RE-DISCOUNT OF NEGOTIABLE INSTRUMENTS USED TO SECURE OTHER OBLIGATIONS IS NOT PERMITTED
The Circular No. 18/2021/TT-NHNN providing for regulations on the re-discount of negotiable instruments of credit institutions and foreign bank branches is issued by the State Bank of Vietnam on November 18, 2021.
Accordingly, credit institutions and foreign bank branches may carry out the re-discount of negotiable instruments if the operation of re-discount of negotiable instruments is stated in their license. Negotiable instruments may be re-discounted when they are discounted by the re-discounted party for clients as prescribed; they are under the lawful ownership of the re-discounted party, they are permitted for trading in accordance with law regulations, without disputes and they are not used to secure other obligations.
Additionally, their payment must be not yet due and they must be still intact, not erased or repaired. Negotiable instruments on which Vietnam dong is written as payment currency shall be re-discounted in Vietnam dong. For negotiable instruments on which a foreign currency is written as payment currency, credit institutions and foreign bank branches shall re-discount the negotiable instruments in the foreign currency written on such negotiable instruments or in Vietnam dong as agreed.
Besides, an agreement of re-discount of negotiable instruments must be presented in a form in accordance with law regulations and include at least the contents such as information about the re-discounting party and re-discounted party; information about negotiable instruments to be re-discounted; currency used in re-discount; re-discount price of negotiable instruments. The contents of the time limit for re-discount; interest rate of re-discount; rights and obligations of the parties; handling of violations… are also required in the agreement.
This Circular takes effect on January 07, 2022.
