state bank of vietnam - CURCILAR OF THE VOVERNOR OF THE STATE BANK OF VIETNAM

STATE BANK OF VIETNAM---------

No. 03/2008/TT-NHNN

SOCIALIST REPUBLIC OF VIETNAMIndependence - Freedom - Happiness

--------------Hanoi, April 11th, 2008

CURCILAR OF THE VOVERNOR OF THE STATE BANK OF VIETNAM Providing guidance on foreign exchange service supply by credit institutions

________________

On 28 December 2006, the Government of Vietnam issued the

Decree No. 160/2006/ND-CP providing in details for the

implementation of the Ordinance on foreign exchange (Decree

No. 160/2006/ND-CP). Basing on Chapter VI of the Decree No.

160/2006/ND-CP, the State Bank of Vietnam (State Bank)

provides detailed guidance as follows:

Chapter I

SCOPE OF THE SUPPLY OF FOREIGN EXCHANGE SERVICE

Section 1

THE SUPPLY OF FOREIGN EXCHANGE SERVICE BY BANKS

1. After obtaining the confirmation from the State Bank on

their full satisfaction of conditions, the banks shall be

entitled to supply foreign exchange service to customers in

the domestic market within following scope:

a) To supply foreign exchange transactions in forms of spot,

forward, swap, option transaction, future contract and other

foreign exchange transactions in accordance with

international rules;

b) To mobilize capital, lend and provide guarantee in foreign

currency under the forms as provided for by the State Bank of

Vietnam;

c) To issue, act as an agent of international card issuance;

d) To supply services of money remittance and payment

(domestic and international), to receive and perform payment

in foreign currency;

dd) To discount, rediscount valuable papers denominated in

foreign currency;

e) To entrust other credit institutions and economic

organizations to act as their agent to supply some foreign

exchange services, including service of exchanging foreign

currency, service of receiving and making payment of foreign

currency and other services;

g) To supply services of entrustment and administration of

asset in foreign exchange;

h) To supply investment banking services in foreign exchange

(purchase, sale, mergence, guarantee and acting as an agent

of securities issuance in foreign currency, etc…);

i) To supply advisory services to customers about foreign

exchange;

k) To perform other foreign exchange activities in accordance

with international rules and in line with applicable laws of

Vietnam;

2. After their registration is confirmed by the State Bank,

the banks shall be entitled to supply foreign exchange

service to customers in international market within following

scope:

a) To supply international payment service;

b) To perform transactions of purchase, sale of foreign

exchange and gold in foreign market;

c) To participate in monetary markets and derivative market

in foreign countries;

d) To supply financial asset management services of customers

in foreign countries;

dd) To supply investment banking services (financial

consultancy, purchase, sale, mergence, guarantee, co-

finance…) in international market.

Section 2The supply of Foreign exchange service by non-

banking credit institutions

3. After their registration for operation is confirmed by the

State Bank, the finance companies shall be entitled to supply

several or entire of the foreign exchange services in

domestic and international markets as follows:

3.1. Supply of foreign exchange service in the domestic

market:

a) To supply foreign exchange transactions in form of spot,

forward, swap, options transaction and other foreign exchange

transactions in line with international rules;

b) To receive foreign currency deposit with the term of one

year upwards, to issue bonds, valuable papers in foreign

currency, to borrow foreign currency funds from domestic and

oversea credit institutions;

c) To provide short, medium and long term loans in foreign

currency, to discount, rediscount, mortgage valuable papers

denominated in foreign currency, provide credit guarantee in

foreign currency;

d) To provide services of entrustment and administration of

asset in foreign exchange;

dd) To receive and perform the payment in foreign currency;

to entrust economic organizations to act as agent of foreign

currency exchange, agent of foreign currency payment;

e) To supply advisory services to customers about foreign

exchange.

