SBV’s regulations on term deposits

15:51-17/04/2019

On December 31, 2018, the State Bank of Vietnam (SBV) issued the Circular No.49/2018/TT-NHNN on term deposits. Accordingly, this Circular prescribes term deposits between organizations or individuals and credit institutions, branches of foreign banks (hereinafter referred to as credit institutions). It excludes term deposits between credit institutions.

The Circular provides that “term deposit” means a sum of money of a customer held at a credit institution for a fixed term as agreed upon between the customer and the credit institution with the principle of full payment of principal and interest to the customer. “Joint term deposit” means a term deposit jointly made by at least two customers.

The Circular also provides the principles of carrying out term deposit transactions. Accordingly, a credit institution shall take term deposits in accordance with its scope of operation permitted by law and its establishment and operation license. A customer may only make a term deposit and receive payment thereof via his/her checking account.

A customer shall, by himself/herself or through his/her legal representative, make a term deposit or receive payment thereof under guidance of the credit institution as per law. If the customer is a person with limited legal capacity, legally incapacitated person as per law or a person aged under 15 years, he/she shall make a term deposit or receive payment thereof via his/her legal representative; if the customer is a person with limited recognition and behavior control under law, he/she shall make a term deposit or receive payment thereof via his/her guardian (hereinafter referred to as legal representative).

Regarding a joint term deposit, the customers shall make a term deposit or receive payment thereof via their joint checking account. Residents and non-residents may not jointly make a joint term deposit. Organizations and individuals may not jointly make a joint term deposit in foreign currency.

The deposit term shall be determined according to the agreement made between the credit institution and the customer. With regard to a foreign organization or individual who is a non-resident, or a foreign individual who is a resident, the deposit term may not exceed the remaining validity period of their identity proof prescribed in Clause 4 and Clause 5 Article 4 hereof.

 The Circular also provides that an agreement on term deposit between a credit institution and a customer must be made in writing, at least containing: Details of customer, Details of credit institution, Amount, currency, deposit term, deposit date, maturity date, Interest rate, interest payment method; Agreement on premature withdrawal, deposit term extension; Details of the checking account of the customer used to make a term deposit and receive payment thereof include: name of checking account holder, number of checking account, name of credit institution which opens such checking account; Actions taken in a case where the customer’s checking account is frozen, closed, temporarily locked and the checking account’s status is changed; Method of inquiring about term deposit account; Actions against the case where the agreement on term deposit is crumpled, torn, or lost; Rights and obligations of customer, credit institution; Validity of agreement.

According to the Circular, each credit institution may set forth term deposit interest rates in conformity with regulations of the SBV on interest rates in each period. Term deposit interest calculation method shall be accordant with regulations of the SBV. The deposit term interest payment method shall be determined according to the agreement made between the credit institution and the customer.

The Circular provides specific regulations on method of inquiring about the term deposit account and notification upon changes to the term deposit,  deposit term extension, premature payout of term deposit,  pledging term deposit as collateral, transfer of ownership of term deposit, taking and payout of online term deposit, actions to be taken upon risks (actions against crumpled, torn or lost agreement on term deposit).

Pursuant to the Law on Credit Institutions, this Circular and relevant law provisions, the credit institutions shall promulgate internal regulations on termdeposit transactions of the credit institutions in conformity with its management model, characteristics, business conditions, ensuring that the term deposit transactions aremade accurately and safely as to the depositors and the operation of the credit institutions. The internal regulations must specify responsibilities and obligations of each department and individual relating to term deposit transactions.

The credit institution must post up publicly at its transaction offices and post on its website (if any) the following: Term deposit interest rates; fees (if any); available currencies upon taking of term deposits; procedures for taking and payout of term deposit between the credit institution and customers; method offered to customers to inquire about term deposit accounts; actions against the case where the agreement on term deposit is crumpled, torn, or lost.

This Circular comes into force as of July 5, 2019.