What is rediscount method among credit institutions and foreign bank branches in Vietnam?

What are regulations on rediscount method among credit institutions and foreign bank branches in Vietnam?

Pursuant to Article 5 of Circular 18/2021/TT-NHNN stipulating rediscount method among credit institutions and foreign bank branches is specified as follows:

Credit institutions and FBBs shall discuss and choose any of the following rediscounting methods:

1. Temporary purchase of negotiable instruments refers to an instance where the rediscounting party purchases and receives negotiable instruments that are not mature from the beneficiary while being guaranteed by the beneficiary to repurchase the same negotiable instruments after a definite amount of time set forth under the rediscounting agreement.

2. Purchase with rights of recourse of negotiable instruments refers to an instance where the rediscounting party purchase and receives negotiable instruments that are not mature from the beneficiary; if the person or persons liable for paying for the negotiable instruments fail to make adequate payment, the beneficiary is then responsible for incurring the remaining payment for the rediscounting party on behalf of said person or persons.

Best Regards!