3.2. Supply of foreign exchange service in international

market:

a) To perform transactions of purchase, sale of foreign

exchange and gold in foreign market;

b) To participate in monetary markets and derivative foreign

currency market in foreign countries;

c) To provide financial asset management services of

customers in foreign countries;

4. After their registration for operation is confirmed by the

State Bank, the finance leasing companies shall be entitled

to provide several or entire of foreign exchange services in

the domestic market as follows:

a) To receive foreign currency deposit with the term of one

year upwards, to issue bonds, valuable papers in foreign

currency, to borrow foreign currency funds from domestic and

oversea credit institutions;

b) To lease finance in foreign currency;

c) To provide credit guarantee in foreign currency;

d) To perform services of entrustment and administration of

asset in foreign currency;

dd) To supply advisory services to customers about foreign

exchange.

5. The supply of foreign exchange service by other non-

banking credit institutions shall be performed in compliance

with particular provisions of the State Bank.

Chapter II

CONDITIONS FOR THE SUPPLY OF FOREIGN EXCHANGE SERVICE

Section 1

CONDITIONS FOR THE SUPPLY OF FOREIGN EXCHANGE SERVICE BY

BANKS

6. Conditions for banks to be considered, confirmed as full

satisfaction of conditions of supplying foreign exchange

service in the domestic market by the State Bank:

a) Availability of operation plan of foreign exchange service

supply in the domestic market, which is approved by the

Shareholders’ General Meeting (in case of being in the

process of application for establishment) or by the Board of

Directors, clearly defines the content, method of foreign

exchange service supply and measures of risk control and

prevention;

b) Availability of equipments and material facilities that

satisfy the requirements of performance of foreign exchange

service in the domestic market;

c) Having enough officers who have a good command of foreign

exchange activity, are trained about foreign exchange

operation and risk management in foreign exchange trading.

7. Conditions so as the registration for foreign exchange

service supply in international market of banks is

considered, confirmed by the State Bank:

a) Availability of operation plan of foreign exchange service

supply in the international market, which is approved by the

Shareholders’ General Meeting (in case of being in the

process of application for establishment) or by the Board of

Directors, clearly defines the content, method of foreign

exchange service supply and measures of risk control and

prevention;

b) Availability of equipments and material facilities that

satisfy the requirements of performance of foreign exchange

service in the domestic market;

c) Having enough qualified officers who have a good command

of the operation of foreign exchange service supply in the

international market;

d) Availability of system of internal inspection, control and

audit which is set up and performs duties in compliance with

provisions of the State Bank;

dd) Complying with provisions of the State Bank on prudential

ratios in operation and debt classification, provisioning and

use of provisions against credit risks; not violating

applicable provisions on foreign exchange control within one

year till the time of requesting the State Bank to consider

as full satisfaction of the conditions;

e) Their business operation has gained profits in the year

preceding the year of registration for foreign exchange

service supply in the international market.

Section 2

Conditions for the supply of foreign exchange service by non-

banking credit institutions


service supply in the domestic market of non-banking credit

institutions is considered, confirmed the by the State Bank:

a) Satisfying the conditions stipulated in points a, b, c,

paragraph 6 of this Circular;

b) Their business operation has gained profits in the year

preceding the year of registration for foreign exchange

service supply in the domestic market


service supply in the international market of finance

companies is considered, confirmed by the State Bank:

a) Satisfying the conditions stipulated in points a, b, c, d,

dd, paragraph 7 of this Circular;

b) Their business operation has gained profits in the latest

3 years.

