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VIETNAM BANKING & FINANCE

TECHNICAL UPDATE JANUARY 2004

Regulations on the supply and use of cheques

Decree 159/2003/ND-CP of the Government, dated 10 December 2003, promulgates regulations on the supply and use of cheques. The Decree regulates the drawings, signatures, transfers, guaranteers, clearances, claims, rights of recourse and other issues relating to cheques issued by institutions which are providing payment service within Vietnam. Main points to note are:

Relevant parties may agree on the application of this Decree for cheques, which are not issued in Vietnam but are in use within Vietnam.

Cheques may be issued in foreign currencies if the payer is allowed to pay in foreign currencies and the payee is allowed to collect money in foreign currencies. However, cheques issued in foreign currencies must contain the name of the payee and are not transferable, except to institutions providing payment services.

The front of a cheque must contain all of the following:

  • The word “cheque” printed at the top of the cheque;
  • Serial number of the cheque;
  • Name of the payee (but see exception in following paragraph);
  • Amount in words and figures; if there is a difference between the amount in words and the amount in figures, the smaller amount will be paid;
  • Name of the payer;
  • amount proceeds Place of payment (but see exception in following paragraph);
  • Date of drawing;
  • Signature and name of the drawer.
  • The cheque will not be valid if one of the above elements is missing, except that:

  • If the place of payment is left blank, the cheque can be paid at the address of the payer or, if that address if not specified, at the head office of the payer; if the cheque is paid through a cheque clearing center, payment can made at that center;
  • If the name of the payee is left blank, the cheque will be paid to the holder of the cheque.
  • The cheque must be printed in Vietnamese. If another language is also printed on the cheque, it must be smaller and not bolder than the Vietnamese language.

    The drawer or the transferor may prevent the payment to the beneficiary in cash by adding the words “account payee only” on the cheque.

    Transferring cheques:

  • A cheque, which has the words “payable to the order of....” or the names of the beneficiary without any additional restriction can be made transferable by endorsing the cheque. The transferring process will be stopped if the beneficiary adds the words “not transferable” before his signature.
  • A cheque, which does not contain the name of the beneficiary or has the words “payable to the bearer”, can be transferred without being endorsed.
  • Guaranteeing cheque payment:

  • A cheque can be certified by the payer if all of the elements required for a cheque is completed and the amount in the drawer’s account is sufficient for the payment. The word “certified” will be added on the cheque by the payer;
  • A cheque can be guaranteed in part or in full by a third party other than the payer. The word “guaranteed”, the guaranteed amount, the name of the beneficiary and the name and signature of the guarantor will be added to the cheque or to a document attached to the cheque.
  • Presenting and clearing cheques:

  • Cheques need to be presented for payment within 30 days from the drawing date (previously 7 days), except in cases of force majeure where they can be extended to a maximum period of 6 months;
  • The beneficiary can authorise a payment service institution to collect the money on his behalf by signing an authorisation agreement with that institution.
  • If the amount in the drawer’s account is not sufficient for the full payment of the cheque and the beneficiary requests the payer to settle part of the value of the cheque, the payer has the responsibility to make the payment within the balance of the drawer’s account. The beneficiary must prepare a memo for such a payment.
  • Losing cheques:

  • If the drawer loses a cheque, the drawer must inform the payer about the lost cheque and cancel the payment of such a cheque.
  • If the beneficiary loses a cheque, the beneficiary must inform the payer about the lost cheque and request the drawer directly or through the previous transferor to arrange the cancellation of such a cheque with the payer.
  • After being notified about a lost cheque, if the payer receives that cheque, it should withhold the payment of the cheque, keep the cheque for a period of 5 days and inform the party which notified the payer about the lost cheque. Within 5 days, if the party notifying the lost cheque cannot provide sufficient information supporting the illegality of the cheque, the payer will make the payment to the beneficiary.
  • Right of recourse:

  • The beneficiary of a cheque can exercise a right of recourse against the drawer, transferor or guarantor or any other party having obligations for the cheque, if the cheque is presented within the presentation period of the cheque but is dishonoured and a dishonoured memo is issued by the payer or the cheque clearing center;
  • The beneficiary should send a notice of recourse and a copy of the dishonoured memo to the drawer within 4 days of the date of the dishonoured memo.
  • This Decree will become effective from 1 April 2004 and supersedes Decree No 30/CP, dated 9 May 1996, and Decree 173/1999/ND-CP, dated 7 December 1999, of the Government.

