THE STATE BANK OF VIETNAM |
THE SOCIALIST REPUBLIC OF VIETNAM |
No. 21/2024/TT-NHNN |
Hanoi, June 28, 2024 |
PROVIDING FOR LETTER OF CREDIT OPERATIONS AND OTHER BUSINESS ACTIVITIES RELATED TO LETTERS OF CREDIT
Pursuant to the Civil Code dated November 24, 2015;
Pursuant to the Law on the State Bank of Vietnam dated June 16, 2010;
Pursuant to the Law on Credit Institutions dated January 18, 2024;
Pursuant to the Ordinance on Foreign Exchange dated December 13, 2005; Ordinance on Amendments to some Articles of the Ordinance on Foreign Exchange dated March 18, 2013;
Pursuant to the Government’s Decree No. 102/2022/ND-CP dated December 12, 2022 defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam;
At the request of the Director General of the Department of Credit for Economic Sectors and the Director General of the Department of Foreign Exchange Management;
The Governor of the State Bank of Vietnam hereby promulgates a Circular providing for letter of credit operations and other business activities related to letters of credit.
This Circular stipulates letter of credit operations (hereinafter referred to as “L/C operations”) (except for standby letter of credit operations) and other business activities related to L/C provided by credit institutions (hereinafter referred to as “CIs”) and foreign bank branches (hereinafter referred to as “FBBs”) to customers.
1. CIs and FBBs that are entitled to perform L/C operations and other business activities related to L/C consist of commercial banks, cooperative banks and FBBs (hereinafter referred to as “banks”).
2. Individuals and organizations that are residents and non-residents related to L/C operations and other business activities related to L/C.
For the purposes of this Circular, the terms below shall be construed as follows:
1. “L/C operation” means a form of credit extension through issuance, confirmation, negotiation of payment or reimbursement of L/C to serve the purchase and sale of goods and services.
2. “other L/C-related business activities” mean the outright purchase without recourse of a set of documents presented under an L/C and the services provided by a bank to customers in addition to the services provided by the bank in the process of providing L/C operations for customers.
3. “letter of credit (L/C)” means any irrevocable undertaking of an issuing bank to pay the beneficiary on the basis of the received set of documents under a complying presentation.
4. “issuance of L/C” means an issuing bank extending credit to a customer through issuance of an L/C to a beneficiary at the customer’s request. The customer must accept the debt and fully pay the principal, interest and fees as agreed in case the bank must make payment to the beneficiary using its own funds or request another bank to make payment on the customer's behalf.
5. “confirmation of L/C” means a confirming bank undertaking to paying the beneficiary on the basis of the received set of documents under a complying presentation at the request of the issuing bank, in addition to the issuing bank's undertaking.
6. “payment negotiation” means a negotiating bank buying forward or purchasing in the form of recourse factoring a set of documents presented under an L/C (with or without bills of exchange) from the beneficiary before the payment is due.
7. “reimbursement of L/C” means a reimbursing bank agreeing with an issuing bank on the payment made using its own funds to the beneficiary or a reimbursing bank undertaking pay the beneficiary at the request of the issuing bank, in addition to the issuing bank's undertaking.
8. “outright purchase without recourse of a set of documents presented under L/C” means a bank buying a set of documents and receive the unpaid documents from the customer. The bank will receive a payment from the issuing bank or confirming bank and has no recourse against the customer in case it does not receive the payment in full from the issuing bank or confirming bank.
9. “set of documents under L/C” means the documents which are presented so as for a payment to be made as specified in the L/C.
10. “beneficiary” means the seller or exporter of goods or services as specified in an L/C or the party for whom, and for whose benefit, an LC is issued.
11. “applicant” means the buyer or importer of goods or services requesting a bank issue an L/C.
12. “customer” means an organization (including overseas bank or overseas CI) or an individual. To be specific:
a) In the case of issuing L/C, customer of the issuing bank is the applicant;
b) In the case of confirming L/C, customer of the confirming bank is the issuing bank;
c) In the case of negotiating payment, customer of the negotiating bank is the beneficiary requesting the bank to negotiate payment;
d) In the case of reimbursing L/C, customer of the reimbursing bank is the issuing bank;
dd) In the case of other L/C-related business activities, customer of the bank is the party to whom or to which services are provided or the party requesting the bank to make outright purchase without recourse of the set of documents presented under L/C.
13. “international commercial practice for L/C” mean uniform rules, customs and practice for L/C issued by the International Chamber of Commerce and other commercial practices not contrary to basic principles of Vietnamese law, which are agreed upon by the parties.
14. “agreement on credit extension serving L/C operations” means an agreement between the issuing bank, confirming bank, negotiating bank or reimbursing bank with the customer and other related parties (if any) on the extension of credit to the customer through issuance, confirmation, negotiation of payment and reimbursement of L/C.
15. “L/C due date” means the last due date of payment to the beneficiary in accordance with the terms of payment under the L/C.
16. “customer’s loan” means an amount of money the applicant borrows from a CI or an FBB or a foreign lender to pay for a contract for sale of goods or services (hereinafter referred to as “sales contract”) according to regulations of law on lending transactions of CIs and FBBs with customers, on foreign currency loans granted to residents by CIs and FBBs, management of foreign borrowing and repayment of foreign loans which are not guaranteed by the Government or management of foreign exchange with regard to CIs’ grant of foreign loans and collection of debts thereof.
17. “capital use plan in L/C operations” means a collection of information about the use of capital by a customer, including at least the following information: source of funds for honoring obligations committed under an L/C; purposes of issuing or confirming or negotiating or reimbursing the L/C.
18. “L/C issuance trust” means a fiduciary relationship in which one party, known as the trustor, gives another party, known as the trustee, the monetary assets so as for the trustee to issue L/C to the beneficiary and serve the applicant that is the trustor’s customer. The trustor assumes all risks incurred by its customers, while the trustee assumes all risks incurred by the trustor.
19. “trustor” means an overseas bank or overseas CI (being a parent bank or branch of the parent bank of the FBB, branch or subsidiary that is an overseas CI of a commercial bank) entrusting the trustee with issuing L/C to the beneficiary.
20. “trustee” means a bank that issues L/C to the beneficiary as entrusted by the trustor.
1. Every bank has its autonomy for performing L/C operations and other L/C-related business activities and assume responsibility for its financial performance.
2. Every bank reserves the right to reject any customer's request for credit extension or provision of other L/C-related business activities if it is found ineffective or unconformable with its internal regulations, regulations in this Circular, international commercial practice for L/C and other relevant regulations of law.
