While foreign bank branches and credit institutions generally negotiate lending and document trading interest rates themselves, the State Bank of Viet Nam will stipulate an inter-bank rate in case of unexpected developments.

This is in accordance with Circular No 21/2012/TT-NHNN dated June 18, which the SBV said it issued to meet development demand in the inter-bank market based on publicity, transparency, efficiency and security.

Transactions involving lending or valuable documents such as Government bonds, State Bank bills and bills of exchange are to be carried out via contracts and alongside provisional funds to counter risks related to such activities, the circular states.

Transactions must be implemented in under one year and through the main headquarters of branches or institutions with the aim to balance short-term payment abilities and capital sources.

The circular also requires credit institutions wishing to implement inter-bank transactions to be free of overdue debts of 10 days and above.

Source VNS