Circular 61/2024/TT-NHNN on bank guarantee

CIRCULAR

Prescribing bank guarantee^[1]

Pursuant to the November 24, 2015 Civil Code;

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

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

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

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

Pursuant to the Government’s Decree No. 102/2022/ND-CP of December 12, 2022, defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam; and the Government’s Decree No. 146/2024/ND-CP of November 6, 2024,  amending, supplementing or annulling a number of articles of the Government’s Decree No. 102/2022/ND-CP of December 12, 2022, defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam, and the Government’s Decree No. 26/2014/ND-CP of April 7, 2014, on the organization and operation of banking inspection and supervision agencies, which is amended and supplemented under the Government’s Decree No. 43/2019/ND-CP of May 17, 2019;

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

The Governor of the State Bank of Vietnam promulgates the Circular prescribing bank guarantee.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

This Circular prescribes the bank guarantee operations of credit institutions and foreign bank branches for customers.

Article 2. Subjects of application

1. Credit institutions, including commercial banks, cooperative banks, and general finance companies.

2. Foreign bank branches.

3. Individuals and organizations related to guarantee operations, including resident and non-resident ones.

Article 3. Interpretation of terms

In this Circular, the terms below are construed as follows:

1. Bank guarantee means a form of credit extension to a customer in which the guarantor, being a credit institution or foreign bank branch, commits to the beneficiary to perform financial obligations on behalf of the obligor (below referred to as the guaranteed party) when the guaranteed party fails to perform or fully perform the obligations committed to the beneficiary; the customer is subject to mandatory debt payment and repay the guarantor according to their agreement.

2. Counter-guarantee means a form of bank guarantee in which the counter-guarantor commits to the guarantor to perform financial obligations to the guarantor in case the guarantor has to perform financial obligations on behalf of the guaranteed party; the customer of the counter-guarantor is subject to mandatory debt payment and repay the counter-guarantor according to their agreement.

3. Guarantee confirmation means a form of bank guarantee in which the guarantee-confirming party commits to the beneficiary to ensure the guarantor’s ability to perform its obligations to the beneficiary. The guarantee-confirming party shall perform the financial obligations on behalf of the guarantor if the guarantor fails to perform or fully perform the obligations committed to the beneficiary; the guarantor is subject to mandatory debt payment and repay the guarantee-confirming party, while the guarantor’s customer is subject to mandatory debt payment and repay the guarantor according to their agreement.

4. Guarantee in the sale or lease-purchase of future housing (below referred to as guarantee of future housing) means a bank guarantee in which the guarantor being a commercial bank or a foreign bank branch commits to the beneficiary being the buyer or lessee of the housing (below referred to as the buyer) to perform financial obligations on behalf of the guaranteed party being the project owner of the future housing project (below referred to as the project owner) when the committed deadline for handing over and receiving the housing comes but the project owner fails to hand over the housing to the buyer without performing or fully performing the financial obligations under the signed housing purchase or lease-purchase contract; the project owner is subject to mandatory debt payment and repay the guarantor according to their agreement. In case a commercial bank or foreign bank branch provides a guarantee on the basis of counter-guarantee, the counter-guarantor shall commit to the commercial bank or foreign bank branch to perform the financial obligations to the latter when the latter has to perform the financial obligations on behalf of the project owner; the project owner is subject to mandatory debt payment and repay the counter-guarantor according to their agreement.

5. Co-guarantee means a form of syndicated credit extension in which 2 (two) or more credit institutions or foreign bank branches jointly perform the guarantee; or a credit institution or foreign bank branch and an overseas credit institution jointly perform the guarantee.

6. Guarantor means a credit institution or foreign bank branch that provides a guarantee for the guaranteed party. In case of co-guarantee, counter-guarantee or guarantee confirmation, the guarantor may also be an overseas credit institution.

7. Guaranteed party means an organization (including a credit institution, foreign bank branch or overseas credit institution) or an individual that has an obligation to the beneficiary and is guaranteed by the guarantor or the counter-guarantor.

8. Beneficiary means an organization (including a credit institution, foreign bank branch or overseas credit institution) or an individual that is entitled to benefit from the guarantee issued by the guarantor or the guarantee-confirming party.

