What are regulations on the purchase of bonds, bills, promissory notes, and certificates of deposit of commercial banks from idle money of insurance funds in Vietnam?

What are regulations on the purchase of bonds, bills, promissory notes, and certificates of deposit of commercial banks from idle money of insurance funds in Vietnam? - Image from Internet

The purchase of bonds, bills, promissory notes, and certificates of deposit of commercial banks from idle money of insurance funds in Vietnam is regulated by Article 11 of the Investment Management Regulations for Social Insurance, Health Insurance, and Unemployment Insurance Funds issued by the Vietnam Social Insurance Authority together with the Decision 1288/QD-BHXH in 2017 as follows:

1. The Investment Management Department shall submit to the General Director to purchase bonds, bills, promissory notes, and certificates of deposit of commercial banks that are selected to ensure safety and efficiency in accordance with the investment plan that has been approved by the Board of Directors as follows:

a) Identify the amount of money to buy bonds, bills, promissory notes, and certificates of deposit for each bank.

b) Choose a reasonable and efficient investment period for buying bonds, bills, promissory notes, and certificates of deposit, but no more than 5 years.

c) Determine the interest rate for buying bonds, bills, promissory notes, and certificates of deposit according to Clause 3 Article 9 of Government's Decree 30/ND-CP.

2. The purchase of bonds, bills, promissory notes, and certificates of deposit must be made by contract (in case of purchase on the secondary market, it shall be implemented according to current regulations).

Other contents shall be implemented as Clause 2, Clause 3 Article 10 of this Regulation and relevant guidance documents.

3. The Investment Management Department shall be responsible for managing the certificate of ownership of bonds, bills, promissory notes, and certificates of deposit in accordance with regulations.

When the principal of bonds, bills, promissory notes, and certificates of deposit is due for payment together with any accrued interest that has not yet been paid, the Investment Management Department shall submit the original certificate of ownership to the relevant bank or issuing agent at the bank or issuing agent to promptly collect the principal and interest in full in accordance with regulations.

4. In case it is necessary to sell bonds, bills, promissory notes, and certificates of deposit to recover capital ahead of schedule, the Investment Management Department shall be responsible for submitting to the General Director to report to the Board of Directors for consideration and decision.

After the Board of Directors has approved, the Investment Management Department shall be responsible for submitting to the General Director for approval to sell according to regulations on the market or contact the bank to carry out the sale procedures according to the regulations of each bank.

Pursuant to Clause 3 Article 9 of Government's Decree 30/ND-CP stipulating as follows:

The interest rate for buying bonds, bills, promissory notes, and certificates of deposit shall be based on the interest rate for issuing bonds, bills, promissory notes, and certificates of deposit issued by commercial banks, but must be not lower than the interest rate for issuing government bonds with the same maturity at the nearest point in the past three months before the time of purchase. In case there is no issuance of government bonds with the same maturity within three months before the time of purchase, the interest rate for buying bonds, bills, promissory notes, and certificates of deposit shall be based on the investment interest rate for depositing money at commercial banks stipulated in Clause 3 Article 8 of this Decree.

Clause 2, Clause 3 Article 10 of this Regulation stipulates as follows:

2. The deposit must be made by contract, which must specify the amount of money, term, interest rate, method of payment of interest and principal, and handling of contract violations.

After the two parties have reached an agreement on the contract on the amount of money, term, interest rate, and other terms related, the Investment Management Department shall submit to the General Director for consideration and signing of the deposit contract in accordance with regulations.

3. Transfer of deposits: Based on the signed contract, the Investment Management Department shall send a letter requesting transfer of money with 1 copy of the Deposit Agreement (original) to the Finance - Accounting Department to carry out the transfer of money to the bank and follow up on accounting and management in accordance with regulations.

After each transfer, the Finance - Accounting Department shall send a written notification (specifying: Amount of money transferred, date of money transfer, unit of money transfer) to the Investment Management Department for management and tracking.

The above is the content of the regulations on the purchase of bonds, bills, promissory notes, and certificates of deposit of commercial banks from idle money of insurance funds in Vietnam. To understand this issue more clearly, you should refer to Decision 1288/QD-BHXH in 2017.

Thank you!