Circular 7/TT-NH1

THE VIETNAM STATE BANK THE VIETNAM STATE BANK CIRCULAR No.7-TT/NH1 OF DECEMBER 27, 1996 GUIDING THE IMPLEMENTATION OF THE REGULATION ON THE ISSUE AND USE OF CHECKS ISSUED TOGETHER WITH DECREE No.30-CP OF MAY 9, 1996 OF THE GOVERNMENT On May 9, 1996 the Government issued Decree No.30-CP promulgating the Regulation on the Issue and Use of Checks (Regulation for short). The Governor of the State Bank hereby provides the following guidance for the implementation of the Regulation: Part I GENERAL PROVISIONS 1. The checks as defined in this Regulation are checks used for both individuals and legal persons. 2. The terms in the Regulation are construed as follows: 2.1. Account holder is the person in whose name an account is opened for payment and also the owner of the amount of money recorded in that account or his/her representative. - Individual account holder is the person in whose name the account is opened for payment of his/her own as stipulated by the State Bank. - Legal person account holder is the lawful representative of the legal person in whose name the account is opened for payment by that legal person as stipulated by the State bank. 2.2. The check issuer is the owner of the account or the person mandated by him/her according to the legislation on delegation of powers. 2.3. The check payee is the person entitled to the ownership of the amount of money recorded on the check. For a signed check he is the person named on the check; for an unnamed check, he is the holder of the check. 2.4. The check assigner is an individual or the lawful representative of the legal person in whose name the right of benefiting the check is assigned to another person. 2.5. The payment unit is the unit holding the account of the account holder which is allowed to conduct the service or task of payment as stipulated in Article 2 of Decree No.91-CP of November 25, 1993 of the Government on the organization of non cash payments, and Article 1 of Decision No.144-QD/NH1 of June 30, 1994 of the Governor of the State Bank on the conditions for non- cash payment of the popular credit funds. 2.6. An assigned unit is a unit of the same as or different from the system of the payment unit which is allowed to conduct payment service or duty, which receives the checks deposited by the payee in order to receive the money on his/her behalf. 2.7. A signed check is a check which records the family name, proper the name and address of the individual, or the name and address of the legal payee of the check. A signed check when assigned must record clearly the family name, name of the individual or the name and address of the assigned legal person. 2.8. An unnamed check is one which does not record the family name and proper name of the individual or the name of the legal person beneficiary of the check. The issue and use of an unnamed check can be used only when there are enough technical conditions and legal environment. The Governor of the State Bank shall provide a written guidance thereof later. 3. Responsibility with regard to the check: the issuer of the check and the assigners all have to bear responsibility for the check. This responsibility includes the obligation to pay the sum recorded on the check and the joint responsibility of settling complaints or initiate a legal action when the check is refused payment. 4. The acceptance term of a check is 15 days from the date when the check is signed for issue until it is rendered to the payment unit or the assigned unit. This term also includes Sundays and holidays. If the end of the term is Sunday or a holiday, the deadline shall be put off until the working day immediately after that Sunday or holiday. 5. Scope of payment of checks in the immediate future: - Checks for transaction among customers who have opened deposit accounts at the same unit or different units which belong to the same system of credit organizations or State Treasuries; - Checks for transaction among customers who have opened deposit accounts at different units or different credit organizations or State Treasuries. This case shall apply only when these units take part in clearings on the territory of the same province or city. The credit organizations and State Treasuries shall inform their customers thereof in order to use the checks within the prescribed scope. Part II FORMS AND CONTENTS OF THE CHECKS 1. The forms of the checks must be designed according to unified models prescribed by the State Bank. The contents of the check must be printed or written in Vietnamese. 1.1. Components of a check: a/ The word "CHECK" is printed in the upper case; b/ The serial number of the check is printed on both the check and its stub; c/ The payment order is printed in the form: "Payable to..."; d/ The check payee: + If the check payee is a legal person, the check must record his/her name and address, the serial number of his/her account and the name of the holder of his/her account. + If the check payee is an individual, the check shall record his family name, proper name and address, the serial number of his/her account and the name of the holder of his/her account (if any). e/ The amount in figures and words (see the mode of recording in Point 1, Section II, Part IV); f/ The check issuer: - If the check issuer is a legal representative, the check shall record his/her name and address and the serial number of his/her account. - If the check issuer is an individual, the check shall record his/her family name, proper name and address and the serial number of the account holder. g/ The name and address of the payment unit shall be printed or sealed on the right corner of the front side of the check; h/ The place, day and month of signing to issue the check shall be written in letters, the year shall be in figures; i/ The signature and seal (if any) of the check issuer (see Points 3 and 4, Section II, Part IV). 1.2. A valid check must gather all the elements and contents defined in Point 1.1, bearing no trace of erasure, correction or addition as to the interest rate and payment conditions and the amount written in letters and that written in figures must match together. 1.3. A check eligible for payment is one which is: - Valid; - Presented within the acceptance term; - Without an order for suspension of payment; - The signature and seal (if any) of the check issuer must correspond with those already registered at the payment unit; - No signing for check issue beyond the competence defined at the assignment document; - The deposit account of the account holder is enough to clear the check. - The signatures of assignment (if any) on a named check must be continuous. 