Decision No. 12/2008/QD-NHNN dated April 29, 2008 of the State Bank on the amendment of several articles of the Regulation on the discount, rediscount of valuable papers of the State Bank for banks, issued in conjunction with the Decision No. 898/2003/QD-NHNN dated August 12, 2003

DECISION

ON THE AMENDMENT OF SEVERAL ARTICLES OF THE REGULATION ON THE DISCOUNT, REDISCOUNT OF VALUABLE PAPERS OF THE STATE BANK FOR BANKS, ISSUED IN CONJUNCTION WITH THE DECISION NO. 898/2003/QD-NHNN DATED 12 AUGUST 2003

THE GOVERNOR OF THE STATE BANK

- Pursuant to the Law on the State Bank of Vietnam in 1997; the Law on amendment, supplement of several articles of the Law on State Bank of Vietnam in 2003;

- Pursuant to the Decree No. 52/2003/ND-CP dated 19 May 2003 of the Government providing for the functions, assignments, authorities and organizational structure of the State Bank of Vietnam;

- Upon the proposal of the Director of the Credit Department,

DECIDES:

Article 1. To amend several articles of the Regulation on the discount, rediscount of valuable papers of the State Bank for banks issued in conjunction with the Decision No. 898/2003/QD-NHNN dated 12 August 2003 as follows:

1. Paragraph 1 of Article 1 is amended as follows

“Article 1. Governing scope and subjects of application

1. This Regulation provides for the performance of the discount, rediscount operation of the State Bank for banks with the view to making contribution to speeding up socio-economic development and implementing national monetary policy.

Based on the orientation of socio-economic development of the Government and objectives of the national monetary policy from time to time, the State Bank’s Governor shall decide areas which the discount, rediscount for banks is given priority by the State Bank.”

2. Article 2 is amended as follows:

“The discount, rediscount (hereinafter referred to as discount) of valuable paper of banks means the short term purchase of undue valuable papers by the State Bank, which have been traded in the primary market or in the secondary market.”

3. Article 6 is amended as follows:

“Article 6. The discount limit

The discount limit is determined on quarterly basis and is the maximum balance which the State Bank is entitled to perform the discount for valuable papers of a bank at any time in a quarter.

1. Based on the objectives of the national monetary policy and the total approved amount of money supply, the Governor of the State Bank shall decide the total limits for the discount operation from time to time.

2. Based on the total discount limits and the objective of giving priority to credit investment from time to time, the State Bank shall allocate the discount limit to each bank.

3. On the 15th of the first month of the following quarter at the latest, banks shall send their application file for the notice of discount limit of valuable papers to the State Bank (the Credit Department) to make basis for determination and notice of the discount limit to the banks in the quarter.

4. The State Bank shall only allocate and announce the discount limit to banks which send the request for the notice of discount limit to the State Bank in accordance with the stipulated time (according to the post stamp or fax). The State Bank shall not allocate and announce the discount limits to he banks which send the request for the notice of the discount limits to the State Bank after the stipulated time.”

4. Article 12 is amended as follows:

“Article 12. The formula to determine the amount payable upon discounting valuable papers of banks

1. In case of discounting the whole remaining term

1.1. For valuable papers of which interests are paid immediately upon issuance:

1.1.1. For short term valuable papers of which interests are paid immediately upon issuance:

Of which:

G : The amount payable by the State Bank upon discounting valuable paper.

MG : Face value of valuable paper

T : The remaining term (number of days) of valuable paper. The remaining term is calculated from the discount date to the maturity date of the valuable paper.

L : The discount interest rate at the time of discount by the State Bank (% per year).

365 : The conventional number of days of a year.

1.1.2. For long term valuable papers of which interests are paid immediately upon issuance

Of which:

G : The amount payable by the State Bank upon discounting valuable paper.

MG : Face value of valuable paper

T : The remaining term (number of days) of valuable paper. The remaining term is calculated from the discount date to the maturity date of the valuable paper.

L : The discount interest rate at the time of discount by the State Bank (% per year).