Article 5. Principles of performing L/C operations and other L/C-related business activities
1. Any L/C operation provided by a bank to a customer shall be bound by an agreement between the bank and the customer. Upon performing an L/C operation, the bank must comply with the regulations enshrined in this Circular and relevant regulations of law on credit extension. Other contents regarding L/C operations, the bank shall comply with international commercial practice for L/C.
2. The performance of L/C operations in a foreign currency by a bank must fall within the scope of foreign exchange operations on the domestic and international markets specified in operating license of that bank and comply with regulations of law on scope of foreign exchange operations, conditions and procedures for granting approval of foreign exchange operations of CIs and FBBs, and regulations of law on trading and provision of foreign exchange services on the domestic and international markets by banks.
3. Upon collecting principal, interest and fees in a foreign currency in L/C operations, if a customer does not have or is yet to have enough foreign currency to repay a debt, the customer may buy foreign currency at the bank performing the L/C operations or at another CI or FBB to repay the debt.
Where the customer wishes to buy foreign currency at the bank performing the L/C operations, that bank must sell foreign currency to the customer. Where the customer buys foreign currency at another CI or FBB, that CI or FBB must transfer such foreign currency to the bank performing L/C operations. The customer must sell foreign currency to the CI or FBB that sold foreign currency to the customer as that CI or FBB so wishes in the case where the customer has foreign currency derived from revenues from production and business activities.
4. Upon performing the payment negotiation operation for non-residents, the bank must comply with the regulations set forth in this Circular and relevant regulations of law on management of foreign exchange with regard to grant of foreign loans and collection of debts thereof.
5. Upon performing the operation of issuing, confirming or reimbursing L/C for non-residents, the bank is not required to a specialized foreign currency account at a payment service provider to collect foreign debts using the L/C operation. Where the bank opens a specialized foreign currency account at a payment service provider in Vietnam, the payment service provider shall examine and compare the documents presented by the bank to correctly conduct transactions involving the performance of L/C operations.
6. Each bank shall perform other L/C-related business activities for customers under the agreement between parties in accordance with regulations of this Circular, relevant regulations of law and international commercial practice for L/C.
7. Regulations set out under the Law on Credit Institutions and guidelines of the State Bank of Vietnam (hereinafter referred to as “SBV”) regarding prohibited acts, cases of ineligibility for credit extension, restrictions on credit extension and limits on credit extension shall be complied with.
Article 6. Application of practices and resolution of disputes
1. Parties to L/C operations are entitled to apply commercial practices as prescribed in Article 3 of the Law on Credit Institutions.
2. When applying commercial practice for L/C, the parties shall explicitly state the version thereof.
3. Any dispute arising from L/C operations shall be resolved by agreement between the parties in accordance with the provisions of Vietnamese law. If the dispute involves a foreign element as prescribed in the Civil Code, the parties may agree to the law applied and the dispute resolution agency (including a court or international commercial arbitration center) for resolution.
1. An agreement on credit extension serving L/C operations must be made in Vietnamese, unless it contains foreign elements as prescribed in the Civil Code or is made via an international communication network. In case of using a foreign language, the credit extension agreement must, at the request of a competent authority, be translated into Vietnamese with confirmation of the bank's legal representative or notarized or authenticated and accompanied by a foreign language version.
2. For other documents used in L/C operations (in addition to the agreement on credit extension serving L/C operations), each bank is permitted to agree with relevant parties about the use of foreign language in accordance with international commercial practice for LC. In case of using a foreign language, these documents must, at the request of a competent authority, be translated into Vietnamese with confirmation of the bank's legal representative or notarized or authenticated and is accompanied by a foreign language version.
Article 8. Security for performance of obligations of customers
1. The bank shall agree with the customer about whether to apply any security interest upon performing an L/C operation.
2. In case of agreeing to apply a security interest, the bank and the customer shall adhere to regulations of law on security for performance of obligation and internal regulations of the bank.
3. The customer and the securing party must cooperate with the bank to realize collateral when there are grounds for the realization under the agreement on credit extension serving L/C operations and regulations of law.
Article 9. Balance in L/C operations
1. Balance in L/C operations provided to a customer or a customer and their related person(s) includes balance in issuance of L/C, balance in confirmation of LC, balance in negotiation of payment of L/C, balance in reimbursement or undertaking to reimburse L/C to such customer, such customer and their related person(s).
2. Balance in L/C operations provided to a customer or a customer and their related person(s) is calculated from the date of issuing L/C, confirming L/C, negotiating payment of L/C or reimbursing L/C.
Article 10. Amount of extended credit
Banks and customers shall agree to an amount of extended credit based on the value of the sales contract (in case of L/C issuance) or the value of L/C (in case of L/C confirmation, payment negotiation and reimbursement) and limits on credit extension to the customer so as to issue, confirm, negotiate payment of or reimburse L/C but that amount must not exceed the value of the sales contract between the customer and the beneficiary or the value of the L/C.
Article 11. Currencies used in L/C issuance, conformation, reimbursement and payment
1. The bank and the customer shall agree whether to issue the L/C in Vietnamese dong or foreign currency in order to match the currency payable to the beneficiary under the sales contract.
2. The bank and the customer shall agree to confirm or reimburse the L/C in Vietnamese dong or foreign currency in order to match the currency payable to the beneficiary under the L/C.
3. The issuing bank, confirming bank or reimbursing bank shall pay the beneficiary on the L/C due date using the payment currency written on the L/C.
Article 12. Interest rates on credit extended to customers
1. The bank and the customer shall agree to the interest rates applying to the L/C reimbursement and payment negotiation.
2. The interest rate on overdue principal balance in the case of L/C reimbursement and payment negotiation shall be agreed to by banks under the credit extension agreement but not exceed 150% of the interest rate on extended credit prior to its maturity at the time of debt delinquency.
3. The interest rate on the amount paid by the bank on its behalf in the case of L/C issuance, confirmation and reimbursement must conform to the credit extension agreement but not exceed the highest interest rate currently applying to the overdue loans at that bank.
4. The late payment interest rate shall be agreed to by banks under the credit extension agreement for the L/C operations but not exceed 10%/year of the overdue interest over the late payment period.
5. If a foreign currency is used to perform L/C operations, the parties shall agree to collect interests on L/C operations in the same foreign currency or convert it into Vietnamese dong or another foreign currency at the agreed exchange rate.
Article 13. Fees for L/C operations and other L/C-related business activities
1. The bank shall agree with the customer and related parties (if any) on the collection of fees and rates of fees for credit extension in relation to L/C operations and rates of fees applicable to other L/C-related business activities.
2. Each bank shall openly post fees for operations and other L/C-related business activities.
3. If a foreign currency is used to perform L/C operations, the parties shall agree to collect fees for L/C operations in the same foreign currency or convert it into Vietnamese dong or another foreign currency at the agreed exchange rate.
