Key features of the new regulations:
- Recognizing non-legal entities as clients for the purpose of holding term deposits
- Promoting non-cash transactions by requiring depositors to effect transactions relating to term deposits via depositor's bank accounts
- Replacing current regulations on saving deposits applicable to Vietnamese citizens
On 31 December 2018, the State Bank of Vietnam (SBV) issued two circulars: (i) Circular No. 48/2018/TT-NHNN (Circular No. 48) regulating savings deposits, including demand and term savings deposits, replacing Decision No. 1160/2004/QD-NHNN dated 13 September 2004 of the Governor of the SBV; and (ii) Circular No. 49/2018/TT-NHNN (Circular No. 49), regulating term deposits.
Circular No. 48 and Circular No. 49 both take effect from 05 July 2019. For savings deposits having a balance after this date and term deposits made before this date, they will continue to be performed in accordance with their agreed terms. For term deposits, if the type of depositor and term of a term deposit does not comply with Circular No. 49, the term deposit may not be extended.
A broad overview of some key provisions of Circular No. 48 and Circular No. 49 are as follows:
1. Types of depositors
Circular No. 48 allows only Vietnamese citizens to make saving deposits. Only Vietnamese citizens being residents may make savings deposit in foreign currencies.
Circular No. 49 provides that the following types of entities will be the customers for the purposes of having term deposits at the credit institutions:
- residents being both organizations and individuals; and
- certain types of non-residents, such as: diplomatic representative agencies, representative offices and project offices of foreign organizations in Vietnam, Vietnamese citizens being non-residents, and foreign individuals permitted to reside in Vietnam for at least six (06) months.
Circular No. 49 does not apply to term deposits between credit institutions.
2. Transactions relating to savings deposits and term deposits
For savings deposits, under Circular No. 48, after the verification process, credit institutions will receive the savings deposit and issue depositors with a savings card. Savings deposits may be made into the depositor’s savings card in cash or through the depositor’s payment account. Receipt and payment of saving deposits will be made at the legal business locations of the credit institutions.
For term deposits, Circular No. 49 requires depositors to send and receive payments for term deposits via their own payment accounts. For joint term deposits, depositors may send and receive payments with respects to term deposits via the joint payment account of all depositors. Residents and non-residents may not be joint term depositors. Organizations and individuals may not jointly deposit term deposits in foreign currencies.
Even though Circular No. 49 allows certain types of non-legal entities, such as representative offices, to be depositors and at the same time requires these depositors to receive and make payments for deposits via their own payment accounts, the SBV currently does not recognize non-legal entities’ rights to open and be owners of bank accounts. This should be subject to clarification, pending further guidelines from the SBV.
3. Terms of savings deposit and term deposit
Terms of a savings deposit are contained on the savings card. Terms of a term deposit are contained on the term deposit agreement between the credit institution and the depositor, which must be made in writing.
Both Circular No. 48 and Circular No. 49 provide certain mandatory terms for savings deposits and term deposits, such as information of the depositor, the deposited amount, currency, date of deposit, maturity date, interest rate, method of payment of interest, methods for depositor to review his/her deposit, and handling in case the savings card or term deposit agreement is crumpled, torn or lost. Circular No. 49 also requires that term deposit agreements must have the information of the depositor’s payment account.
Credit institutions and depositors may agree on extending the term of deposit and prepaying the saving deposits and term deposits. Upon expiration of the term of a savings deposit, if the depositor does not withdraw the saving deposit and there is no contradicting agreement or request, the credit institution may extend the term of the savings deposit in accordance with the credit institution’s regulations.
4. Interest rate
For both savings deposits and term deposits, interest rate and interest calculation method must comply with regulations of the SBV. Method for payment of interest for savings deposits and term deposits can be agreed between the credit institution and the depositor.
5. Using deposits as security asset
Depositors may use their savings deposits and term deposits as security asset in accordance with the guidelines issued by the credit institutions. Such guidance must comply with the regulations on security transactions.
6. Requirements for credit institutions
Credit institutions may receive savings deposits and term deposits within their permitted scope of activities in accordance with the law and the Establishment and Operation License of such credit institutions.
Credit institutions must establish internal regulations on savings deposit and term deposit transactions in accordance with the Law on Credit Institutions, Circular No. 48 and Circular No. 49 and other applicable law. The internal regulations must expressly provide for the responsibility and obligations of each department and individual with respects to performing term deposit transactions and must include certain mandatory provisions.
Circular No. 48 and Circular No. 49 provide for certain mandatory contents that credit institutions must publicly post at their business locations and on their electronic information page (if any) and comply with, such as interest rate on deposits and applicable fees (if any), foreign currencies in which deposits may be received, procedure for receiving and paying deposits, method for customers to review the deposit, and handling of cases where the savings card or term deposit agreement is crumpled, torn or lost.
Credit institutions receiving and paying term deposits electronically must ensure full archiving of the information related to the receiving and paying of term deposits electronically to meet customers’ demand in case of review, inspection and dispute resolution.