On November 30, 2022, the State Bank of Vietnam issued Circular No. 16/2022/TT-NHNN (“Circular 16”), replacing Circular No. 04/2016/TT-NHNN (“Circular 04”) ) dated April 15, 2016 on custody and use of valuable papers at the State Bank of Vietnam (the “SBV”).
Custody of valuable papers at the SBV is understood as the activity of receiving deposit, preserving, transferring and exercising the rights related to the possession of valuable papers by deposited directly at the SBV by depository members or through the client account of the SBV at the Vietnam Securities Depository and Clearing Corporation (“VSDC”) in order to secure the rights and interests related to valuable papers of the owners and to perform a number of operations at SBV.
Several contents related to the custody and use of valuable papers are amended and supplemented in Circular 16, specifically as follows:
1. Supplementing types of valuable paper to be deposited at the SBV
Valuable papers include:
- SBV bills;
- Government Bonds;
- Bonds of which 100% of principal and interest upon maturity is guaranteed by the Government;
- Local government bonds used in transactions of the SBV according to the Governor's decision from time to time;
- Special bonds, bonds issued directly to credit institutions selling debts to buy bad debts at market value of Vietnam Credit Institution Asset Management Company;
- Bonds issued by commercial banks of which over 50% of charter capital is held by the State (except for commercial banks that have been compulsorily purchased); bonds issued by credit institutions (except credit institutions being under special control) and other enterprises;
- Other valuable papers decided by the Governor of the SBV from time to time.
2. Supplement depository members at the SBV
Article 10.2 of Circular No. 16/2019/TT-NHNN dated October 22, 2019 on the issuance of State Bank bills stipulated: “Deposit Insurance of Vietnam is entitled to purchase SBV bills from a credit institution under an agreement which it enters into with that credit institution”. Therefore, in order to create consistency among legal regulations, Circular 16 allowed the Deposit Insurance of Vietnam to open a valuable paper depository account at the SBV.
Accordingly, depository members at the SBV include:
- Deposit Insurance of Vietnam;
- Credit institutions;
- Foreign bank branches;
- Other organizations upon the decision of the Governor of the SBV.
3. Supplement new operations related to the use of valuable papers deposited at the SBV
Using valuable papers in money market operations:
- Open market operations;
- Refinancing;
- Pledge valuable papers to set overdraft limit and overnight loans in interbank electronic payment;
- Pledge and deposit valuable papers to establish net debt limit in banking-related electronic payments;
- Pledge and deposit valuable papers to establish centralized payment limit;
- Pledge and deposit valuable papers to establish electronic clearing limit through the Electronic Clearing System;
- Pledge and deposit valuable papers to establish other operations upon the decision of the Governor of the SBV from time to time.
Using valuable papers in special lending operations for specially controlled credit institutions.
4. Supplement regulations related to information changes of depository accounts of valuable papers
When there is a change in information, the member must notify and send relevant legal documents to the SBV within 15 working days from the date the changed information arises.
Notes on the transitional effect of Circular 16 in the following cases:
- Credit institutions, foreign bank branches and other organizations that already have a valuable paper depository account opened at the SBV under Circular 04, may continue to use that account to perform transactions pursuant to Circular 16 without having to register a new account;
- Transactions made before January 17, 2023 related to valuable papers subject to Circular 16 but has yet deposited at the SBV, shall continue to be performed upon the agreement between the parties.
Circular 16 shall effect from January 17, 2023.
Comment: