Circular 49/2024/TT-NHNN amend Circular 11/2022/TT-NHNN on bank guarantee

CIRCULAR

Amending and supplementing a number of articles of Circular No. 11/2022/TT-NHNN dated September 30, 2022, of the Governor of the State Bank of Vietnam, on bank guarantee

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Pursuant to the Civil Code dated November 24, 2015;

Pursuant to the Law on the State bank of Vietnam dated June 16, 2010;

Pursuant to the Law on Credit Institutions dated January 18, 2024;

Pursuant to the Law on Real Estate Business dated November 28, 2023;

Pursuant to the Ordinance on Foreign Exchange dated December 13, 2005, and the Ordinance Amending and Supplementing a Number of Articles of the Ordinance on Foreign Exchange dated March 18, 2013;

Pursuant to the Government’s Decree No. 102/2022/ND-CP dated December 12, 2022, defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam;

At the proposal of the Director of the Department of Credit for Economic Sectors;

The Governor of the State Bank of Vietnam hereby promulgates the Circular amending and supplementing a number of articles of Circular No. 11/2022/TT-NHNN dated September 30, 2022, of the Governor of the State Bank of Vietnam, on bank guarantee.

Article 1. Amending and supplementing a number of articles of Circular No. 11/2022/TT-NHNN

1. To amend and supplement Clauses 4, 13 and 15 of Article 3 as follows:

“4. Guarantee in the sale or lease-purchase of an off-plan house (below referred to as guarantee for an off-plan house) means a bank guarantee whereby the guarantor being a commercial bank or foreign bank branch makes a commitment with the beneficiary being the purchaser or hire-purchaser (below collectively referred to as the purchaser) to perform financial obligations on behalf of the guaranteed party being the owner of the off-plan house project (hereinafter referred to as the project owner) in case the project owner fails to hand over the house to the purchaser when the committed time of house handover is due while failing to perform or incompletely performing the financial obligations under the signed house purchase or lease-purchase contract; the project owner is required to acknowledge the compulsory debt and refund it to the guarantor under the signed agreement. In case a commercial bank or foreign bank branch provides guarantee on the basis of reciprocal guarantee, the reciprocal guarantee provider will be required to make a commitment with the commercial bank or foreign bank branch to perform financial obligations toward the commercial bank or foreign bank branch when the latter is required to perform financial obligations on behalf of the project owner; and the project owner is required to acknowledge the compulsory debt and refund it to the reciprocal guarantee provider under the signed agreement”.

“13. Written commitment to issue a letter of guarantee for off-plan house (hereinafter referred to as the written commitment to issue a letter of guarantee) means a written commitment made by the guarantor toward the project owner, confirming that the guarantor shall issue a letter of guarantee for all purchasers who choose to have a guarantee in the project owner's project approved to provide guarantee by the guarantor as stipulated in the guarantee agreement”.

“15. Financial obligations of a project owner toward a purchaser in guarantee for an off-plan house (below referred to as financial obligations of a project owner) means a money amount the project owner obligated to pay to the purchaser if the project owner fails to hand over the house according to the schedule as committed in the signed contract on house purchase or lease-purchase, including the money amount the project owner has received in advance from the purchaser after the date of receiving the letter of guarantee from the guarantor and other money amounts (if any) that the project owner is obligated to pay the purchaser as agreed upon in the signed contract on house purchase or lease-purchase”.

2. To amend and supplement Clause 3 Article 6 as follows:

“3. The guarantee balance in guarantee for an off-plan house shall be determined under Clause 7 Article 13 of this Circular”.

3. To amend and supplement Article 13 as follows:

“Article 13. Guarantee for off-plan houses

1. A commercial bank or foreign bank branch shall consider and decide on the provision of guarantee to a project owner when:

a) The project owner fully satisfies the requirements specified in Article 11 of this Circular (unless the commercial bank or foreign bank branch provides guarantee to the project owner on the basis of reciprocal guarantee);

b) The project owner has received the response from the provincial-level state management agency in charge of real estate business on the house's eligibility for purchase or lease-purchase.

