Vietnam: What is the collection order? What are the contents of a collection order under the regulations of current law?
What is the collection order in Vietnam?
According to the provisions of Clause 4 Article 3 of Circular 46/2014 / TT-NHNN, “collection order execution” means a bank transferring a certain sum of money from the paying party’s checking account to the beneficiary at the request of the beneficiary under an agreement between the sender and the beneficiary.
What are the contents of a collection order in Vietnam?
According to the provisions of Clause 1, Article 9 of Circular 46/2014 / TT-NHNN, a collection order consists of:
- The text “nhờ thu” (“collection order”) and order number;
- Date of collection order;
- Name, address and checking account number of the beneficiary;
- Name of the beneficiary’s bank;
- Name, address and checking account number of the sender;
- Name of the sender’s bank;
- Contract number (or order form or agreement) as the basis for collection, number of enclosed documents;
- Details of payment;
- Amount in words and figures;
- Date on which the sender’s bank makes the payment;
- Date on which the beneficiary’s bank receives the payment;
- Signature (handwritten signature in case of physical document and electronic signature in case of electronic document of the account owner or the person authorized by the account owner and signatures of the persons related to the document; seal of the unit (if any).
The bank may specify other contents in the collection order in accordance with its management requirements and operations, and regulations of law.
What are the procedures for executing collection orders in Vietnam?
According to the provisions of Clause 2, Article 9 of Circular 46/2014/TT-NHNN, the bank shall establish and issue internal procedures for executing collection orders in a quick, accurate and safe manner and all of the following steps shall be taken:
Collection order preparation and delivery
The beneficiary shall prepare a collection order enclosed with the collection agreement between the sender and the beneficiary and other documents (if any) and send them to the beneficiary’s bank or the sender’s bank. The bank shall instruct clients to prepare and adopt the methods of delivering documents in accordance with regulations of this Circular and applicable regulations of the State Bank.
Verify the collection order
- At the beneficiary’s bank, upon receipt of the collection order and enclosed documents of the client, the bank shall strictly verify its legitimacy in accordance with regulations on bank accounting documents. If the collection order is invalid, the bank shall request the client to adjust it or return it to the client.
- At the sender’s bank, upon receipt of the documents concerning collection order execution, the bank shall verify legitimacy of the collection order, and check the checking account balance and solvency of the sender.
If the collection order contains error, within 01 working day from the date on which the collection order is received, the sender’s bank shall request the sender’s bank to trace it or return it to the beneficiary’s bank or the beneficiary.
If the sender’s account is closed, within 01 working day from the date on which the collection order is received, the sender’s bank shall return it to the beneficiary’s bank or the beneficiary.
Collection order processing and accounting
- In case the sender has a checking account at the beneficiary’s bank:
After verification of the collection order, the bank shall inspect the collection order execution agreement between the sender and the beneficiary and proceed as follows:
+ In case the sender has authorized the bank to automatically debit the paying party’s checking account to execute the collection order:
+ If the sender is insolvent, within 01 working day from the date on which the collection order is received, the bank shall debit the sender’s checking account and credit the beneficiary’s checking account, and then send a Debit Note to the sender, and a Credit Note to the beneficiary.
If the sender is insolvent, within 01 working day from the date on which the collection order is received, the bank shall inform the sender and the beneficiary, and return the collection order to the beneficiary (if requested by the beneficiary) or continue to retain the collection order until the sender is solvent and follow the above-mentioned instructions.
+ In case the sender has not yet authorized the bank to automatically debit the sender’s checking account to execute the collection order, the bank shall inform the sender of the collection order.
+ If the sender approves the authorization for a debit to the checking account, within 01 working day from the date on which the sender’s authorization for a debit is obtained, the bank shall debit the sender’s checking account and credit the beneficiary’s checking account, and then send a Debit Note to the sender, and a Credit Note to the beneficiary.
If the sender does not approve the authorization for a debit, the bank shall immediately inform and return the collection order to the beneficiary.
+ The methods of giving the authorization for a debit shall be decided by the bank in accordance with regulations of the law on authorization.
- In case the sender does not have a checking account at the beneficiary’s bank:
+ After verification of the legitimacy of the collection order, the beneficiary’s bank shall adopt an appropriate method for supervising the processed order and within 01 working day from the date on which the collection order is received, send it to the sender’s bank.
+ After receipt of the collection order and enclosed documents (if any) sent by the beneficiary’s bank or the beneficiary and after verification of the legitimacy of the collection order, the sender’s bank shall inspect the agreement on authorization for a debit to the checking account and then debit the sender’s checking account as if the sender has a checking account at the beneficiary’s bank, and prepare and send a payment order to the beneficiary’s bank by using an appropriate payment system.
+ Upon receipt of the payment order sent by the sender’s bank, within 01 working day, the beneficiary’s bank shall, according to the payment order, credit the beneficiary’s appropriate account and send a Credit Note to the beneficiary.
The bank shall sufficiently and promptly send the Debit Note or Credit Note to the client in accordance with the agreement between the bank and the client and regulations of law.
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