Article 14. Application for credit extension
Any customer that wishes to be provided with L/C operations must submit the following to a bank:
1. Information, documents and data proving their eligibility for credit extension as prescribed in Article 21, Article 27, Article 31 and Article 40 of this Circular.
2. Information about their related person(s) as prescribed in the Law on Credit Institutions if the total credit extension balance of the customer at the bank (including the requested credit) is greater than or equal to 0.1% of the bank's equity according to latest statistics, except where the customer is an overseas CI. If the equity of the bank is a negative number, the abovementioned percentage shall apply to its charter capital or allocated capital (regarding an FBB). Information about a related person includes:
a) Information about a related person being an individual: full name, personal identification number in case of a Vietnamese citizen; nationality, passport number, date of issue, place of issue in case of a foreigner; relationship with the customer;
b) Information about a related person being an organization: name, enterprise ID number, and headquarters address of the enterprise, number of enterprise registration certificate or another document of equivalent legal effect, legal representative and relationship with the customer.
3. Other documents required by the bank.
Article 15. Carrying out appraisal for credit extension
1. A bank shall appraise the conditions for credit extension applicable to its customer as prescribed in Article 21, Article 27, Article 31 and Article 40 of this Circular to consider deciding the L/C issuance, confirmation, payment negotiation and reimbursement. In the course of appraisal, the bank shall use the internal credit rating system associated with information available at the National Credit Information Center of Vietnam and other communications channels.
2. The bank must establish credit extension approval procedures according to the principle of assignment of responsibilities in the appraisal and decision-making stages.
3. In the event of refusal to extend credit, the bank shall notify the customer of its decision on refusal and reasons for such refusal if the customer so requests.
Each bank shall classify assets and decide amounts established for risk provisions, methods for establishing risk provisions and use of these provisions for risk management regarding the undertakings and assets upon extending credit in L/C operations, making outright purchase without recourse of sets of documents presented under L/C and establishing the L/C issuance trust in accordance with regulations of law on classification of assets, amounts established for risk provisions, methods for establishing risk provisions and use of these provisions for management of risks arising from operations of CIs and FBBs.
Article 17. Banks’ internal regulations on L/C operations
1. Pursuant to regulations of the Law on Credit Institutions, this Circular and other relevant regulations of law, every bank shall promulgate its internal regulations on L/C operations performed for customers (including regulations on electronic L/C operations (if any)), which include the process for performing L/C operations in accordance with regulations on credit extension and business characteristics of the bank.
2. The bank shall send its internal regulations on L/C operations to SBV (Banking Supervision Agency or SBV branch of province or city) as per relevant regulations of law.
Article 18. Electronic L/C operations
1. The bank and the customer are entitled to select to perform L/C operations and other L/C-related business activities by electronic means (hereinafter referred to as “e-L/C operations). The performance of e-L/C operations shall comply with regulations of this Circular; regulations of law on anti-money laundering; e-transactions; personal data protection; safety and security for provision of online services in the banking industry and relevant regulations of law.
2. When identifying a customer and verifying customer identification information via electronic means for customers establishing a relationship with the bank for the first time (except where the customer sends an authenticated SWIFT message or uses electronic signature according to regulations of law), the bank shall follow the instructions below:
a) For the customer being a resident: The bank shall identify the customer and verify customer identification information according to SBV’s regulations on opening and use of checking accounts at payment service providers.
b) For the customer being a non-resident: The bank shall identify the customer and verify customer identification information by way of conducting self-assessment of level of risks to select and decide appropriate measures, methods and technology for e-transaction authentication, ensuring safety and facing all risks that arise.
3. The bank shall decide measures, methods and technology for performance of e-L/C operations for all or each stage in the business process, take all risks (if any) that arise and meet the following minimum requirements:
a) Measures, methods and technology selected by the bank must satisfy security, safety, and confidentiality standards according to SBV’s regulations;
b) E-transaction authentication methods shall be adopted to confirm the customer's agreement with the bank when conducting e-transactions in the process of performing e-L/C operations in accordance with relevant regulations of law.
c) Documents, information and customer identification data shall be fully stored and preserved during the process of performing e-L/C operations. Information and data must be stored safely, kept confidential and backed up and the adequacy and integrity of data must be assured to serve the examination, comparison and authentication of customers in the course of performing e-L/C operations; tracing requests, complaints and disputes must be resolved and information must be provided at the request of competent authorities. Period of storage and preservation shall comply with regulations of law on anti-money laundering and law on e-transactions;
d) The bank must inspect and evaluate the level of safety and confidentiality of measures, methods and technology and suspend services to upgrade, modify and perfect them in case safety is threatened;
dd) Responsibility shall be delegated to each individual or division in charge of building, establishing and operating the information system in service of credit appraisal and decision on credit extension in e-L/C operations. In case any risk arises, a mechanism should be in place to identify each responsible individual or division and promptly handle the issues and risks that arise to ensure efficiency and safety during performance of e-L/C operations.
4. The information system serving e-L/C operations must satisfy level-3 or higher-level information system security requirements laid down in regulations of law on assurance of security of information systems by classification and SBV’s regulations on information system security in banking operations.
1. Banks performing L/C operations have the following rights:
a) Accept or reject customers’ request in performance of L/C operations;
b) Request customers and related parties to provide information, documents and data related to appraisal of credit and collateral (if any);
c) Request customers to fully pay the agreed principal, interest and fees;
d) Initiate a lawsuit according to provisions of law as any related party is in breach of their committed obligations;
dd) Other rights agreed upon by the parties in accordance with relevant regulations of law and international commercial practice for L/C.
2. Banks performing L/C operations have the following obligations:
a) Honor their undertakings to customers;
b) Other obligations agreed upon by the parties in accordance with regulations of this Circular and international commercial practice for L/C.
Article 20. Rights and obligations of customers
1. Customers have the following rights:
a) Reject bank’s requests which are unconformable with signed agreements on credit extension serving L/C operations and regulations of law;
b) Initiate a lawsuit according to provisions of law as any related party is in breach of their committed obligations;
c) Other rights under agreement with banks in accordance with international commercial practice for L/C.
2. Customers have the following obligations:
a) Provide information, documents and data to banks in a truthful, accurate, adequate and timely manner to prove that they meet all conditions for credit extension and take responsibility for the information, documents and data provided;
b) Fully pay the agreed principal, interest and fees in accordance with international commercial practice for L/C;
c) Other obligations under agreement with banks and regulations of law.