2. With regard to the payment units catering customers who are foreigners, besides the Vietnamese language, the check may also print the English language below the Vietnamese; the size of the English words must be smaller than that of the Vietnamese words. 3. The forms of the checks of the credit organizations and State Treasuries must be ratified by the Central State Bank and must be kept at the model ratifying agency. The credit organizations and State Treasuries shall have to notify the other credit organizations, the other State Treasuries and customers of the ratified forms of checks. The units attached to the credit organizations and State Treasuries shall have to use the forms of checks of their own systems. The forms of checks which are not ratified by the State bank are not allowed circulation. The printing of checks of the credit organizations and State Treasuries shall comply with Decision No.317-QD/NH2 of November 10, 1995 of the Governor of the State Bank. All the old checks (except the negotiable checks) shall lose their use value after this Circular takes implementation effect. With regard to the old checks which were signed for issue before this Circular takes implementation effect but which have not expired their acceptance term, shall continue to be paid according to the old regulations. 4. A check used to draw cash money at a payment unit shall not have two parallel crossing lines on the upper left corner or the words "demand deposit" on the front side of the check. A check used to transfer an account shall have two parallel crossing lines on the upper left of the check or the word "demand deposit" on the front side of the check. Part III RIGHTS AND OBLIGATIONS OF THE ISSUERS AND USERS OF CHECKS I. RIGHTS AND OBLIGATIONS OF THE CHECK ISSUER 1. The check issuer shall have to issue a check according to prescriptions, ensure that he/she has enough money on his/her deposit account so that the check can be drawn when it is rendered to the payment unit. If the amount written on the account is not enough for the payment of the check leading to the refusal of payment for the check, the issuer of the check shall have the responsibility to pay for this check, to bear all the fines and costs arising from the complaint and lawsuit. 2. The checks already issued shall be refused payment in the following cases: - The check issuer is an individual who has died or is reported missing. In this case, the payment of the check shall comply with the provisions of law; if the check issuer is an individual who has been declared by the court to have lost his/her capacity for civil acts or has his capacity for civil acts restricted, the payment of the check shall be done by the guardian or by decision of the court. - If the check issuer is a legal person and he/she is declared bankrupt or dissolved, the payment of the check of this legal person shall be effected according to the legislation on bankruptcy or dissolution. - In case the individual or legal person who issues the check has his/her account frozen, the payment of the check shall comply with the decision of the competent State agency. II. RIGHTS AND OBLIGATIONS OF THE CHECK PAYEE 1. Within the acceptance term of the check, the payee of the check shall have to make a declaration of the checks and render it together with the checks to the payment unit or the assigned unit in order to claim payment. If for a force majeure reason the payee of the check cannot remit the checks during the acceptance term, after the termination of the force majeure reason, he/she must remit the check immediately to the payment unit or the assigned unit together with a written attestation of the force majeure reason from the People’s Committee of the commune or ward where he/she resides, works or installs his/her office. 2. The first payee is entitled to ask the check issuer to hand him/her the cashier’s check which has been paid by the payment unit. 3. The payee of the check has the right : - To assign the check to another if the check has not been earlier written with the words "not assignable" or the words "not to be further assigned" in the part devoted to the assignment; - To terminate the subsequent assignment by writing before his/her signature the words "not to be further assigned" at the part reserved for the assignment before handing the check to the subsequent payee. 4. In case the check is refused payment, the payee of the check is entitled to ask the payment unit to certify the reason in writing. III. RIGHTS AND OBLIGATIONS OF THE PAYMENT UNIT 1. When receiving the check asking for payment, the payment unit must check the conditions for payment. In case the check is fully eligible for payment, the payment unit shall have to pay it immediately. If the check is received after the time of transaction with customers, the payment unit shall have to pay in the first hour of the following working day. In case the payment is delayed due to the fault of the payment unit and causes loss to the payee, the payment unit shall have to pay compensation to the latter. The compensation shall be calculated on the amount written on the check and the number of days of delayed payment at the interest rate of overdue debts of the ceiling interest rate of short term loans prescribed by the State Bank at the time of payment. The delayed payment period is calculated from the date when the payment unit receives the check. 2. In case many checks are sent at the same time to claim payment from an account which does not have enough money to pay all these checks, the priority of payment shall be determined according to the serial numbers of the checks, those with smaller numbers shall be paid first. 3. The payment unit is entitled to refuse payment and return the check to the assignee or the payee in case the check is not eligible for payment. When refusing payment of the check the payment unit has to establish the refusal bill. 4. The payment unit must print in advance the model forms to supply customers on demand. IV. RIGHTS AND OBLIGATIONS OF THE ASSIGNED UNIT 1. When receiving a check from the payee, the assigned unit shall have to check the validity of the check and its acceptance term. 2. The assigned unit shall have to open a book to monitor the checks assigned to it. After receiving and checking the check, the assigned unit must transfer the check immediately to the payment unit. If the check is received after the time of transaction with customers, the assigned unit must transfer the check to the payment unit at the first hour of the next working day. In case the transfer of the check is delayed due to the fault of the assigned unit and causes losses to the payee, the assigned unit must pay compensations to the payee; the compensation shall be calculated on the amount of money written on the check and the number of days of the delay in the transfer at an interest rate applied to the ceiling interest rate of short term loans prescribed by the Vietnam State Bank at the time of the transfer of the check. The period of delay is calculated from the date when the customer renders the check to the date when the assigned unit transfers the check to the payment unit. 3. In case of a force majeure reason which prevents the assigned unit from rendering the check immediately, after the force majeure reason has terminated, the assigned unit must immediately send the check to the payment unit attached to the certification of the force majeure reason by the People’s Committee of the commune or ward where it installs its office. 