

We are very sorry to inform you that the cheque:

Cheque number............................................................ Date of drawal..................................

Drawer:.................................................................................................................................

Address:...............................................................................................................................

Identity card number (in case where the drawer is an individual)................................................

Account number:...................................................................................................................

At the bank:..........................................................................................................................

Amount stated on the cheque (in number)...............................................................................

In words................................................................................................................................

Refused Amount: (in number).................................................................................................

In words................................................................................................................................

Reasons of refusal................................................................................................................

............................................................................................................................................

............................................................................................................................................

............................................................................................................................................

Appendix No. 06
Form No. S01/CIC

To: Credit Information Center – State Bank
(45 Ly Thuong Kiet - Hanoi)

Cheque No....................................................... Presentation date..........................................

Cheque drawer (organization or individual)..............................................................................

Address................................................................................................................................

Identity card No. (where the drawer is an individual)........ Date of issue……..Place of issue......

Beneficiary:...........................................................................................................................

Last endorser:.......................................................................................................................

Address of the beneficiary:....................................................................................................

Amount in numbers...................................................... (Currency symbol).............................

Amount in words...................................................................................................................

............................................................................................................................................

Address of the credit information center – the State Bank (CIC):

1. Address of Head office: 45 Ly Thuong Kiet Str., Hoan Kiem Dist., Hanoi

2. Website: http://www/creditinfo.org.vn webpage: cheque payment

3. Email: [email protected]

4. Fax: 04 8248715, Tel: 04 936 0157; 04 9342318

Providing and exploiting information under one of following modes:

1. Sending the data file in text format in accordance with the form to email address

2. Under the direct form on the website of CIC

3. Sending via fax (04 8248715)/ by post/by hand (for minority)

4. Directly searching on the website of CIC

5. Sending queries to CIC via Fax or email

(Please access to the website of CIC: http://www.creditinfo.org.vn or make a call to 04 9342318 for detailed information)