Vietnamese people will no longer be allowed to use cash to purchase cars and securities, if a draft decree suggested by the central bank is approved, Tuoi Tre reported on Friday.
For other transactions, such as the purchase of real estate and motorbikes, cash payments would be prohibited when in excess of a regulated amount, according to the draft which has been introduced by the State Bank of Vietnam for gathering public opinions.
The draft, however, does not specify what the limit would be, as the exact amount needs to be “thoroughly studied” before being discussed on a large scale, said the central bank’s Department of Payment, noting that the draft will have to be revised for many times before being submitted to the government.
Planned to be submitted to the government for approval this second quarter, and take effect in June at latest, the draft also targets organizations that transfer payments through banks on transactions of assets that require registration, such as boat sales.
Once the draft is approved, those who fail to conform to the regulation will not be allowed to register assets paid for in cash for titles and use rights, Bui Quang Tien, chief of the state bank’s Department of Payment, was quoted as saying.
According to the department, the draft is actually a replacement for the current decree, which limits cash payments for state budget-related transactions to VND30 million (US$1,434).
The original decree was issued in 2006 to improve the “health” and “transparency” of major transactions, reasoning that cash payments imply risks of corruption, money laundering, tax evasion and other illegal activities, the department said.
In addition to its initial objective, the draft, with the expansion of subjected transactions, will help modify Vietnamese people’s preference of using cash that create a big burden for the country’s automated teller machines (ATMs), it said.
The revision will also help prevent counterfeit money from changing hands, it added.
Speaking to Tuoi Tre, Nguyen Thanh Toai, deputy general director of Asia Commercial Bank said it is “reasonable” to force major transactions such as those involving land and housing to be made via banks, adding that the regulation will also increase the transactions’ “transparency.”
He also said that it will not be difficult for people to transfer money, because most of large transactions take place at the country’s economic centers like Hanoi and HCMC, where banks can be found everywhere.
Phan Thi Chinh, deputy general director of BIDV, agreed, saying that it is necessary to mandate that people present bank receipts which prove the transfer of funds before being allowed to proceed with subsequent necessary to acquire purchased assets.
On the other hand, lawyer Truong Thanh Duc from the Vietnam International Arbitration Center said some regulations of the draft failed to encourage people to stop using cash.
For example, one of its regulations says that banks are allowed to decide charges on their cash transaction services, which shows that the draft only makes it convenient for service suppliers and does not aim to deter cash payments, according to Duc.
As of April 2012, cash disbursements accounted for up to 70.2 percent of transaction values at several major banks like Vietcombank and BIDV, Tuoi Tre reported.
Meanwhile, a representative of the Vietnam Card Association was quoted in VnExpress as saying that ATM cards were first introduced 20 years ago in Vietnam, which now has tens of millions of cardholders, but who mostly use the cards to withdraw cash.
As of September 30, 2012, Vietnam’s banks had issued nearly 51 million credit and debit cards, the online newspaper quoted the central bank’s statistics as saying.
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