DECISION

ON THE ISSUANCE OF THE REGULATION ON THE ISSUANCE THE STATE BANK BILLS.

THE GOVERNOR OF THE STATE BANK

Pursuant to the Law on the State Bank of Vietnam No. 01/1997/QH10 and the Law of the Credit Institutions No. 02/1997/QH10 dated 12 December, 1997;
Pursuant to the Decree No. 15/CP dated 03 February, 1993 of the Government on the assignment, authority and responsibility for the State management of the ministries and ministry-level agencies;
Upon the proposal of the Director of the Monetary Policy Department,

DECIDES

Article 1. To issue in conjunction with this Decision the Regulation on the issuing the State Bank Bills.

Article 2. This Decision shall be effective after 15 days from the date of signing and replace the Decision No. 211/QD-NH1 dated 22 September, 1994 of the Governor of the State Bank on the issuance of the Regulation on the issuing the State Bank Bills.

Article 3. The Director of the Administration Department, the Chief Inspector, Heads of relevant units of the State Bank of Vietnam, General Managers of the State Bank branches in the provinces, cities; Chairman of the Board of Directors and General Directors (Directors) of Credit Institutions shall be responsible for the implementation of this Decision.

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FOR THE GOVERNOR OF THE STATE BANK
DEPUTY GOVERNOR




Duong Thu Huong

REGULATION

ON THE ISSUANCE OF THE STATE BANK BILLS
(issued in conjunction with the Decision No. 362/1999/QD-NHNN1 of the Governor of the State Bank dated 8 October, 1999)

Chapter I

GENERAL PROVISIONS

Article 1. The State Bank Bill shall be a short-term valuable paper, issued by the State Bank to create instruments in the money market for the implementation of the National Monetary Policy.

Article 2. Credit Institutions which buy State Bank Bills shall satisfy following conditions:

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2. Having a deposit account with the Banking Operations Department or at a State Bank branch which has been designated by the Governor of the State Bank to carry out the auction activity.

3. Complying fully with the provisions of the State Bank on the issuance and auction of State Bank bills.

Article 3. The buying of State Bank Bills shall be on a voluntary basis. In the event of need, for the sake of the monetary stability, The Governor of the State Bank shall decide on the issuance of compulsory State Bank Bills to Credit Institutions.

Article 4. The State Bank Bills shall be freely bought, sold, transferred, mortgaged between Credit Institutions, mortgaged for borrowing or discounted at the State Bank, used as an instrument in the open market operations conducted by the State Bank in accordance with current applicable provisions.

Article 5. The State Bank shall be committed to the payment of the bills at the face value to the Credit Institutions at the due date.

Article 6. The cost of issuance and interest payment of the State Bank Bills shall be charged to the operational expense of the State Bank.

Chapter II

DETAILED PROVISIONS

Article 7. The State Bank Bills shall be of following characteristics:

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2. Having the minimum face value of VND 100 million and face values of the multiples of VND 100 million.

3. The term is under 1 year;

4. As a discounted Bill, the State Bank shall sell the Bills at a price which is lower than the face value of the Bill and repay at the face value of Bills when they become due. The difference between the face value and the selling price shall be the rate of interest of the Bills.

5. Issued is the form of a Certificate or book entry form;

6. Issued in the compulsory mode or auction.

Article 8. Forms of the State Bank Bills:

1. The form of a Certificate

a. The front of the Bill shall consist of following features;

- The sentence: " Ngn hng Nh nước Việt nam " (The State Bank of Vietnam)

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- The face value of the Bill

- The part to write down the maturity of the Bill, the due date of the Bill.

Other features such as: Symbol of the Bill, serial number, printed signature of the Governor of the State Bank, the seal of the State Bank.

b. The back of the Bill is used to write down details arising during the buy and sale of bills; Name and seal of the Banking Operations Department of the State Bank or designated State Bank branches; Name, address, seal of Credit Institutions as the first buyer, and lines for writing down name, address, seal of Credit Institutions as the second, third buyer . . . and notice, guidance of the State Bank.

c. The front and the back of a State Bank Bill shall be protected against counterfeit with technical measures like in the case of money and other valuable paper of the banking system.

2. Book entry form:

This is the form in which the value of the Bills won by a Credit Institution in an auction shall be recorded to the account "Bill in book entry form" with the State Bank.

Article 9. Mode of issuance of State Bank Bills.

1. Compulsory mode:

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2. The mode of auction: To be implemented in one of the two following ways:

a. Auction for the volume: To be implemented in the following principles:

- The State Bank shall announce in advance the rate of interest and the volume of the Bills which are expected to be issued.

- Credit Institutions shall determine the required volume of Bills and send their offers to the State Bank.

- The State Bank shall organise the auction and decide on the sale of Bills to those who have first sent the offer.

- In case of receiving more than one offer at the same time and the total volume offered by these offers is greater than the expected volume of the issue, the expected volume of the issue shall be appropriated to each offer in proportion to the volume offered by each offer which shall be rounded to VND 100 million.

b. Auction for the interest rate: To be implemented in the following principle:

- The State Bank shall announce in advance the volume of the Bills which are expected to be issued.

- The buying Credit Institutions shall determine by themselves the interest rates and the volume of Bills they require to buy at each level of interest rate and send their offer to the State Bank. The interest rate shall be offered on the annual basis and rounded to two decimal digits.

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- The auction interest rate shall be the highest interest rate offered among the rates at which the respective offers are accepted. The interest rate which is used to calculate the sale price of the State Bank Bills and applied generally to all level of accepted interest rates shall be the interest rate of the auction.

- In the event the volume offered at the auction interest rate is higher than the expected volume of the issue, the volume of Bills to be appropriated to each offer shall be in proportion to the volume offered at each level of interest rate and rounded to VND 100 million.

3. The Formula for the calculation of the sale price of the State Bank bills shall be applied uniformly to all buying entities as follows:

G=

MG

1 +

LS x T

365 x 100

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G : The sale price of the State Bank bill;

MG : The face value of the State Bank bills

LS : The interest rate at which the State Bank bills are sold;

T : The number of days of the Bills maturity;

365 : The number of days of a year.

Article 10. The recognition of a Credit Institutions as a member of the State Bank Bills auction, the authority of the representative of the member to sign documents relating to the auction, the mode of auction notice, the pro-forma registration form for the auction, procedures of offer valuation, payment and delivery of State Bank Bills and other related issues shall be carried out in accordance with the Regulation on the sequence of the auction of the State Bank Bills, which is issued by the Governor of the State Bank.

Article 11. The total value of each issue, the term of the Bills, the time of issue, mode of issue shall be decided upon and announced by the Governor of the State Bank prior to each issue.

In the event of issuing in the compulsory mode or in the mode of auction for the volume, The Governor of the State Bank shall announce the interest rate of the bills prior to each issue in addition to above mentioned information.

Article 12. Credit Institutions shall, upon registration for the auction, place a margin deposit at the Banking Operations Department or a State Bank branch designated by the Governor of the State Bank. The margin deposit shall be 5% of the volume registered in the auction and does not earn interest during the auction period. The margin deposit shall be returned to Credit Institutions intermediately after the auction result is announced if their offers are not accepted. In the event the offer of a Credit Institution is accepted, the margin deposit shall be kept by the State Bank and deducted from the payment of the State Bank Bills.

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Article 14. The sorting, packaging, delivery, maintenance, transport of blank Bills and expired Bills shall be in compliance with the current provisions on the delivery, maintenance, transport of cash, valuable assets and paper.

Article 15. The payment of the State Bank Bills to the Credit Institutions who own the bills shall be made on the maturity date of the Bills to the account of Credit Institutions with the State Bank. In the event the maturity date coincides with a date which is a holiday in accordance with applicable laws, the payment shall be made in the next working day.

Article 16. Violations of the payment of the State Bank Bills shall be dealt with in accordance with current provisions.

Chapter III

ORGANISATION OF IMPLEMENTATION

Article 17. The responsibility of units of the State Bank, State Bank branches in provinces, cities which are designated by the Governor of the State Bank to carry out the auction in the implementation of this Regulation:

1. The Monetary Policy Department: On the basis of the objectives of the national monetary policy, the developments of the money supply and the liquidity of the banking system, the Monetary Policy Department shall submit to the Governor for his Decision on the volume of the bills issue, the expected interest rate of the Bills, the term of the Bills, the timing of the issue, the form of the bills and the issuing mode of the issue.

2. The Banking Operations Department

a. To submit to the Governor for his issuance of the Decision as to designate a State Bank branch in provinces, cities to carry out the auction of the State Bank Bills;

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c. To organise the auction, determine and announce the results of the auction.

d. In the event of an issue under the compulsory mode, the Banking Operations Department shall announce the Decision of the Governor on the issuance of compulsory Bills to State Bank branches in provinces activities (where the buying credit institutions maintain their accounts) and buying credit institutions which maintain their accounts with the Banking Operations Department of the State Bank.

e. dd. To submit the report on the results of the bills issuance to the Governor and the report to the Monetary Policy Department, the Accounting and Finance Department.

f. To prepare the final settlement on the issuance and payment of State Bank Bills for submission to the Accounting and Finance Department.

g. To delivery, maintain blank Bills, expired Bills like in the case of cash. To report to the Issuing and Vault Department on the Bills issued, matured Bills collected, blank Bills unused which are maintained by the Banking Operations Department (in case of issuing Bills in form of a Certificate).

3. State Bank branches in provinces, cities which are designated to carry out the auction:

a. To carry out the auction in compliance with provisions in the Regulation on the sequence of the auction of State Bank Bills.

b. In the event of the issue under the compulsory mode, the State Bank branches shall inform the Decision of the Governor of the issuance of compulsory Bills to the buying Credit Institutions which maintain their accounts at the Branches; to organise the sale, payment of the bills at the maturity date for credit institutions which maintain their accounts at the branches.

c. To deliver, maintain blank Bills, expired Bills like in the case of cash; to report to the Issuing and Vault Department on the Bills issued, matured Bills collected, blank Bills unused which are maintained in the branches (in case of issuing bills in form of a Certificate).

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4. The Accounting and Finance Department:

a. To guide the accounting for the issuance of State Bank Bills;

b. To reconcile the report on the Bills issued with the payment collected from the sale of Bills, the matured Bills collected with the payment of matured Bills which are made at State Bank branches in provinces, cities and the Banking Operations Department.

5. The Issuing and Vault Department

a. To organise the design and the printing contract as well as the delivery, maintenance, transport of blank Bills, expired Bills in the same way as with cash.

b. To organise the supply of blank Bills to the Banking Operations Department and State Bank branches in provinces, cities for further delivery to the Credit Institutions which have won in the auctions in line with the result of each auction.

6. The Banking Informatic Department:

To coordinate with the Banking Operations Department to design programs and to ensure the technical system related to the auction of State Bank Bills.

Article 18. Any amendment, supplement to this Regulation shall be decided upon by the Governor of the State Bank.

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FOR THE GOVERNOR OF THE STATE BANK
DEPUTY GOVERNOR




Duong Thu Huong