2. Procedures for provision of guarantee for off-plan houses:

a) Based on the request of a project owner or reciprocal guarantee provider, a commercial bank or foreign bank branch shall consider, appraise and decide on the provision of guarantee to the project owner;

b) The guarantor and the project owner sign a guarantee provision agreement under Article 26 of the Law on Real Estate Business and Clause 12 Article 3, and Article 15 of this Circular;

c) Based on the signed guarantee provision agreement, the guarantor shall issue a written commitment to issue a letter of guarantee for the project owner for the latter to send a copy to the purchaser when signing a contract on house purchase or lease-purchase;

d) After signing a house purchase or lease-purchase contract that contains a provision on the financial obligations of the project owner, the project owner shall send such contract to the guarantor to request the latter to issue a letter of guarantee to the purchaser;

dd) The guarantor shall base itself on the house purchase or lease-purchase contract and guarantee provision agreement to issue a letter of guarantee and send it to the project owner for forwarding to the purchaser.

3. Validity period and contents of a guarantee provision agreement:

a) The guarantee provision agreement is valid from the date of its signing to the date the guarantee obligation under all letters of guarantee to the purchasers expire under Article 23 of this Circular and all obligations of the project owner toward the guarantor as agreed upon in the guarantee provision agreement have been fulfilled; except for the case where the parties agree to terminate the guarantee provision agreement ahead of schedule;

b) In addition to the provisions of Clause 2 Article 15 of this Circular (except the provisions of Points h and i in case of providing guarantee on the basis of reciprocal guarantee), a guarantee provision agreement must also have a content stating that the guarantor is obliged to issue a letter of guarantee to the purchaser upon receiving the house purchase or lease-purchase contract from the project owner before the deadline for house handover as committed in such contract, and send the letter of guarantee to the project owner for the latter for forwarding to the purchaser.

4. Validity period and contents of a written commitment to issue a letter of guarantee:

a) A written commitment to issue a letter of guarantee is valid from the date of its signing to the date of competing the issuance of the letter of guarantee before the deadline for house handover as committed in the house purchase or lease-purchase contract, or when the guarantee provision agreement expires (whichever occurs earlier);

b) A written commitment to issue a letter of guarantee must have the following contents:

(i) Information about the guarantor and the project owner;

(ii) Effect of the document;

(iii) Information about the guaranteed project or project part (if only one part of the project is guaranteed);

(iv) The guarantor's commitment on the issuance of the letter of guarantee for all purchasers who choose to have a guarantee in the project owner's project approved to provide guarantee by the guarantor;

(v) Financial obligations of a project owner toward a purchaser guaranteed by the commercial bank or foreign bank branch means a money amount the project owner obligated to pay to the purchaser if the project owner fails to hand over the house according to the schedule as committed in the signed contract on house purchase or lease-purchase, including the money amount the project owner has received in advance from the purchaser after the date of receiving the letter of guarantee from the guarantor and other money amounts (if any) that the project owner is obligated to pay the purchaser as agreed upon in the signed contract on house purchase or lease-purchase;

(vi) The dossier sent by the purchaser to the guarantor requesting performance of the guarantee obligation, which must be accompanied by the letter of guarantee issued by the commercial bank or foreign bank branch to the purchaser.

5. Validity period and contents of a letter of guarantee:

a) A letter of guarantee is valid from the date of its issuance to the date which is at least 30 days following the deadline for the project owner to fulfill financial obligations toward the purchaser in case where the project owner fails to hand over the house as committed in the house purchase or lease-purchase contract, except the case in which the guarantee obligation terminates as specified in Article 23 of this Circular. In case the guarantor and the project owner prematurely terminate the guarantee provision agreement, the letters of guarantee previously issued to the house purchasers remain valid until the guarantee obligation terminates;

b) In addition to the contents specified in Clause 1 Article 16 of this Circular, a letter of guarantee must also have a content clearly stating the financial obligations of the guaranteed project owner.

6. The amount of guarantee for every purchaser must not exceed the total amount which the project owner is allowed to receive in advance from the house purchaser as specified in Article 25 of the Law on Real Estate Business and other amounts (if any) under the house purchase or lease-purchase contract.

7. Guarantee balance in provision of guarantee for off-plan houses:

a) The guarantee balance for a project owner or reciprocal guarantee provider is equal to the amount covered by the financial obligation of the project owner. The guarantee balance shall gradually be reduced when the guarantee obligation toward every house purchaser terminates under Article 23 of this Circular;

b) The time of recording the guarantee balance is the time when the project owner notifies the guarantor of amounts received in advance from the house purchasers as specified at Point c of this Clause and other amounts of money (if any) under the house purchase or lease-purchase contract;

c) The guarantor and the project owner shall agree on the time to notify and update amounts received in advance from the house purchasers in the month which, however, must not be later than the last working day of the month, to serve as a basis for determining the guarantee balance. The project owner shall take responsibility before law for notifying the guarantor of accurate amounts received in advance from the house purchasers and the time of receipt.