9. Counter-guarantor means a credit institution, foreign bank branch or foreign credit institution that provides a counter-guarantee for the guaranteed party.

10. Guarantee-confirming party means a credit institution, foreign bank branch or overseas credit institution that confirms the guarantee for the guarantor.

11. Customer of a credit institution or foreign bank branch (below referred to as customer) means an organization (including a credit institution, foreign bank branch or overseas credit institution) or an individual, specifically as follows:

a/ In a bank guarantee (except counter-guarantee and guarantee confirmation), the customer of the guarantor is the guaranteed party or the party requesting the credit institution or foreign bank branch to issue a guarantee for the guaranteed party;

b/ In a counter-guarantee, the customer of the counter-guarantor is the guaranteed party or the party requesting the credit institution or foreign bank branch to issue a counter-guarantee for the guaranteed party; the customer of the guarantor is the counter-guarantor;

c/ In a guarantee confirmation, the customer of the guarantee-confirming party is the guarantor; the customer of the guarantor is the guaranteed party or the party requesting the credit institution or foreign bank branch to issue a guarantee to the guaranteed party.

12. Guarantee issuance agreement means an agreement between the guarantor or counter-guarantor or guarantee-confirming party and the customer and other related parties (if any) on the issuance of a bank guarantee, counter-guarantee, or guarantee confirmation for the customer.

13. Written commitment to issue a letter of guarantee for future housing (below referred to as written commitment to issue a letter of guarantee) means a written commitment of the guarantor to the project owner affirming that the guarantor will issue a letter of guarantee to all selected buyers with a guarantee belonging to the project owner’s project approved by the guarantor as stipulated in the guarantee issuance agreement.

14. Guarantee commitment means a commitment issued by the guarantor or counter-guarantor or guarantee-confirming party in one of the following forms:

a/ Letter of guarantee, which is a commitment by the guarantor to the beneficiary that the guarantor will perform the financial obligations on behalf of the guaranteed party when the guaranteed party fails to perform or fully perform the obligations committed to the beneficiary.

In case of counter-guarantee or guarantee confirmation, a letter of guarantee includes both the commitment of the counter-guarantor to the guarantor and that of the guarantee-confirming party to the beneficiary;

b/ Guarantee contract, which is an agreement between the guarantor and the beneficiary and related parties (if any) on the guarantor’s performance of financial obligations on behalf of the guaranteed party when the guaranteed party fails to perform or fully perform the obligations committed to the beneficiary.

In case of counter-guarantee or guarantee confirmation, the guarantee contract includes the agreement between the counter-guarantor and the guarantor and other related parties (if any), and that between the guarantee-confirming party and the beneficiary and other related parties (if any).

In particular, the guarantee for future housing shall only be issued in the form of letter of guarantee.

15. Financial obligations of the project owner to the buyer in the guarantee for future housing (below referred to as financial obligations of the project owner) means the amounts the project owner is obliged to pay to the buyer when the project owner fails to hand over the house on time as committed in the signed house purchase or lease-purchase contract, including: the amount the project owner has received in advance from the buyer after the buyer has received a letter of guarantee from the guarantor, and other amounts (if any) the project owner is obliged to pay to the buyer according to their agreement in the signed house purchase or lease-purchase contract.

Article 4. Foreign exchange management in guarantee

1. The issuance of foreign-currency guarantees by credit institutions and foreign bank branches must comply with the scope of foreign exchange activities in the domestic and international markets stated in the operation license of each type of credit institution or foreign bank branch.

2. Credit institutions and foreign bank branches may only provide foreign-currency guarantees to customers for financial obligations in foreign currency in accordance with law.

Article 5. Cases in which guarantees are not allowed, guarantees are restricted, and credit extension limits are imposed

When providing guarantees, credit institutions and foreign bank branches shall comply with the provisions of the Law on Credit Institutions and the regulations of the State Bank of Vietnam (below referred to as the State Bank) regarding cases in which credit extension is not allowed, credit extension is restricted, and credit extension limits are imposed.