4. The assigned unit is entitled to refuse the assignment and return the check to the payee in the following cases: - The check is not valid; - The check has expired its acceptance term without a certification of the force majeure reason prescribed in Point 1, Section II, Part III of this Circular. 5. The assigned unit is allowed to collect the fee for check clearance of the customer who asks it to collect the money as defined by the State Bank. 6. The assigned unit must print in advance the model forms in order to meet the demand of the customer when he/she so requires. Part IV PROCEDURES FOR THE ISSUE AND USE OF CHECKS I. PROCEDURES OF CHECK SALE 1. When he/she needs to use the check, the account holder (or the person authorized by him/her) can put forth a proposal to sell the check and sends it to the payment unit. The buyer of the check must take along his/her identity card or passport or the identity card of armyman, defense worker or personnel together with the proposal for check sale so that the payment unit can proceed to the sale of the check. 2. The payment unit shall sell the check only to a customer who has opened a deposit account payment at the unit. - The payment unit shall check the proposal for check buying and the identity card or passport or identity card of armyman, defense worker and personnel of the check buyer. The payment unit shall have to print in advance or seal the name, address and codename of the payment unit; print, type or write the names, addresses and codenames of the account holders on all the checks before handing the checks to the customers. The maximum number of checks sold each time is one roll of checks to an individual and three rolls to a legal person (each roll comprises 10 checks). - The payment unit shall open a book to monitor the name, the address and codename of the account of the check buyer, the quantity and marks (serial number, number) of the check sold to the customer and asks the customer to sign reception. - The payment unit has the responsibility to print in advance the necessary indications on the cover of the rolls of checks. - The payment unit shall have to guide the customer how to use the check and other necessary indications and answer questions of the customer. 3. When receiving the check, the customer has to count the number of checks, check the number, name and marks of the account written on each check. If any error is detected, he/she must inform the payment unit in order to change for another check. If the customer does not check and count, when an error happens or when some checks are missing leading to the misuse of the checks, the account holder shall have to bear full responsibility for any resulting losses. II. PROCEDURES FOR ISSUING CHECKS 1. When issuing a check, the issuer shall issue only clearing checks within the scope defined in Point 5, Part I of this Circular. He/she must also: - Write the check with an unerasable ink, not write it with a pencil or red ink and must not make any correction or erasing on the check. - Write the amount of money at the prescribed place. The amount of money in words must match the amount in figures. - Write the date, month and year of signing the check for issue; the amount of money and the name, address and marks of the account (if any) of the payee on the stub of the check which must correspond with the check. - Write the first letter of the amount of money in the upper case and right at the beginning of the first line, not to space the lines or the letters or to add other letters between two letters already written close together. 2. Assignment of the signing for check issue: - Only the account holder has the right to assign others to sign for the issue of the checks. The assignee shall not assign the check to another person. - For an account holder who is an individual the assignment to another person to sign the issue of the check on one’s behalf must comply with the provision of law. Assigning the signing of check issue may apply to each issue of checks or within a given period. The assignment must be done according to the form and must be sent to the payment unit together with the model form of registration of the signature of the assignee. - For a legal person, the assignment shall be effected at the same time as the registration of the seal and signature for the use of the account. The person assigned to use the account is also the person entitled to issue the check on behalf of the account holder. In the absence of the assignees and the account holder has to temporarily assign another to sign for the issue of the check the assignment shall comply with the form defined and the letter of procuration must be sent to the payment unit in order to register the signature of the assignee. 3. In case the legal person has a chief accountant the check must also bear the signature of the chief accountant (or the person assigned by the chief accountant); if the legal person has no chief accountant or does not register the signature of the chief accountant, the check issuer must write the word "not available" under the word "chief accountant". The signature and seal on the check must correspond with the model already registered at the payment unit. 4. The account holder must not sign or affix the seal to the checks which have not gathered all the necessary elements (signed blank check). If the signed blank check is misused the account holder shall have to bear any resulting losses. 5. If the issue of the check is aimed only at paying through money order, the check issuer shall cross the two parallel lines crossing a corner or write and affix the seal on the word "demand deposit" at the left corner on the front of the check before handing the c