Article 21. Conditions to be satisfied by customers
1. A bank shall consider and decide the issuance of an L/C if a customer fully satisfies the following conditions:
a) They have civil legal personality and capacity for civil acts as prescribed by law;
b) They have the need to open an L/C to serve their legal sale of goods and services;
c) They have a feasible capital use plan;
d) They are financially capable of paying for the sales contract.
2. Where the customer is a non-resident, the bank (except for the FBB issuing L/C in a foreign currency as prescribed in clause 3 of this Article) shall only consider and decide the issuance of an L/C to the customer if they satisfy the conditions set out in clause 1 of this Article and one of the following requirements:
a) The customer is an enterprise established and operating in a foreign country with capital contributed from a Vietnamese enterprise in the form of investment prescribed in points a and c clause 1 Article 52 of the Law on Investment or in other investment form prescribed in point dd clause 1 Article 52 of the Law on Investment;
b) 100% of the L/C value shall be secured by the customer's assets, including their deposits and deposit certificates at the issuing bank or the amount that the customer will be paid from another L/C issued by the bank to the beneficiary being the customer;
c) The beneficiary is a resident.
3. Each FBB shall only consider and decide the issuance of an L/C in a foreign currency to any customer being a non-resident provided that they fully meet the conditions set forth in clause 1 of this Article and the beneficiary is a resident.
Article 22. Time limit for credit extension in L/C issuance
1. The time limit for credit extension in L/C issuance means a period of time beginning from the day following the date of issuing an L/C to the L/C due date but must not exceed the remaining duration of legal operation of the bank and the customer.
2. The extension of the time limit for credit extension in L/C issuance shall be agreed to by the parties in accordance with international commercial practice for L/C.
Article 23. Credit extension agreement in L/C issuance
1. A credit extension agreement shall contain the following main details:
a) Information about the parties in L/C issuance;
b) Requested currency and amount;
c) A sales contract;
d) Type of L/C;
dd) Source of funds for paying for the sales contract;
e) Fees, interest rates, penalty interest rate (if any) applied;
g) Security interest (if any);
h) Compulsory indebtedness, deduction from escrow account, deposit account (if any);
i) Trading of foreign currency (if any);
k) L/C due date;
l) Time limit for credit extension;
m) Resolution of disputes that arise;
n) Other details not contrary regulations of law.
2. The credit extension agreement shall secure rights and obligations of the parties and be made in the form of a credit extension agreement individually applying to each specific transaction in L/C issuance or a framework agreement generally applying to all transactions in L/C issuance, accompanied by a specific agreement.
1. According to the credit extension agreement, the bank shall issue an L/C to the beneficiary. Details of L/C and the amendment or annulment of the L/C shall be agreed to by the parties and conform to international commercial practice for L/C.
2. Banks are entitled to issue types of L/C under agreement with customers in accordance with international commercial practice for L/C.
3. A bank is only entitled to issue deferred payment L/C with terms of sight payment or advanced payment before the L/C due date in case the customer is a resident.
Article 25. Fulfillment of obligations committed under L/C
1. The issuing bank shall pay the beneficiary in accordance with regulations set out in the L/C and international commercial practice for L/C.
2. Where a bank issues a sight or deferred payment L/C, the bank shall agree with the customer about the deduction of the escrow account or deposit account (if any) or use of loans of the customer so as for the former to make payment to the beneficiary. Where the customer's amount is not sufficient to pay the beneficiary, the customer must be indebted to the bank for the arrears. The customer is obliged to fully pay the indebtedness amount, interest and fees as prescribed in Articles 12 and 13 of this Circular.
3. In case a bank issues a deferred payment L/C which contains a provision that the beneficiary is entitled to receive sight payment or advanced payment before the L/C due date, the parties shall follow the instructions below:
a) The issuing bank shall request the reimbursing bank to pay the beneficiary. Where the beneficiary is a non-resident, the issuing bank shall only request the reimbursing bank being the non-resident to pay the beneficiary;
b) As the reimbursing bank pays the beneficiary, the issuing bank must be indebted to the reimbursing bank and the bank must also be indebted to the reimbursing bank for the amount paid by the latter to the beneficiary as committed under the L/C. The banks shall record the debt incurred by the customer upon being notified by the reimbursing bank. The reimbursing bank and issuing bank must include such outstanding debt in the total credit extension balance of the customer;
c) On the L/C due date, the customer is obliged to fully pay the indebtedness amount and interest to the issuing bank and the issuing bank is obliged to fully pay the indebtedness amount, interest and fees to the reimbursing bank as prescribed in Articles 12 and 13 of this Circular.
d) In case the customer fails to fully pay the indebtedness amount to the issuing bank by the L/C due date, the issuing bank shall convert the principal amount that the customer fails to repay by the due date into delinquent debt. The issuing bank must notify the customer of such debt delinquency. The notification shall contain at least the outstanding amount of overdue principal, time of debt delinquency and interest rate charged for that overdue principal amount as prescribed in Article 12 of this Circular;
dd) In case the issuing bank fails to pay the indebtedness amount to the reimbursing bank, the reimbursing bank shall comply with the regulation set out in point c clause 3 Article 43 of this Circular, unless the reimbursing bank is a non-resident;
e) The parties may agree to pay the indebtedness amount prior to the L/C due date and exit fee for payment of debt before the due date.
4. In case the issuing bank requests the reimbursing bank being a non-resident to pay the beneficiary as prescribed in clause 3 of this Article, the issuing bank shall comply with regulations of law on management of enterprise’ foreign borrowing and repayment of foreign debts which are not guaranteed by the Government.
5. In the event of debt in a foreign currency, the customer shall pay it in the same foreign currency or convert the foreign currency into Vietnamese dong or another foreign currency at the agreed exchange rate.
Article 26. Syndicated loans in L/C issuance
1. Banks shall co-issue L/C according to the principles, conditions and procedures prescribed in this Circular, SBV’s regulations on grant of syndicated loans to customers by CIs and FBBs and relevant regulations of law.
2. In case the L/C is co-issued by the bank and an overseas CI and the customer is a resident, the customer must adhere to the regulations set out in this Circular and regulations of law on management of enterprise’ foreign borrowing and repayment of foreign debts which are not guaranteed by the Government.
Section 2. CONFIRMATION OF L/C
Article 27. Conditions to be satisfied by customers
1. A bank shall consider and decide the confirmation of an L/C if a customer fully satisfies the following conditions:
a) The L/C issued by the customer to serve their legal sale of goods and services;
b) They have a feasible capital use plan;
c) They are financially capable of honoring the obligations committed under the L/C.
2. The bank is not required to consider the condition specified in point c clause 1 of this Article applicable to the customer in the following cases:
a) The customer is a parent bank or branch in the system in Vietnam of the FBB’s parent bank;
b) The customer is a CI being a commercial bank’s overseas branch.