Article 6. Determination of guarantee balance

1. The guarantee balance for a customer or for a customer and its/his/her related persons includes the balance issued for a guarantee commitment, the balance issued for a counter-guarantee commitment, and the balance issued for a guarantee confirmation commitment for that customer or for that customer and related persons.

2. The guarantee balance for a customer or for a customer and its/his/her related persons shall be calculated from the date of issuance of the guarantee commitment.

3. The guarantee balance in the guarantee for future housing shall be determined according to Clause 7, Article 13 of this Circular.

Article 7. Use of language

1. Guarantee issuance agreements and guarantee commitments shall be made in Vietnamese, except the cases specified in Clause 2 of this Article.

2. Credit institutions and foreign bank branches may agree with relevant parties to use foreign languages ​​in the following cases:

a/ Guarantee transactions in civil relations involving foreign elements as prescribed by the Civil Code;

b/ Guaranteed obligations arising when implementing projects funded by international financial institutions according to the State Bank’s regulations on prudential limits and ratios in the operations of banks and foreign bank branches;

c/ Guaranteed obligations arising when participating in international bidding packages;

d/ Guarantee transactions issued through the SWIFT system.

3. In case foreign languages ​​are used, upon request of a competent agency, all documents or data messages shall be translated into Vietnamese with certification by the legal representatives of the credit institutions or foreign bank branches or shall be notarized or authenticated with the foreign-language versions attached.

Article 8. Application of practices and selection of dispute resolution

1. Parties participating in bank guarantees, counter-guarantees, guarantee confirmations, and co-guarantees may agree to apply commercial practices in accordance with Article 3 of the Law on Credit Institutions.

2. Disputes arising in guarantee transactions shall be resolved according to the agreement of the parties in accordance with law. In case the guarantee involves foreign elements or the parties choose to apply international commercial practices, the parties may agree on the applicable law and the dispute resolution body (including foreign courts or commercial arbitration) to solve disputes regarding guarantee transactions.

Article 9. Electronic guarantee activities

1. Credit institutions, foreign bank branches and customers may choose to perform bank guarantee activities through electronic means (below referred to as electronic guarantee activities).

The implementation of electronic guarantee activities must comply with this Circular and the laws on anti-money laundering; electronic transactions; protection of personal data; and safety and security for the provision of online services in the banking sector, and relevant laws.

2. When identifying customers and verifying customer identification information via electronic means for customers establishing a relationship with a credit institution or foreign bank branch for the first time (except cases where customers send a request by authentication telegraph via the SWIFT system or customers use electronic signatures in accordance with law), credit institutions and foreign bank branches shall proceed with the following:

a/ For customers that are residents: Credit institutions and foreign bank branches shall identify customers and verify customer identification information in accordance with the State Bank’s regulations on opening and use of payment accounts at payment service providers;

b/ For customers that are non-residents: Credit institutions and foreign bank branches shall identify customers and verify customer identification information based on self-assessment of the level of risk to select and decide on appropriate measures, forms and technologies, ensuring safety, and bearing all arising risks.

3. Credit institutions and foreign bank branches shall decide on their own measures, forms and technologies for implementing electronic guarantee activities applicable to all stages or each stage in the guarantee process, bear all arising risks (if any), and must meet at least the following requirements:

a/ Measures, forms and technologies selected by credit institutions and foreign bank branches must comply with the State Bank’s regulations on security, safety and confidentiality;

b/ Appropriate forms of electronic transaction confirmation to customers shall be applied when performing electronic transactions during the implementation of electronic guarantee operations in accordance with relevant laws;

c/ Documents, information and data for customer identification shall be stored and preserved fully and in detail during the implementation of electronic guarantee operations. Information and data shall be stored securely and confidentially, and backed up, ensuring the completeness and integrity of the data to serve the work of checking, comparing and verifying customers during the process of performing electronic guarantee operations; resolving trace requests, complaints and disputes and providing information when requested by competent authorities. The retention period must comply with the laws on anti-money laundering and electronic transactions;

d/ Credit institutions and foreign bank branches shall conduct inspections and assessments of the safety and security of measures, forms and technologies, and promptly upgrade and update them in case of detecting signs of insecurity;

dd/ It is required to define the specific roles and responsibilities of each individual and division in building, establishing and operating the information system serving the appraisal and credit extension decision stages in electronic guarantee operations. When any risks arise, the banks must have a mechanism to identify each responsible individual and division and promptly handle arising issues and risks to ensure efficiency and safety in the process of implementing the banks’ electronic guarantee operations.