    Credit

    Decision 94/2004/QDNHNN of the Governor of the SBV, dated 20 January 2004, amends some articles of the Statute on SBV loans to banks secured by valuable papers, which was promulgated in conjunction with Decision No 1452/2003/QDNHNN, dated 3 November 2003, of the Governor of the SBV.

    This Decision became effective 15 days after the date it was published in the Official Gazette.

    Instruction 08/2003/CTNHNN of the Governor of the SBV, dated 24 December 2003, provides instructions on improving the credit quality of credit institutions.

    This Instruction became effective 15 days after the date it was published in Official Gazette.

    Official letter 1467/NHNN-TD of the Governor of the SBV, dated 23 December 2003, requests the General Directors (Directors) of credit institutions to expand credit activities in agricultural, forestry and sea product processing industries.

    Interest rates

    Decision 1667/QDNHNN of the Governor of the State Bank, dated 30 December 2003, keeps the VND base interest rate at 0.625% per month (7.5% p.a.).

    This Decision became effective on 1 January 2004 and superseded Decision 1573/QDNHNN, of the Governor of the SBV, dated 28 November 2003.

    Foreign exchange

    Circular 11/2003/TTNHNN of the Governor of the SBV, dated 11 December 2003, provides guidelines on foreign exchange management on purchasing Government bonds in foreign currencies by organizations and individuals.

    This Circular became effective 15 days after the date it was published in Official Gazette.

    Decision 17/2004/QDNHNN of the Governor of the SBV, dated 5 January 2004, promulgates the Statue on payments on purchasing and exchanging goods and services along Vietnam - Cambodia border.

    This Decision became effective 15 days after the date it was published in Official Gazette.

    Others

    Circular 12/2003/TTNHNN of the Governor of the SBV, dated 23 December 2003, amends and supplements Circular 03/2002/TT/ NHNN5 of the Governor of the SBV, dated 16 March 2000, which provides guidance on the implementation of Government Decree 89/1999/ND-CP, dated 1 September 1999, on deposit security.

    Accordingly, the Vietnam Deposit Security Agency (“VDSA”) is responsible for providing SBV Inspectors with certain information related to the operations of institutions participating in deposit security.

    The SBV Inspectors and the Special Supervision Board of the SBV are responsible for providing certain information to the VDSA about operations of credit institutions participating in deposit security.

    This Circular became effective 15 days after the date it was published in Official Gazette.

    Decision 1630/2003/QD-NHNN of the Governor of the SBV, dated 19 December 2003, promulgates regulations on technical criteria for developing and purchasing software for banking operation.

    This Decision became effective 15 days after the date it was published in Official Gazette.

    Decision 1677/2003/QD-NHNN of the Governor of the SBV, dated 31 December 2003, amends Article 2 of Decision 1247/2003/QDNHNN, dated 20 October 2003, of the Governor of the SBV on the Statute on banking code system in settlement transactions through the SBV.

    This Decision became effective 15 days after the date it was published in Official Gazette.

    Official letter 1471/NHNN-CSTT of the Governor of the SBV, dated 24 December 2003, requests branches of the SBV in cities and provinces and credit institutions to prepare sufficient funds to meet payment demands of customers during Tet holiday.

    Official letter 532/CVVP of the SBV, dated 31 December 2003, introduces the signature of Mr Tran Quang Khanh, the newly appointed Director of the Department of Cooperative Credit Institutions of the SBV.

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