3. Where the customer is a non-resident, the bank (except for the FBB confirming L/C in a foreign currency as prescribed in clause 4 of this Article) shall only consider and decide the confirmation of the L/C for the customer if they satisfy the conditions set out in clauses 1 and 2 of this Article and one of the following requirements:
a) The customer is an overseas CI being the branch or subsidiary of a commercial bank; is a parent bank or branch in the system in Vietnam of the FBB’s parent bank;
b) 100% of the L/C value shall be secured by the customer's assets, including their deposits and deposit certificates at the confirming bank;
c) The beneficiary of the L/C is a resident.
4. Each FBB shall only consider and decide the confirmation of an L/C in a foreign currency to any customer being a non-resident provided that they fully meet the conditions set forth in clauses 1 and 2 of this Article and the beneficiary is a resident.
Article 28. Time limit for credit extension in L/C confirmation
The time limit for credit extension in L/C confirmation means a period of time beginning from the day following the date of confirming an L/C to the L/C due date but must not exceed the remaining duration of legal operation of the bank and the customer.
Article 29. Credit extension agreement in L/C confirmation
1. A credit extension agreement in L/C confirmation shall contain the following main details:
a) Information about related parties, including issuing bank, confirming bank, applicant, beneficiary and other related parties (if any);
b) Information about the L/C, security interest (if any), other information requested by the confirming bank;
c) Requested currency and amount;
d) Time limit for credit extension upon L/C confirmation;
dd) Fees, interest rates, penalty interest rate (if any).
2. The credit extension agreement shall be made in the form of a credit extension agreement individually applying to each specific transaction in L/C issuance or a framework agreement generally applying to all transactions in L/C confirmation, accompanied by a specific agreement.
Article 30. Fulfillment of obligations confirmed under L/C
1. The confirming bank shall pay the beneficiary in accordance with regulations set out in the L/C and international commercial practice for L/C.
2. The confirming bank shall agree with the customer about the deduction of the latter's escrow account or deposit account (if any) or the customer shall transfer their payment to the confirming bank’s nominated account so as for the confirming bank to confirm the fulfillment of obligation to pay the beneficiary. Where the customer's amount is not sufficient to pay the beneficiary, the customer must be indebted to the confirming bank for the arrears. The customer is obliged to fully pay the indebtedness amount, interest and fees to the confirming bank as prescribed in Articles 12 and 13 of this Circular.
3. In the event of debt in a foreign currency, the customer shall pay it in the same foreign currency or convert the foreign currency into Vietnamese dong or another foreign currency at the agreed exchange rate.
Section 3. PAYMENT NEGOTIATION
Article 31. Conditions to be satisfied by customers
1. A bank shall consider and decide the payment negotiation if a customer fully satisfies the following conditions:
a) They have full civil legal personality and capacity for civil acts as prescribed by law;
b) The L/C is meant to serve legal sale of goods and services;
c) The set of documents satisfies the conditions mentioned in Article 32 of this Circular;
d) They have a feasible capital use plan;
dd) They are financially capable of reimbursing the amount for which payment negotiation is requested.
2. Where the customer is a non-resident, the bank (except for the FBB negotiating payment in a foreign currency as prescribed in clause 3 of this Article) shall only consider and decide the negotiation of payment for the set of documents under the L/C for the customer if they satisfy the conditions set out in clause 1 of this Article and one of the following requirements:
a) The customer is an enterprise established and operating in a foreign country with capital contributed from a Vietnamese enterprise in the form of investment prescribed in points a and c clause 1 Article 52 of the Law on Investment or in other investment form prescribed in point dd clause 1 Article 52 of the Law on Investment;
b) The bank issuing the L/C is a resident.
3. Each FBB shall only consider and decide the negotiation of payment for the set of documents under L/C in a foreign currency for any customer being a non-resident provided that they fully meet the conditions set forth in clause 1 of this Article and the bank issuing the L/C is a resident.
1. Any L/C accompanied by a set of documents presented for payment negotiation shall be issued in accordance with international commercial practice for L/C.
2. The customer is the lawful beneficiary of the set of documents.
3. Payment for the set of documents is yet to be made.
Article 33. Foreign currency in payment negotiation
1. For the sets of documents under L/C issued in Vietnamese dong, banks shall negotiate payment in Vietnamese dong for customers.
2. For the sets of documents under L/C issued in a foreign currency, banks shall negotiate payment in the foreign currency written on the L/C or convert it into Vietnamese dong or another foreign currency at the agreed exchange rate.
1. For the sets of documents negotiated to be paid for in Vietnamese dong, the currency used for reimbursement shall also be Vietnamese dong.
2. For the sets of documents negotiated to be paid for in a foreign currency, the currency used for reimbursement shall also be foreign currency or converted into Vietnamese dong or another foreign currency at the agreed exchange rate.
Article 35. Methods of payment negotiation
Banks and customers shall agree to and select the following methods of payment:
1. Buying forward of a set of documents under an L/C which refers to an instance where a bank buys and receives the set of documents under the L/C that are not mature from the customer and the customer must undertake to reimburse the amount for which payment negotiation is requested, interest rate and fees after a definite amount of time specified in the payment negotiation agreement.
2. Purchase of a set of documents presented under an L/C in the form of recourse factoring which refers to an instance where a bank buys and receives the set of documents that is not mature from the customer and the bank is entitled to claim the remaining from the customer in case the bank does not receive the payment in full from the bank responsible for paying for the set of documents by the L/C due date. The bank shall reimburse the amount for which payment negotiation is requested, interest rate applying to payment negotiation and other legitimate costs related to the payment negotiation in case the bank does not receive the payment in full from the bank responsible for paying for the set of documents.
Article 36. Prices, time limit and interest rates upon payment negotiation and related costs
1. Banks and customers shall agree to purchase and repurchase prices of sets of documents on the basis of payment value on the due date, level of risks of the sets of documents, interest rate applying to payment negotiation, term to maturity of the sets of documents and other factors.
2. The time limit for making negotiated payment using the method “buying forward” shall be agreed upon by the bank and the customer but not exceed 01 year and the term to maturity of a set of documents.
3. The time limit for making negotiated payment using the method “purchase in the form of recourse factoring” shall be agreed upon by the bank and the customer but not exceed 01 year and the ending date of the time limit for recourse. The time limit for recourse shall be agreed upon by the bank and the customer, beginning from the day following the L/C due date to the date on which the customer must fully pay the bank the amount that the person responsible for paying for the set of document failed to pay.
4. The interest rate applying to payment negotiation and other costs related to the payment negotiation shall be agreed upon by the bank and the customer and conform to regulations of law.