4. In case of identifying customers and verifying customer identification information via electronic means, the value of each guarantee commitment (in case the guarantee currency is a foreign currency, to apply the conversion rate according to the guarantor’s regulations at the time of issuing the guarantee commitment) issued to individual customers must not exceed 4,000,000,000 (four billion) Vietnam dong, and to institutional customers must not exceed 45,000,000,000 (forty-five billion) Vietnam dong, except the following cases:

a/ Customer identification information is authenticated by a competent state agency or electronically authenticated through an electronic authentication service provider in accordance with the law on electronic identification and authentication;

b/ Customers send a request for a guarantee by electronic authentication via the SWIFT system;

c/ Customer information and guaranteed obligations are matched through the Customs Electronic Payment Portal or the Vietnam national E-Procurement System;

d/ Customers use electronic signatures in accordance with law when requesting issuance of a guarantee or signing a guarantee issuance agreement with a credit institution or foreign bank branch;

dd/ Customers are credit institutions or foreign bank branches.

5. The information system for performing electronic guarantee activities must comply with regulations on ensuring information system safety at level 3 or higher in accordance with the law on level-based security for information systems, and the State Bank’s regulations on security for information systems in banking operations.

Chapter II

SPECIFIC PROVISIONS

Article 10. Scope of guarantee

The guarantor may commit to guarantee part or the whole of the financial obligations the guaranteed party is obliged to perform for the beneficiary.

Article 11. Requirements for customers

1. A credit institution or foreign bank branch shall consider and decide to issue guarantee, counter-guarantee, and guarantee confirmation to a customer that meets the following requirements:

a/ Having full civil legal capacity and civil act capacity as prescribed by law;

b/ The guaranteed obligation is a lawful financial obligation;

c/ The credit institution or foreign bank branch assesses that the customer has the ability to repay the amount the credit institution or foreign bank branch has to pay on the customer’s behalf when performing the guarantee obligation.

2. Credit institutions and foreign bank branches are not allowed to guarantee the bond payment obligations of issuing enterprises for the purposes of: restructuring the debts of the issuing enterprise itself; contributing capital to, purchasing shares in, other enterprises, and increasing the operating capital.

Article 12. Guarantees for non-resident customers

1. Credit institutions and foreign bank branches are only allowed to guarantee for non-resident institutional customers and must satisfy one of the following requirements (not applicable to customers that are overseas credit institutions):

a/ Customers are economic organizations established and operating abroad with capital contributed by Vietnamese enterprises in the form of investment specified at Points a and c, Clause 1, Article 52 of the Investment Law or in other forms of investment specified at Point dd, Clause 1, Article 52 of the Investment Law;

b/ Such a customer deposits 100% of the guarantee value or has 100% of the guarantee value secured by the customer’s assets, including the deposit balance at the guarantee-providing credit institution or foreign bank branch, and the deposit certificate of the guarantee-providing credit institution or foreign bank branch;

c/ The beneficiary is a resident.

2. Foreign bank branches are not allowed to provide guarantees in foreign currency for non-resident institutional customers, except cases where the beneficiary is a resident.

3. When providing guarantees in foreign currency for non-resident customers, credit institutions and foreign bank branches shall:

a/ Comply with the State Bank’s regulations on foreign exchange management for lending abroad and debt collection for non-residents;

b/ Have a process for assessing and managing credit risks, including risks in guarantees for non-residents.

4. In addition to the provisions of this Article, other contents on guarantees for non-resident customers must comply with the corresponding provisions of this Circular.

Article 13. Guarantees for future housing

1. Commercial banks and foreign bank branches shall consider and decide to grant guarantees to investor project owner when:

a/ The project owner meets all the requirements specified in Article 11 of this Circular (except cases where commercial banks and foreign bank branches provide guarantees for the project owner on the basis of counter-guarantees);

b/ The project owner has received a document from the provincial-level state management agency in charge of real estate business responding to the project owner that the housing is eligible for sale or lease-purchase.