365 : The conventional number of days of a year.

1.2. For valuable papers of which principals, interests are paid once upon maturity:

1.2.1. For short term valuable papers of which principals, interests are paid once upon maturity

Of which

G : The amount payable by the State Bank upon discounting valuable paper.

GT : Value of the valuable paper upon maturity, including its face value and interests;

MG : Face value of valuable paper

T : The remaining term (number of days) of valuable paper. The remaining term is calculated from the discount date to the maturity date of the valuable paper.

L : The discount interest rate at the time of discount by the State Bank (% per year).

365 : The conventional number of days of a year.

Ls : Issuing interest rate of valuable paper (%/ annum)

n : period of valuable paper

1.2.2. For long term valuable papers of which principals, interests are paid once upon maturity (interests are not added to principal)

Of which:

GT  =  MG  x  { 1 + ( Ls x n ) }

G : The amount payable by the State Bank upon discounting valuable paper

GT : Value of the valuable paper upon its maturity, including its face value and interests;

MG : Face value of valuable paper

T : The remaining term (number of days) of valuable paper. The remaining term is calculated from the discount date to the maturity date of the valuable paper.

L : The discount interest rate at the time of discount by the State Bank (% per year).

365 : The conventional number of days of a year.

Ls : Issuing interest rate of valuable paper (%/ annum)

n : period of valuable paper

1.2.3. For long term valuable papers of which principals, interests are paid once upon maturity (interests are added to the principal)

Of which:

GT  =  MG  x  ( 1 + Ls )ⁿ

G : The amount payable by the State Bank upon discounting valuable paper

GT : Value of the valuable paper upon maturity, including its face value and interests;

MG : Face value of valuable paper

T : The remaining term (number of days) of valuable paper. The remaining term is calculated from the discount date to the maturity date of the valuable paper.

L : The discount interest rate at the time of discount by the State Bank (% per year).

365 : The conventional number of days of a year.

Ls : Issuing interest rate of valuable paper (%/ annum)

n : period of valuable paper

1.3. For long term valuable papers of which interests are paid on periodical basis

Of which

G : The amount payable by the State Bank upon discounting valuable paper

Ci : Payment made for interests, principals for the ith time;

i : The ith time of interest, principal payment;

L : The discount interest rate at the time of discount by the State Bank (% per year).

365: The conventional number of days of a year.

k : Number of times of interest payment in a year;

Ti : Term commencing from the discount date to the ith payment date of interests, principal (number of days);

2. In case of time discount

2.1. The formula to determine the amount payable by the State Bank to banks upon discounting valuable papers (discount price): to be calculated in line with the formula, which is provided for in paragraph 1 of this Article.

2.2. The formula to determine the amount payable by banks to the State Bank upon the expiry of discount term (repurchase price):

Of which:

Gv : Amount payable by banks to the State Bank upon the expiry of discount term;

G : Amount payable by the State Bank upon discounting valuable paper

L : The discount interest rate at the time of discount of the State Bank (% per year)

Tb : The discount term (days) of the State Bank

5. Paragraph 5 of Article 13 is amended as follows:

“2. Upon the expiry of the discount term (in case of the time discount), banks shall make payment for the repurchase of valuable papers to the State Bank and get back valuable papers in accordance with the commitment. After 1 working day since the expiry of the discount term, if Banks fail to make payment to the State Bank and get back valuable papers, the State Bank shall deduct from their deposit accounts at the State Bank for payment.

In case where the balance in the bank's account is not sufficient, the State Bank shall classify the deficit amount of the bank as overdue debt and the bank shall be subject to an overdue interest rate that is equal to 150% of the discount interest rate. The State Bank shall consider selling valuable papers held by the State Bank in the monetary market for recovery of the deficit amount.”

Article 2. This Decision shall be effective after 15 days since its publication in the Official Gazette.

Article 3. The Director of Administrative Department, Director of Credit Department, Head of units of the State Bank, Chairman of the Board of Directors and General Manager (Manager) of banks shall be responsible for the implementation of this Decision.