5. The penalty interest rate on the overdue amount of payment negotiation shall be agreed upon by the bank and the customer in conformity with Article 12 of this Circular.
Article 37. Payment negotiation agreement
1. A payment negotiation agreement shall contain at least the following details:
a) Information about related parties, including negotiating bank, beneficiary and other related parties (if any);
b) Information about the set of documents under L/C, other information requested by the negotiating bank;
c) Price of payment negotiation;
d) Currency in payment negotiation;
dd) Methods of payment negotiation;
e) Time limit for payment negotiation;
g) Interest rate, penalty interest rate and related costs;
h) Cases where the payment negotiation agreement is terminated ahead of schedule (if any);
i) Actions against violations;
k) Effect of the payment negotiation agreement;
l) Other details agreed upon by the parties in conformity with regulations of law.
2. The parties may agree to make a payment negotiation agreement individually applying to each specific transaction in payment negotiation or a framework agreement generally applying to all transactions in payment negotiation, accompanied by a specific agreement.
Article 38. Procedures for negotiating payment for sets of documents
1. As a bank agrees to make the negotiated payment to a customer, the customer shall transfer the set of documents to the bank as prescribed by law.
2. Payment negotiation procedures must be elaborated in the bank’s internal regulations on payment negotiation.
1. In case of buying forward a set of documents: If the customer fails to pay debt by the due date, the bank shall convert the amount that the customer failed to pay into delinquent debt. On the L/C due date, if the payment for L/C is lower than the amount which the bank negotiates to pay the customer plus fees and interest, the bank shall continue to monitor this difference and adopt debt recovery methods.
2. In case of purchasing a set of documents in the form of recourse factoring: If the customer fails to pay debt to the bank upon the expiry of the recourse time limit specified in the payment negotiation agreement between the bank and the customer, the bank shall convert the amount negotiated to be paid to the customer into delinquent debt and adopt debt recovery methods.
3. The bank must notify the customer of the debt delinquency specified in clauses 1 and 2 of this Article. The notification shall contain at least the outstanding amount of overdue principal, time of debt delinquency and interest rate charged for that overdue principal amount.
Section 4. REIMBURSEMENT OF L/C
Article 40. Conditions to be satisfied by customers
1. A bank shall consider and decide the reimbursement of an L/C at the request of a customer if they fully satisfy the following conditions:
a) The L/C issued by the customer to serve their legal sale of goods and services;
b) They have a feasible capital use plan;
c) They are financially capable of paying debts.
2. The bank is not required to consider the condition specified in point c clause 1 of this Article applicable to the customer in the following cases:
a) The customer is a parent bank or branch in the system in Vietnam of the FBB’s parent bank;
b) The customer is a CI being a commercial bank’s overseas branch.
3. Where the customer is a non-resident, the bank (except for the FBB reimbursing L/C in a foreign currency as prescribed in clause 4 of this Article) shall only consider and decide the reimbursement of an L/C to the customer if they satisfy the conditions set out in clauses 1 and 2 of this Article and one of the following requirements:
a) The customer is an overseas CI being the branch or subsidiary of a commercial bank; is a parent bank or branch in the system in Vietnam of the FBB’s parent bank;
b) 100% of the L/C value shall be secured by the customer's assets, including deposits and deposit certificates at the reimbursing bank;
c) The beneficiary of the L/C is a resident.
4. Each FBB shall only consider and decide the reimbursement of an L/C in a foreign currency to any customer being a non-resident provided that they fully meet the conditions set forth in clauses 1 and 2 of this Article and the beneficiary is a resident.
Article 41. Time limit for credit extension in L/C reimbursement
1. In case of reimbursing an L/C in the form of an agreement with the customer to make payment using the reimbursing bank’s funds, the time limit for credit extension in L/C reimbursement means a period of time beginning from the day following the date on which the reimbursing bank makes payment to the beneficiary until the due date of the amount of extended credit but must not exceed the L/C due date and not exceed 01 year and remaining duration of operation of the bank and the customer.
2. In case of reimbursing an L/C in the form of issuing a reimbursement undertaking, the time limit for credit extension in L/C reimbursement means a period of time beginning from the day following the date of issuing the L/C reimbursement undertaking to the L/C due date but must not exceed the remaining duration of legal operation of the bank and the customer.
Article 42. Credit extension agreement in L/C reimbursement
1. A credit extension agreement in service of L/C reimbursement shall contain the following main details:
a) Information about related parties, including issuing bank, reimbursing bank, applicant, beneficiary and other related parties (if any);
b) Information about the L/C, security interest (if any), other information requested by the reimbursing bank;
c) Requested currency and amount;
d) Time limit for credit extension upon L/C reimbursement;
dd) Fees for reimbursement of L/C, interest rates, penalty interest rate (if any).
2. The parties may agree to make an L/C reimbursement agreement individually applying to each specific transaction in L/C reimbursement or a framework agreement generally applying to all transactions in L/C reimbursement, accompanied by a specific agreement.
Article 43. Issuance of undertakings and fulfillment of obligations to reimburse L/C
1. In case of reimbursing an L/C in the form of issuing a reimbursement undertaking, the bank issuing the reimbursement undertaking shall rely on the credit extension agreement to reimburse the L/C to the beneficiary. Details of the reimbursement undertaking and the amendment or annulment of the reimbursement undertaking shall be agreed to by the parties and conform to international commercial practice for L/C.
2. The reimbursing bank shall pay the beneficiary at the request of the customer or the beneficiary on the basis of adhering to international commercial practice for L/C.
3. In case of reimbursing an L/C in the form of an agreement with the customer to make payment using the reimbursing bank’s funds:
a) As the reimbursing bank pays the beneficiary at the customer’s request, the reimbursing bank must record the amount paid by the reimbursing bank to the beneficiary as a debt to be incurred by the customer according to the undertaking in the L/C;
b) On the L/C due date, the customer is obliged to fully pay the indebtedness amount, interest and fees to the reimbursing bank as prescribed in Articles 12 and 13 of this Circular;
c) In case the customer fails to fully pay the indebtedness amount to the reimbursing bank by the L/C due date, the reimbursing bank shall convert the principal amount that the customer fails to repay by the due date into delinquent debt. The reimbursing bank must notify the customer of the debt delinquency. The notification shall contain at least the outstanding amount of overdue principal, time of debt delinquency and interest rate charged for that overdue principal amount as prescribed in Article 12 of this Circular.