Chapter III

File, procedures for confirmation of full satisfaction of

conditions, confirmation of registration for foreign exchange

service supply

Section 1

APPLICATION FILE FOR CONFIRMATION OF FULL SATISFACTION OF

CONDITIONS, CONFIRMATION OF REGISTRATION FOR FOREIGN EXCHANGE

SERVICE SUPPLY BY BANKS

10. The application file for confirmation of full

satisfaction of conditions of foreign exchange service supply

in the domestic market shall include:

a) An application for confirmation of full satisfaction of

conditions of foreign exchange service supply (in line with

the Form stated in Appendix 1);

b) Operation plan of foreign exchange service supply in the

domestic market, which clearly defines contents, method of

foreign exchange service supply and measures of risk control,

prevention is approved by the Shareholders’ General Meeting

(in case of being in process of application for

establishment) or by the Board of Directors; Minutes and

Resolution of the Board of Directors’ meeting, Shareholder’s

General Meeting in case of being in process of application

for establishment) on the approval of operation plan of

foreign exchange service supply;

c) A summary of the situation of equipments and material

facilities for supply of foreign exchange service and written

evidences about the full satisfaction of conditions of

equipments and material facilities. In the event where there

is not any evidence of equipments and material facilities, it

is required to have a commitment by Chairman of Board of

Directors (or authorized person) on the full satisfaction of

conditions of equipments and material facilities;

d) Qualifications, certificate and information of

professional level, capacity and personnel capacity of

executive officers and implementation capacity of operations

of foreign exchange service supply.

11. The application file for foreign exchange service supply

in the international market shall include:

a) An application for foreign exchange service supply (in

line with the Form stated in Appendix 1);

b) Documents as stipulated in points b, c, d, paragraph 10 of

this Circular, of which the contents are corresponding to the

foreign exchange service supply in the international market

(documents required for the cases being in process of

application for bank establishment are excluded);

c) Financial statements of the year preceding the year of

registration for foreign exchange service supply, already

audited by an independent auditing organization;

d) Report on the situation of foreign exchange service supply

in the domestic market, which affirms the full compliance

with provisions on foreign exchange control.

Section 2

APPLICATION FILE FOR CONFIRMATION OF REGISTRATION FOR FOREIGN

EXCHANGE SERVICE SUPPLY BY NON-BANKING CREDIT INSTITUTIONS


in the domestic market shall include:


line with the form stated in Appendix 1);


this Circular;

c) Financial statements of the year preceding the year of




in the international market shall include:


line with the form stated in Appendix 1);


this Circular;

c) Financial statements of the 3 years preceding the year of



Section 3

PROCEDURES FOR CONFIRMATION OF FULL SATISFACTION OF

CONDITIONS, CONFIRMATION OF REGISTRATION FOR FOREIGN EXCHANGE

SERVICE SUPPLY

14. Credit institutions, which have the demand for foreign

exchange service supply in the domestic and international

market, shall be required to send their file to the State

Bank (The Department of Banks and Non-banking Credit

Institutions) for being granted the Confirmation of full

satisfaction of conditions, Confirmation of registration for

foreign exchange service supply. Documents, papers enclosed

in the file must be the originals or notarized copies of

originals or copies confirmed by a competent person of the

credit institution who undertakes to take responsibility for

those documents. In case where the file is made in foreign

language, it is required to have Vietnamese translation of

which the signature of translator is certified in accordance

with provisions of applicable laws.

15. Within a period of 30 working days since the full receipt

of credit institution’s file, the State Bank shall grant the

Confirmation of full satisfaction of conditions, Confirmation

of registration for foreign exchange service supply (in

accordance with the form stipulated in Appendix 2) or reject

to grant the Confirmation. In case of refusal, the State Bank

shall be obliged to clearly state the written reason thereof.

16. The credit institution can request for the grant of

Confirmation of full satisfaction of conditions or

Confirmation of registration for foreign exchange service

supply for a part or all of foreign exchange services. Once

having demand for supplement, adjustment of contents of

foreign exchange service supply, the credit institution shall

request for the supplement, adjustment of Confirmation of

full satisfaction of conditions or Confirmation of

registration for foreign exchange service supply.

It is not permitted to perform the registration for the

supply of foreign exchange service in the international

market before the registration for the supply of foreign

exchange service in the domestic market.

17. The gold trading in the international market shall be

performed in accordance with provisions of the State Bank.

