CIRCULAR

GUIDING THE ADDITIONAL ALLOCATION OF CHARTER CAPITAL TO STATE-RUN COMMERCIAL BANKS

Pursuant to Decision No. 453/QD-TTg of June 14, 2002 on the issuance of Governments bonds for the additional allocation of charter capital to State-run commercial banks in the 2002-2004 period and the Governments Official Dispatch No. 36/CP-KTTH of July 15, 2002 on the plan to additionally allocate charter capital to State-run commercial banks, the Ministry of Finance hereby guides the implementation of a number of contents as follows:

I. GENERAL PROVISIONS:

1. State-run commercial banks (hereafter abbreviated to SCBs), which are entitled to the additional allocation of charter capital in the 2002-2004 period under the Governments Official Dispatch No. 36/CP-KTTH of July 15, 2002, include: The Foreign Trade Bank of Vietnam, the Industrial and Commercial Bank of Vietnam, Vietnam Bank for Investment and Development, Vietnam Bank for Agriculture and Rural Development, and the Mekong River Delta Housing Development Bank.

2. Sources for the additional allocation of charter capital shall comply with the provisions at Point 1.b of the Governments Official Dispatch No. 36/CP-KTTH of July 15, 2002 on the plan to additionally allocate charter capital to SCBs.

3. Special bonds mean the Governments bonds issued in Vietnam dong by mode of book-entry voucher for the additional allocation of charter capital to SCBs under the Prime Ministers Decision No. 453/QD-TTg of June 14, 2002. Special bonds held by SCBs shall be considered their assets, which may be used for pledge in their credit relations with the State Bank.

II. SPECIFIC PROVISIONS:

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In order to be entitled to the additional allocation of charter capital according to the time table already approved by the Prime Minister, SCBs must meet the following conditions:

1.1. Strictly complying with the schedule on the handling of outstanding debts under the scheme already approved by the State Bank Governor.

1.2. Deploying the implementation of the scheme on restructure of each SCB already approved by the Prime Minister strictly according to the time table.

1.3. The percentage of overdue debts at the time of reporting on debts arising from January 1, 2002 must be lower than 5%.

1.4. By the end of June, 2002, having thoroughly handled problems left from the 2000 audit; by the end of December, 2002, completing the 2001 independent audit and thoroughly handling problems left from the 2001 audit; by the end of December, 2003, completing the 2002 independent audit and thoroughly handling problems left from the 2002 audit.

1.5. Quarterly (before the 10th day of the first month of the subsequent quarter), banks must send their written reports on the evaluation of tempo of implementation of the contents mentioned at Points 1.1 thru 1.4 to the Steering Committee for Financial Restructure of Commercial Banks, the Ministry of Finance, the State Bank, and the Ministry of Planning and Investment.

1.6. In cases where SCBs fail to fully meet the conditions prescribed at Points 1.1 thru 1.5 above, the additional allocation of charter capital shall be suspended until all the conditions are fully met.

2. Additional allocation of charter capital:

2.1. On the basis of the SCBs� reports on their satisfaction of the conditions for being entitled to the additional allocation of charter capital, and after coordinating with the State Bank and the Ministry of Planning and Investment in expertising them, the Ministry of Finance shall make decisions on the additional allocation of charter capital to the SCBs which fully meet the prescribed conditions.

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A book-entry voucher shall be made in two copies: the first copy shall be archived at the Central State Treasury, and the second copy shall be handed over to the bank entitled to the additional allocation of charter capital.

3. Provisions on the management of special bonds:

3.1. Within the first 5 years, SCBs shall not be entitled to transfer special bonds. Past this timelimit, the Ministry of Finance shall assume the prime responsibility and coordinate with the State Bank in re-considering this stipulation and proposing their comments, then report thereon to the Prime Minister for decision.

3.2. Pledge transactions of special bonds shall be conducted only between SCBs and the State Bank. SCBs shall use the second copy of the bond-monitoring book-entry voucher for pledge in their credit relations with the State Bank.

3.3. Pledge procedures and volume of the pledged special bonds shall comply with the State Bank�s regulations in accordance with the administration of monetary policies by the State Bank in each period.

3.4. Monthly (before the 10th day of the subsequent month), SCBs shall send their reports on special bond pledge transactions in the month to the Ministry of Finance.

4. Settlement and cost-accounting of additionally allocated charter capital:

4.1. When being additionally allocated with charter capital, SCBs shall account the increase of charter capital and monitor this amount in a separate sub-item.

4.2. Special bond interests shall be settled once a year by the State budget on the date the special bonds are issued at the Central State Treasury. The first settlement shall be 1 year as from the date of issuance of special bonds.

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III. IMPLEMENTATION ORGANIZATION:

This Circular takes implementation effect 15 days after its signing. Any problems arising in the course of implementation should be reported to the Ministry of Finance for study, consideration and settlement.

FOR THE MINISTER OF FINANCE
VICE MINISTER




Le Thi Bang Tam