4. In case of reimbursing an L/C in the form of issuing a reimbursement undertaking, the reimbursing bank shall agree with the customer about the deduction of the latter’s escrow account or deposit account (if any) or the customer shall transfer their payment to the reimbursing bank’s nominated account so as for the reimbursing bank to fulfill its obligation to pay the beneficiary. Where the customer's amount is not sufficient to pay the beneficiary, the customer must be indebted to the reimbursing bank for the arrears. The customer is obliged to fully pay the indebtedness amount, interest and fees to the reimbursing bank as prescribed in Articles 12 and 13 of this Circular.
5. In the event of a foreign currency debt, the customer shall pay it in the same foreign currency or convert the foreign currency into Vietnamese dong or another foreign currency at the agreed exchange rate.
Section 5. OFFER AND ACCEPTANCE OF L/C ISSUANCE TRUSTEESHIP
Article 44. Conditions for offer and acceptance of the trusteeship to/from banks
A bank is eligible for the offer and acceptance of L/C issuance trusteeship if it fully meets the following conditions:
1. Trusteeship offer and acceptance transactions must be specified in the license for its establishment and operation.
2. It is required to set out the internal regulations on management of trusteeship offer and acceptance transactions under which risks to such transactions must be identified, weighed and managed in conformity with the operating characteristics and scope of the bank.
3. All risks incurred from the trusteeship offer and acceptance transactions must be managed by a risk management unit.
4. The trustee must provide necessary facilities, network and staff of professional, skilled and well-trained personnel that are required to fulfill their fiduciary duties.
5. The trustee must consider and evaluate the financial capacity for the distribution of trust property by the trustor before considering and deciding the acceptance of L/C issuance trusteeship.
1. The trust must be established in the form of an agreement and conform to the regulations specified in Article 46 of this Circular and relevant regulations of law.
2. The trustee is not permitted to delegate the trusteeship to the third party.
3. The trust property must be transferred by the L/C due date.
4. The trustee is not permitted to misuse the trust property and breach their contractual fiduciary duties as agreed upon in the trust agreement.
5. The trustor must include the balance of entrusted accounts in the total credit extension balance of the customer, the trustee must total credit extension balance of the trustor in accordance with regulations of law on prudential ratios and limits in operations of banks and FBBs.
6. FBBs entrusted by the parent banks or branches of the parent banks in foreign countries with the issuance of L/C; commercial banks entrusted by the branches or subsidiaries of the banks in foreign countries with the issuance of L/C and relevant parties shall comply with regulations laid down in this Circular and regulations of law on foreign borrowing and repayment of foreign loans, exchange management as well as other relevant regulations of law.
7. Entrusted assets in foreign currencies must conform to regulations of law on foreign exchange management and other relevant regulations of law.
8. The trustor and the trustee must carry out the debt classification and establish provisions for risk management with respect to the balance of the trustor’s assets held in trust in accordance with regulations of law on classification of assets, amounts established for risk provisions, methods for establishing risk provisions and use of these provisions for management of risks arising from operations of CIs and FBBs.
9. Banks are not permitted to delegate the trusteeship for L/C issuance to the applicant in the cases of ineligibility for credit extension set out under the Law on Credit Institutions.
1. A trust agreement must consist of at least the following information:
a) Information about the trustor and the trustee;
b) Information relating to the applicant, the beneficiary, sales contract and other related information as the basis for issuance of L/C;
c) Fiduciary purpose;
d) Fiduciary scope, terms and conditions;
dd) Trust term;
e) Fiduciary fee, penalty interest rate (if any);
g) Trust property; the time of transferring the trust property;
h) Agreed currencies used for the trust;
i) Rights and obligations of the trustor and trustee, which must clearly mandate that the trustor shall take all risks from their customers and be entitled to the benefit or interest of the trust, and the trustee shall take all risks from the trustor and be entitled to trust fees;
k) Dispute settlement.
2. In addition to the information mentioned in clause 1 of this Article, the trust agreement can enclose other information agreed by contracting parties in conformity with regulations laid down in this Circular and relevant regulations of law.
Trust term which shall be agreed upon by the trustor and the trustee refers to the period of time that begins from the date on which the trustee commences issuing an L/C until the date on which the trustee makes payment to the beneficiary specified in the trust agreement.
The trustor and the trustee shall agree to the trust fee that is paid by the trustor to the trustee for issuance of L/C, specified in the trust agreement and conforms to regulations of law.
Article 49. Fulfillment of obligations committed under L/C
1. The issuing bank being the trustee must pay the beneficiary in accordance with regulations set out in the L/C and international commercial practice for L/C.
2. On the L/C due date, the trustee shall agree with the trustor about the deduction of the latter’s escrow account or deposit account (if any) or the trustor shall transfer an amount to the trustee’s nominated account to fulfill the obligation to pay the beneficiary.
Where the trustor’s amount is not sufficient to pay the beneficiary, the trustor must be indebted to the trustee for the arrears paid by the trustee to the trustor. The trustor is obliged to fully pay the indebtedness amount and penalty interest as agreed in the trust agreement.
3. On the L/C due date, the trustor about shall deduct its escrow account or deposit account (if any) and use the customer’s loan as agreed to transfer an amount to the trustee to fulfill the obligation to pay the beneficiary.
Where the customer's amount is not sufficient to pay the beneficiary, the customer must be indebted to the trustor for the arrears. The customer is obliged to fully pay the indebtedness amount, interest and fees as prescribed in Articles 12 and 13 of this Circular.
Article 50. Rights and obligations of the trustor
1. The trustor shall be vested with the following rights:
a) Request the trustee to provide documentary evidences proving that the trustee has obtained permission to perform L/C operations as prescribed by law;
b) Request the trustee to report and provide documents, information and data on the status and result of trust agreement execution;
c) Supervise and inspect the compliance of the trustee with their fiduciary duties and scope defined in the trust agreement;
d) Exercise other rights in accordance with provisions enshrined in the trust agreement and regulations of law.
2. The trustor shall take on the following obligations:
a) Consider and assess whether the trustee is sufficiently competent to issue L/C;
b) Transfer the title to or ownership of property held in trust to the trustee to fulfill payment obligations as committed under L/C by the L/C due date specified in in the trust agreement;
c) Provide the trustee with documents, information and data pertaining to their fiduciary duties specified in the trust agreement and take responsibility for the truthfulness, accuracy, adequacy and timeliness of such documents, information and data;
d) Pay fiduciary fees and penalty interest (if any) to the trustee as specified in the trust agreement;
dd) Discharge other obligations in accordance with provisions enshrined in the trust agreement and regulations of law.