18. Credit institutions that are joint – venture banks, 100%

foreign – owned banks, joint – venture non – banking credit

institutions and 100% foreign – owned non – banking credit

institutions shall be entitled to engage in the foreign

exchange service supply in accordance with the provisions

stated in the establishment and operation licence. Branches

of foreign banks shall be entitled to perform foreign

exchange service supply in accordance with the provisions

stated in the license on the establishment of foreign bank’s

branch.

Chapter IV

RESPONSIBILITIES OF CREDIT INSTITUTIONS FOR THE SUPPLY OF

FOREIGN EXCHANGE SERVICE

19. After being granted the Confirmation of full satisfaction

of conditions, Confirmation of registration for foreign

exchange service supply, the credit institution shall be

obliged to maintain conditions of foreign exchange service

supply. In the event where the credit institution, after

being granted the Confirmation of full satisfaction of

conditions, Confirmation of registration for foreign exchange

service supply, fails to maintain the conditions as provided

for in this Circular, it shall be obliged to suspend the

permitted operation of foreign exchange service supply and

make report to the State Bank within 30 working days since

its unsatisfaction of conditions.

20. Upon carrying out the supply of foreign exchange service,

credit institutions shall be obliged to comply with the

contents stated in the Confirmation of full satisfaction of

conditions, Confirmation of registration for foreign exchange

service supply, provisions stipulated in Section 3, Chapter

VI of the Decree No. 160/2006/ND-CP, provisions in this

Circular and other related provisions of applicable laws.

21. Credit institutions, authorized to perform the foreign

exchange service supply, shall be obliged to comply with the

provisions on foreign exchange position and other provisions

on prudential ratios in business operation in accordance with

provisions of the State Bank.

22. Before the supply of foreign exchange service, credit

institutions shall be obliged to work out transaction

process, strict measures of risk management and internal

control. The transaction process must clearly reflect

contents and steps of transaction implementation, assign

concretely responsibilities and authorities of different

levels in the implementation of transaction; define

concretely transaction limits, loss limits (if any) to ensure

the double control in the transaction process. Officers in

charge of transaction management, supervision shall not be

permitted to directly implement transactions. Transactions

shall be controlled in accordance with applicable provisions

on internal inspection, control;

23. Credit institutions shall be obliged to provide specific

description of supplied services that can cause risks to

customers.

24. Credit institutions, authorized to perform the supply of

foreign exchange service, shall be obliged to list the

selling rate, purchasing rate of foreign currency and to

perform the purchase, sale of foreign currency in accordance

with provisions of the State Bank.

25. Credit institutions, authorized to perform the supply of

foreign exchange service, once performing foreign exchange

transactions to customers, shall be responsible for the

consideration, examination, preservation of valuable papers

and vouchers in line with factual transactions in order to

ensure that the supply of foreign exchange services is

performed in line with set up target and in accordance with

provisions of applicable laws.

26. Credit institutions shall be responsible for providing

guidance on operations and periodically examining operation

of agents upon their entrustment in their implementation of

provisions in this Circular and related provisions of

applicable laws.

27. Credit institutions shall be responsible for making

report on the supply of foreign exchange services in

compliance with provisions on statistic reporting regime of

the State Bank.

28. Credit institutions shall be obliged to prepare

provisions on decentralization, authorization within their

internal system in order to ensure the security of foreign

exchange service supply.

Chapter V

SUSPENSION, REVOCATION OF CONFIRMATION OF FULL SATISFACTION

OF CONDITIONS, CONFIRMATION OF REGISTRATION FOR FOREIGN

EXCHANGE SERVICE SUPPLY

29. The State Bank shall suspend, revoke or abolish some

contents in the Confirmation of full satisfaction of

conditions, Confirmation of registration for the foreign

exchange service supply of banks, non-banking credit

institutions in the following cases where:

a) They are under special control by the State Bank;

b) The State Bank has any evidence proving that their

application file for the grant of confirmation contains

information deliberately distorting the fact;

c) Their establishment and operation licences are revoked or

cease the effectiveness;

d) They are splitted, merged, integrated, bankrupt;

dd) Thy spontaneously terminate the supply of foreign

exchange service;

e) They change the functions, business lines;

g) They change a part or all of registered contents without

notification to the State Bank;

h) They no longer satisfy fully conditions of equipments,

material facilities and officers team for the supply of

foreign exchange services in accordance with applicable

provisions.

