Supplementing new regulations on nominal interest on Government bonds and annexes of contract for term repurchase of Government bonds in Vietnam?
- Supplementing new regulations on nominal interest on Government bonds in Vietnam?
- When is the time to repay the nominal interest?
- What are the regulations on identification of term repurchase results of government bonds in Vietnam?
- Supplementing regulations on annexes of contract for term repurchase of Government bonds in Vietnam?
Supplementing new regulations on nominal interest on Government bonds in Vietnam?
On February 10, 2023, the Government of Vietnam issued Circular No. 12/2023/TT-BTC on amendments to Circular No. 107/2020/TT-BTC on guidelines for term repurchase of government bonds using temporarily idle state funds of State Treasury.
According to that, Clause 8 Article 1 of Circular No. 12/2023/TT-BTC has supplemented Article 15a of Circular No. 107/2020/TT-BTC with contents on nominal interest on Government bonds in Vietnam.
To be specific:
Nominal interest on government bonds
1. In case the State Treasury receives nominal interest on government bonds during the period of term repurchase of government bonds, the State Treasury is responsible for returning the nominal interest on government bonds received to financial institutions according to the government bond code for which the State Treasury received the nominal interest. The repayment of nominal interest on government bonds is done outside the debt instrument trading system of the Stock Exchange; the time of repayment of nominal interest shall be mutually agreed upon by the two parties, but must not be later than five (05) working days from the date of actual payment of bond interest.
2. In case of late transfer of nominal interest, the State Treasury is responsible for paying the late payment fine to financial institutions for the number of days of late payment at the late payment penalty interest rate specified in Clause 2, Article 14 of this Circular.
Thus, according to the above provisions, during the period of term repurchase of government bonds, the State Treasury is responsible for returning the nominal interest on government bonds received to financial institutions.
Supplementing new regulations on nominal interest on Government bonds and annexes of contract for term repurchase of Government bonds in Vietnam?
When is the time to repay the nominal interest?
Pursuant to the provisions of Clause 1, Article 15a of Circular No. 107/2020/TT-BTC, supplemented by Clause 8 Article 1 of Circular No. 12/2023/TT-BTC.
The repayment of nominal interest on government bonds is done outside the debt instrument trading system of the Stock Exchange; the time of repayment of nominal interest shall be mutually agreed upon by the two parties, but must not be later than five (05) working days from the date of actual payment of bond interest.
In case of late transfer of nominal interest, the State Treasury is responsible for paying the late payment fine to financial institutions for the number of days of late payment at the late payment penalty interest rate.
Specifically, based on Clause 2, Article 14 of Circular No. 107/2020/TT-BTC, the late payment penalty is calculated using the following formula:
Late payment penalty = Value of payment which is not made in a timely manner (VND) x Interest of late payment penalty (%/year) x Number of days past the payment deadline/365 days.
In which:
- Value of payment which is not made in a timely manner is calculated based on value of the payment which is not made in a timely manner (including principal and interest).
- Interest of late payment penalty equals 150% of interest of term repurchase of government bonds of contract annexes on late payment and does not exceed 10%/year.
- Number of days past the payment deadline is determined by the number of days starting from the payment date as per contract annex until the date preceding the actual payment date.
What are the regulations on identification of term repurchase results of government bonds in Vietnam?
Pursuant to the provisions of Article 11 of Circular No. 107/2020/TT-BTC, the identification of term repurchase results of government bonds is carried out as follows:
(1) Methods of identifying interest of term repurchase of government bonds:
Interest of term repurchase of government bonds applicable to each financial institution is offered interest of the financial institutions selected in descending order and satisfying both requirements below:
- The lowest interest of term repurchase of government bonds is not lower than the minimum interest regulated by the State Treasury from time to time.
- Quantity of government bonds for term repurchase accrued until the point where interest of term repurchase of government bonds is at the lowest does not exceed quantity publicized by the State Treasury.
(2) Methods of identifying quantity of government bonds for term repurchase for each financial institution:
- Quantity of government bonds for term repurchase of each financial institutions that submit price quotes shall be equivalent to price quote quantity of the financial institutions.
+ In case interest of term repurchase of government bonds is at the lowest and offered quantity accrued up to the interest exceeds the quantity publicized by the State Treasury for the type of repurchase term, after excluding offered quantity in higher interest, the remainder of the quantity publicized by the State Treasury shall be allocated to financial institutions making offers at the lowest interest for term repurchase of government bonds in the ratio corresponding to offered quantity and rounded down to VND billion.
+ The remaining government bonds publicized by the State Treasury after being rounded down in VND billion shall be allocated to the first financial institution making offer at the lowest repurchase interest; in case allocation of the remaining government bonds exceeds the remaining price quotes of this financial institution, the excess shall be allocated to the next financial institution until the quantity publicized by the State Treasury runs out.
- In case offered quantity of financial institutions exceed remaining outstanding debt of the financial institutions, the offered quantity eligible for consideration of term repurchase of government bonds of financial institutions shall be the remaining outstanding debt prioritizing shorter repurchase terms and higher offer interest.
- Identification of specific quantity of government bonds for term repurchase of each financial institution shall conform to guidelines under Annex of Circular No. 107/2020/TT-BTC.
Supplementing regulations on annexes of contract for term repurchase of Government bonds in Vietnam?
In Clause 3, Article 1 of Circular No. 12/2023/TT-BTC, Clause 5, Article 9 of Circular No. 107/2020/TT-BTC has been amended as follows:
Framework contracts and contract annexes shall be prepared in paper documents (bearing all seals, signatures of competent representatives of parties to the contracts) or electronic documents (digitally signed by the authorized person and digitally signed by agencies and organizations as prescribed by law), in accordance with regulations on electronic transactions in professional practices of the State Treasury.
Circular No. 12/2023/TT-BTC takes effect from May 4, 2023.
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