2. Procedures for implementing guarantees for future housing:

a/ Based on the request of the project owner or the counter-guarantor, the commercial bank or foreign bank branch shall consider, appraise and decide to issue a guarantee to the project owner;

b/ The guarantor and the project owner shall sign a guarantee issuance agreement in accordance with Article 26 of the Law on Real Estate Business and Clause 12, Article 3, and Article 15, of this Circular;

c/ Based on the guarantee issuance agreement, the guarantor shall issue a written commitment to issue a letter of guarantee to the project owner for sending a copy thereof to the buyer when signing the house purchase or lease-purchase contract;

d/ After signing the house purchase or lease-purchase contract, which stipulates the financial obligations of the project owner, the project owner shall send the house purchase or lease-purchase contract to the guarantor to request issuance of a letter of guarantee to the buyer;

dd/ The guarantor shall, based on the house purchase or lease-purchase contract, the guarantee issuance agreement and the written commitment to issue a letter of guarantee, issue a letter of guarantee and send it to the project owner for provision to the buyer.

3. Validity period and content of a guarantee issuance agreement:

a/ The guarantee issuance agreement is valid from the date of its signing until the guarantee obligation under all letters of guarantee for the buyer terminates as prescribed in Article 23 of this Circular, and all obligations of the project owner to the guarantor under the guarantee issuance agreement have been fulfilled, except in cases where the parties agree to terminate the guarantee issuance agreement ahead of time;

b/ In addition to the contents specified in Clause 2, Article 15 of this Circular (except the contents at Points h and i in case of guarantee based on counter-guarantee), the guarantee issuance agreement must also state that the guarantor is obliged to issue a letter of guarantee to the buyer before the deadline for handing over and receiving the house according to the commitment specified in the house purchase or lease-purchase contract, upon receiving the house purchase or lease-purchase contract from the project owner, and send the letter of guarantee to the project owner for provision to the buyer.

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

a/ The written commitment to issue a letter of guarantee is valid from the date of its signing until the completion of the issuance of a letter of guarantee to all buyers before the deadline for handing over and receiving the house as committed in the house purchase or lease-purchase contract or when the guarantee issuance agreement expires (whichever comes first);

b/ The written commitment to issue a letter of guarantee must have the following contents:

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

(ii) Validity of the written commitment;

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

(iv)  The guarantor’s commitment to issue a letter of guarantee to all buyers that choose to have a guarantee in the project owner’s project that the guarantor has approved to provide guarantee for the project owner;

(v) The project owner’s financial obligation to the buyer guaranteed by a commercial bank or foreign bank branch, which is the amount the project owner is obliged to pay to the buyer when failing to hand over the house on time as committed in the signed house purchase or lease-purchase contract. This amount includes the amount the project owner has received in advance from the buyer after the buyer has received the letter of guarantee from the guarantor, and other amounts (if any) the project owner is obliged to pay to the buyer as agreed in the signed house purchase or lease-purchase contract;

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

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

a/ The letter of guarantee is valid from the date of its issuance until the time that is at least 30 days after the deadline for the project owner to fulfill its financial obligations to the buyer when failing to hand over the house as committed in the house purchase or lease-purchase contract, except cases where the guarantee obligation terminates under Article 23 of this Circular. In case the guarantor and the project owner prematurely terminate the guarantee issuance agreement, the letters of guarantee previously issued to the buyers remain valid until the guarantee obligation terminates;

b/ In addition to the contents specified in Clause 1, Article 16 of this Circular, the letter of guarantee must also clearly state the financial obligations of the project owner to be guaranteed and clearly state that the dossier sent by the buyer to the guarantor requesting the performance of the guarantee obligation must be accompanied by a letter of guarantee issued by a commercial bank or foreign bank branch to the buyer.

6. The maximum guarantee amount for each buyer is equal to the total amount the project owner is allowed to receive in advance from the buyer 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 the guarantee for future housing:

a/ The guarantee balance for the project owner or the counter-guarantor is equal to the amount of the project owner’s financial obligation. The guarantee balance gradually decreases when the guarantee obligation for each buyer terminates as specified in Article 23 of this Circular;

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

c/ The guarantor and the project owner shall agree on the time of notification and update of the amounts received in advance from the buyers during the month, which, however, is no later than the last working day of the month, as a basis for determining the guarantee balance. The project owner is responsible before law for notifying the guarantor of the exact amounts and time of receipt of advance payments from the buyers.

