Vietnam: Measures to be taken to deal with cases in which clearing members are in short position to clearing

Currently, electronic clearing service is a service providing technical infrastructure to receive, compare payment data and calculate the results of receivable and payable amounts of money after clearing among members in order to settle payments to parties involved. Clearing member is a member establishing net debit caps for electronic clearing and settlement transactions to make payments via the Electronic Clearing System and opening payment accounts for clearing and settlement purposes at the State Bank (Transaction Center).

In particular, according to Circular No. 23/2019/TT-NHNN of the State Bank of Vietnam, if there is at least a clearing member incapable of payment during the process of settlement of electronic clearing transactions, handling procedures shall be regulated as follows:

- Clearing members carry out overdraft within their assigned limit prescribed in accordance with regulations of the State Bank on overdraft and overnight lending in the interbank electronic payment sector in order to handle results of settlement of electronic clearing transactions;

- In case where a clearing member has used up the authorized overdraft limit and there is not enough balance for settlement of electronic clearing transactions, electronic clearing results shall be moved to the pending queue. If balance is adequate, electronic clearing results shall be further processed;

- The clearing house carries out enquiry on the National Electronic Information Interbank System to check the status of processing of electronic clearing results in the pending queue; informs and requests insolvent clearing members take timely actions to increase balance (Credit) in their payment accounts by using their capital or through transactions performed on currency market or by lending each other on the interbank market under the regulations of the State Bank for settlement of electronic clearing transactions;

- At the time of putting an end to receipt of low-value payment orders in the National Electronic Information Interbank System, if clearing members remain insolvent to make payments, the State Bank (Transaction Center) shall take away from (debit) escrow funds to set electronic clearing limits for clearing members (if any) for the purpose of settling electronic clearing transactions. After taking away from (debit) escrow funds to set electronic clearing limit for a clearing member, the State Bank (Transaction Center) shall inform the clearing house to make any decrease in electronic clearing limit on the basis of the residual escrow value of that clearing member;

- At the time of halting receipt of high-value payment orders in the National Electronic Information Interbank System, an insolvent clearing member shall have to sign Indebtedness Agreement with a bank due to shortage of funds for settlement of electronic clearing transactions (according to the form given in Appendix No.06 hereto), sending it to the State Bank (Transaction Center) in order to be eligible to receive loans for settlement of clearing transactions at the interest rate equaling overnight lending interest rate decided by the State Bank’s over periods of time. Simultaneously, the State Bank (Transaction Center) shall inform the clearing house to temporarily suspend that clearing member from using payment services via electronic clearing systems and prepare risk management plans.

Besides, Circular No. 23/2019/TT-NHNN also stipulates that the clearing house may adopt regulations on admission (or cessation) of new members in their electronic clearing systems in which clearing members are required to meet the following requirements:

- They have been accepted as direct members of the National Electronic Information Interbank System;

- They have already set electronic clearing limits prescribed in clause 2 of this Article and have already been committed to monitoring and managing electronic clearing limits in order to ensure processing of payment transactions via electronic clearing systems conforms to regulations laid down in point c of clause 4 of this Article;

- They have granted the State Bank (Transaction Center) indefinite-term and irrevocable written authorizations to act on its own initiative to withdraw money from (debit) their payment accounts and dispose of escrow collateral (when setting electronic clearing limits) in order to carry out electronic clearing transactions or risk distribution obligations in the event that clearing members signing indebtedness agreements with banks due to inadequate capital available for electronic clearing transactions are incapable of repaying loan debts;

- They have entered into written commitments with the clearing house on their payment capability to make timely and full payments on any obligation arising from settlement of electronic clearing transactions under the provisions.

View more details at Circular No. 23/2019/TT-NHNN of the State Bank of Vietnam, effective from January 07, 2020.

Thu Ba

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