8. A guarantor has the following rights and obligations:

a) A guarantor has the following rights

(i) To refuse to issue a letter of guarantee to the house purchaser if the house purchase or lease-purchase contract is incompliant with relevant laws or after terminating the guarantee provision agreement;

(ii) To refuse to perform the guarantee obligation for the money amount not covered by the project owner’s financial obligations or for the money amount paid by the house purchaser in excess of the rate specified in Article 25 of the Law on Real Estate Business or when the house purchaser fails to produce the letter of guarantee issued by the guarantor to the house purchaser.

b) A guarantor has the following obligations:

(i) To issue a letter of guarantee and send it to the project owner upon receiving a valid house purchase or lease-purchase contract before the deadline for house handover stated in such contract;

(ii) In case the guarantor and the project owner prematurely terminate the guarantee provision agreement, no later than the working day following the date of agreement termination, the guarantor shall publicly notify the termination on its website and notify such in writing to the provincial-level housing management agency in the locality where the project owner’s housing project is implemented; such a notice must clearly state that the guarantor will no longer issue a letter of guarantee to the house purchaser that signs a house purchase or lease-purchase contract with the project owner after the guarantor terminates the guarantee provision agreement with the project owner. For the letters of guarantee previously issued to the house purchasers, the guarantor shall continue to fulfill its commitments until the guarantee obligation terminates;

(iii) To perform the guarantee obligation for the money amount paid on behalf of the project owner which is equivalent to the project owner’s financial obligation as determined in the dossier of request for performance of the guarantee obligation provided by the house purchaser as suitable to the conditions for performance of the guarantee obligation specified in the letter of guarantee.

9. A project owner has the following rights and obligations:

a) A project owner has the right to

request the guarantor to issue a letter of guarantee to all house purchasers who choose to have a guarantee in the off-plan housing project guaranteed in the validity period of the written commitment to issue a letter of guarantee.

b) A project owner has the following obligations:

(i) To send a letter of guarantee issued by the guarantor to the house purchaser after receiving it from the guarantor in accordance with Clause 6 Article 26 of the Law on Real Estate Business;

(ii) In case the guarantor and the project owner prematurely terminate the guarantee provision agreement, no later than the working day following the date of agreement termination, the project owner shall publicly notify the termination on its website (if any) and notify such in writing to the provincial-level housing management agency in the locality where the project owner’s housing project is implemented. The project owner shall stop providing the purchaser an invalid written commitment to issue a letter of guarantee when the guarantee provision agreement between the project owner and the guarantor is invalid;

(iii) To notify the guarantor of the accurate money amount received in advance from every purchaser and other amounts of money (if any) according to the schedule as agreed upon under Point c Clause 7 of this Article.

10. A purchaser has the following rights:

a) To receive the guarantor-issued letter of guarantee from the project owner;

b) To request the guarantor to perform the guarantee obligation for the project owner’s financial obligations on the basis of producing the letter of guarantee accompanied by supporting documents.

11. In addition to the provisions of this Article, other contents on provision of guarantee for off-plan houses must comply with the relevant provisions of this Circular”.

4. To amend and supplement Article 17 as follows:

“Article 17. Competence to sign guarantee provision agreements, guarantee commitments and written commitments to issue letters of guarantee

1. Guarantee provision agreements, guarantee commitments and written commitments to issue letters of guarantee shall be signed by lawful representatives of credit institutions or foreign bank branches in accordance with law and internal regulations of such credit institutions or foreign bank branches.

2. The use of e-signatures and authorization for signing of guarantee provision agreements, guarantee commitments and written commitments to issue letters of guarantee must comply with relevant laws”.

Article 2. Repealing a number of articles of Circular No. 11/2022/TT-NHNN

To repeal Point b Clause 1, Point b Clause and Clause 5 Article 34 of Circular No. 11/2022/TT-NHNN.

Article 3. Implementation organization

The Chief of the Office, the Director of the Credit Department for Economic Sectors, and heads of the units of the State Bank, credit institutions and foreign bank branches shall organize the implementation of this Circular.

Article 4. Implementation provisions

1. This Circular takes effect from December 10, 2024.

2. For guarantee provision agreements and guarantee commitments signed and taking effect before the effective date of this Circular, credit institutions, foreign bank branches and clients shall continue to comply with the signed contents in accordance with the law in force at the time of signing such guarantee provision agreements and guarantee commitments. The modification or supplementation of such guarantee provision agreements and guarantee commitments may only be made if the to-be-modified or -supplemented contents are compliant with this Circular.