Regulations on interbank interest rates if there are abnormalities
The Governor of the State Bank has just issued Circular No. 21/2012/TT-NHNN regulating lending, borrowing, and term trading of valuable papers between credit institutions and foreign bank branches.
According to the State Bank, this Circular regulates interbank activities, creates a new legal framework, and overcomes current shortcomings.
Circular 21 clearly states that interest rates for lending, buying and selling valuable papers will be agreed upon by credit institutions and foreign bank branches. However, in case of unusual developments in banking activities, the State Bank will regulate interbank lending interest rates for organizations to implement.
Illustration photo. (Source: Internet).
Lending, borrowing, and term purchase and sale transactions must be made in contracts. Credit institutions and foreign bank branches must make provisions for risks in lending and term purchase of valuable papers according to current regulations.
The activity is only carried out through the head office of the credit institution, foreign bank branch and is used to compensate for temporary shortages of required reserves, solvency and short-term capital balance. The prescribed transaction period is less than 1 year.
Notably, Circular 21 also stipulates that credit institutions wishing to conduct interbank transactions must not have overdue debts for interbank transactions of 10 days or more at the time of the transaction (for the borrower).
The Circular also stipulates that credit institutions and foreign bank branches are not allowed to deposit money or receive deposits (except for payment money) at other credit institutions and foreign bank branches.
In addition, credit institutions and foreign bank branches must make provisions for risks in lending and term purchase of valuable papers.
According to the State Bank, because the regulations on borrowing between credit institutions issued with Decision 1310 have been implemented for nearly 11 years, they are no longer suitable for practical situations, so a new circular is needed to replace them.
The State Bank said that the new Circular will create a step forward for transactions in the interbank market, meeting the development requirements of the market on the basis of publicity, transparency, efficiency, safety in operations and compliance with legal regulations./.
According to VietNam + (NT)