Article 51. Rights and obligations of the trustee
1. The trustee shall be vested with the following rights:
a) Refuse any of requests of the trustor pertaining to scope and terms and conditions of the trust which is not agreed in the trust agreement, or infringes regulations of law;
b) Receive fiduciary fees and penalty interest (if any) in accordance with terms and conditions of the trust agreement;
c) Request the trustor to provide necessary information, documents and data pertaining to the trust as specified in the trust agreement and as requested by related parties;
d) Exercise other rights in accordance with provisions enshrined in the trust agreement and regulations of law.
2. The trustee shall take on the following obligations:
a) Consider and assess scope of the trustor in order to ensure that the trustor is permitted to perform L/C operations as prescribed by law;
b) Conform to fiduciary duties and scope as agreed upon in the trust agreement;
c) Inform the trustor about the issuance of L/C and making of payment to the beneficiary in a timely and sufficient manner as specified in the trust agreement;
d) Transfer all of the legal benefits and related documents (if any) to the trustor as specified in the trust agreement;
dd) Discharge other obligations in accordance with provisions enshrined in the trust agreement.
OTHER L/C-RELATED BUSINESS ACTIVITIES
Article 52. Outright purchase without recourse of sets of documents under L/C
1. Conditions applicable to a set of documents under an L/C which is outright purchased without recourse:
a) The set of documents is issued in accordance with international commercial practice for L/C;
b) The customer is the lawful beneficiary of the set of documents;
c) Payment for the set of documents is yet to be made;
d) The payment for the set of documents has been accepted by the issuing bank or the confirming bank.
2. In case the customer is a non-resident, the bank shall only outright purchase without recourse of the set of documents under L/C as the L/C issuing bank or the L/C confirming bank is a resident.
3. Currencies used to purchase a set of documents:
a) For the set of documents under L/C issued in Vietnamese dong, banks are permitted to purchase it in Vietnamese dong;
b) For the set of documents under L/C issued in a foreign currency, banks shall purchase it in the foreign currency written on the L/C or convert the foreign currency into Vietnamese dong or another foreign currency at the agreed exchange rate.
4. The bank shall assess risks to the issuing bank (except where the bank outright purchases the set of documents without recourse under LC issued by the bank itself) or the confirming bank if the L/C is confirmed to consider and agree with the customer about the outright purchase of the set of documents, including the following details: purchase price of the set of documents, currency used for purchase, some cases where recourse from the customer (if any) is allowed, other details agreed upon by the parties on the basis of payment value when due, L/C due date and other details.
5. Procedures for purchasing and paying a set of documents shall be agreed upon by the parties, conform to international commercial practice for LC and be specified in the bank’s internal regulations on other business activities.
6. The total balance of outright purchase of a set of documents without recourse under an LC shall be included in the total credit extension balance of the bank purchasing the set of documents regarding the issuing bank or the confirming bank if the L/C is confirmed, unless the bank outright purchases the set of documents under the L/C issued by the bank itself.
Article 53. Other L/C-related services
Banks are entitled to provide customers with other L/C-related services as prescribed in point e clause 1 Article 114 of the Law on Credit Institutions in accordance with international commercial practice for L/C, including:
1. Services provided to customers being sellers or exporters of goods/services:
a) L/C notification, notification of L/C amendment;
b) Examination, processing and presentation of sets of documents;
c) Amendment of claims at the request of customers;
d) Payment for sets of documents;
dd) Cancellation of L/C upon request;
e) Transfer of L/C; amendment of L/C transfer; cancellation of L/C transfer;
g) Telegraph fee;
h) Delivery of sets of documents;
i) Preparation of sets of documents under L/C;
k) Draft document review;
l) L/C operations consulting;
m) Reimbursement of L/C using customer’s amount;
n) Transfer of sets of documents under L/C;
o) Notification of document set acceptance;
oo) Other services in accordance with international commercial practice for L/C.
2. Services provided to customers being purchasers or importers of goods/services:
a) L/C operations consulting;
b) Guarantee for receipt of goods, endorsement of bill of lading, authorization to receive goods;
c) Telegraph fee;
d) Delivery of sets of documents;
dd) Other services in accordance with international commercial practice for L/C.
Article 54. Accounting and reporting
1. Banks shall carry out accounting for L/C operations in accordance with prevailing regulations of law on accounting.
2. Banks shall report their performance of L/C operations in accordance with regulations on SBV’s statistical reporting regulations.
Article 55. Responsibilities of units affiliated to SBV
1. The Department of Credit for Economic Sectors shall:
a) Monitor, review and inspect the performance of L/C operations and other L/C-related business activities by banks for customers being residents;
b) Act as a conduit and cooperate with relevant units to resolve difficulties that arise from L/C operations and other L/C-related business activities for customers being residents.
2. The Department of Foreign Exchange Management shall:
a) Monitor, review and inspect the performance of L/C operations and other L/C-related business activities by banks for customers being non-residents;
b) Act as a conduit and cooperate with relevant units to resolve difficulties that arise from L/C operations and other L/C-related business activities for customers being non-residents.
3. The Banking Supervision Agency shall act as a conduit and cooperate with relevant units to inspect, audit and supervise L/C operations and other L/C-related business activities of banks and take actions against violations within their power.
4. The Department of Finance and Accounting shall instruct banks to do accounting for transactions related to L/C operations and other L/C-related business activities as prescribed in this Circular.
5. SBV branches of provinces and cities shall supervise, inspect and audit the compliance with this Circular by banks within their power.
Article 56. Transitional clauses
1. Any contract, agreement, undertaking or other transaction related to L/C operations signed and agreed upon before the effective date of this Circular shall continue to be executed and monitored until its expiry date and fulfillment of related parties' obligations. The amendment or extension of the contract, agreement, undertaking or other transactions shall be made only when such amendment or extension conforms to regulations of this Circular.
2. Any bank issued with a license to perform L/C operations before the effective date of this Circular may perform L/C operations and other L/C-related business activities without having to apply for amendment of its license.
3. Any bank issued with a license to provide domestic payment services; international payment services; payment services between customers; provide payment services on the domestic or international market before the effective date of this Circular may continue to perform L/C operations and other L/C-related business activities until December 31, 2025 without having to apply for amendment of its license.
This Circular comes into force from July 01, 2024.
Article 58. Responsibility for organizing implementation
Chief of Office, Director General of Department of Credit for Economic Sectors, Director General of Department of Foreign Exchange Management, heads of units affiliated to SBV, CIs and FBBs are responsible for organizing the implementation of this Circular./.
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PP. THE GOVERNOR |
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This translation is made by THƯ VIỆN PHÁP LUẬT, Ho Chi Minh City, Vietnam and
for reference purposes only. Its copyright is owned by THƯ VIỆN PHÁP LUẬT
and protected under Clause 2, Article 14 of the Law on Intellectual Property.Your comments are always welcomed