Chapter VI

IMPLEMENTING PROVISIONS

30. This Circular shall be effective after 15 days since its

publication in the Official Gazette and replace provisions in

Section 5 of the Circular No. 01/1999/TT-NHNN dated

16/04/1999 providing guidance on the implementation of the

Decree No. 63/1998/ND-CP dated 17/08/1998 of the Government

on foreign exchange control.

31. Credit institutions, already granted the License of

foreign exchange operation before the effective day of this

Circular, must request the State Bank to change the License

of foreign exchange operation into the Confirmation of full

satisfaction of conditions, Confirmation of registration for

the foreign exchange service supply. The time limit for the

change by credit institutions is 12 months since the

effective day of this Circular.

32. Inspectorate of the State Bank and State Bank branches in

provinces, cities under the central Government’s management

in the locality shall examine periodically or unexpectedly

the satisfaction of conditions and the compliance with

provisions of this Circular.

33. Director of Administrative Department, Heads of related

units of the State Bank, Managers of State Bank branches in

provinces, cities under the central Government’s management,

Chairman of the Board of Directors and General Directors

(Directors) of credit institutions shall be responsible for

the implementation of this Circular.

For the Governor of the State

Bank of Vietnam

Deputy Governor

NGUYEN DONG TIEN (Signed and sealed)

Appendix 1

NAME OF CISOCIALIST REPUBLIC OF VIETNAM

Independence - Freedom – Happiness

--------------------

…, date…

APPLICATION FOR CONFIRMATION OF FULL SATISFACTION OF

CONDITIONS (OR REGISTRATION FORM) OF FOREIGN EXCHANGE SERVICE

SUPPLY

To: - The

State Bank of Vietnam

(Department

of Banks and Non-banking credit institutions)

- State Bank branch…

Name of credit institution:

Located at:

Telephone number: Fax

number:

Establishment License No.: issued

on:

Issued by:

We would like to request the State Bank of Vietnam to confirm

the full satisfaction of conditions (or confirm the

registration) of the supply of following foreign exchange

services:

1.

2.

3.

…

We undertake:

- To be fully responsible for the accuracy of the enclosed

files.

- To ensure the full satisfaction of conditions for the

supply of registered foreign exchange service as mentioned

above and to continue to maintain these conditions in

accordance with provisions of the State Bank and related

provisions of applicable laws.

- To comply seriously with applicable provisions on foreign

exchange control of Vietnam and other provisions of

applicable laws relating to the supply of foreign exchange

service.

CHAIRMAN OF THE BOARD OF DIRECTORS

(Sign and seal)

Attached files:

1.

2.

3. …

STATE BANKOF VIETNAM---------

No. …/NHNN-CNH

SOCIALIST REPUBLIC OF VIETNAMIndependence - Freedom - Happiness

--------------Hanoi, date…

CONFIRMATION OF FULL SATISFACTION OF CONDITIONS

(OR CONFIRMATION OF REGISTRATION)

OF THE SUPPLY OF FOREIGN EXCHANGE SERVICE

After considering application file for the confirmation of

full satisfaction of conditions (or registration) of the

supply of foreign exchange service by (name of CI), the State

Bank of Vietnam confirms that (name of CI) has fully

satisfied the conditions (or registered for) of the supply of

following foreign exchange services:

1.

2.

3.

…

(Name of CI) shall be responsible for the serious compliance

with provisions on foreign exchange control of Vietnamese

applicable laws and other provisions of applicable laws

relating to the supply of foreign exchange service.

GOVERNOR

state bank of vietnam - CURCILAR OF THE VOVERNOR OF THE STATE BANK OF VIETNAM

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