8. The guarantor has the following rights and obligations:

a/ The guarantor has the rights to:

(i) Refuse to issue a letter of guarantee to the buyer if the house purchase or lease-purchase contract does not comply with relevant legal provisions or after the guarantee issuance agreement has been terminated;

(ii) Refuse to perform the guarantee obligation for the amount that is not the financial obligation of the project owner or the amount paid by the buyer that exceeds the rate specified in Article 25 of the Law on Real Estate Business or the buyer fails to present the letter of guarantee issued by the guarantor to the buyer.

b/ The guarantor is obliged to:

(i) Issue a letter of guarantee before the deadline for handing over and receiving the house as stipulated in the house purchase or lease-purchase contract upon receipt of a valid house purchase or lease-purchase contract, and send it to the project owner;

(ii) In case the guarantor and the project owner prematurely terminate the guarantee issuance agreement, no later than the next working day, the guarantor shall publicly announce on its website and notify in writing the provincial-level housing management agency in the locality where the project owner’s housing project is located, clearly stating that the guarantor will no longer issue a letter of guarantee for the buyer to sign a house purchase or lease-purchase contract with the project owner after the time the guarantor terminates the guarantee agreement with the project owner. For letters of guarantee previously issued to the buyer, the guarantor shall continue to perform its commitment until the guarantee obligation is terminated;

(iii) Perform the guarantee obligation with regard to the amount of payment corresponding to the financial obligations of the project owner determined based on the request for performance of guarantee obligations provided by the buyer in conformity with the conditions for performance of guarantee obligations specified in the letter of guarantee.

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

a/ The project owner has the right to request the guarantor to issue a letter of guarantee to all buyers who choose to have a guarantee for the future housing project under the guarantee within the validity period of the written commitment to issue the letter;

b/ The project owner is obliged to:

(i) Send the letter of guarantee issued by the guarantor to the buyer after receiving it from the guarantor under Clause 6, Article 26 of the Law on Real Estate Business;

(ii) In case the guarantor and the project owner prematurely terminate the guarantee issuance agreement, no later than the next working day, the project owner shall publicly announce on its website (if any) and notify in writing the provincial-level housing management agency in the locality where the project owner’s housing project is located that the guarantor has terminated the guarantee for the project owner. The project owner shall stop providing the buyer with a written commitment to issue a letter of guarantee that has expired when the guarantee issuance agreement between the project owner and the guarantor expires;

(iii) Notify the guarantor of the exact amount of advance payment received from each buyer and other amounts (if any) within the agreed time as specified at Point c, Clause 7 of this Article.

10. The buyer has the rights to:

a/ Receive a letter of guarantee issued by the guarantor from the project owner;

b/ Request the guarantor to perform the guarantee obligation for the project owner’s financial obligations on the basis of presenting a letter of guarantee with the dossier consistent with the letter of guarantee.

11. In addition to the provisions of this Article, other contents on the guarantee of future housing must comply with the corresponding provisions of this Circular.

Article 14. Guarantee application dossier

1. A guarantee application dossier must comprise the following main documents:

a/ A guarantee application;

b/ Documents on the customer, including information on the persons related to the customer as prescribed in the Law on Credit Institutions if the total outstanding credit balance of that customer at the credit institution or foreign bank branch (including also the amount being requested for guarantee) is greater than or equal to 0.1% of the own capital of the credit institution or foreign bank branch at the end of the working day closest to the time the customer applies for the guarantee, except cases where the customer is an overseas credit institution. In case the credit institution’s or foreign bank branch’s own capital is negative, the above ratio is that to the charter capital or allocated capital (for foreign bank branches). Information on related persons includes:

(i) Information on related persons who are individuals, including: full name, personal identification number for Vietnamese citizens; nationality, passport number, date of issuance, and place of issuance for foreigners; relationship with the customer;

(ii) Information on related persons that are organizations, including: name, enterprise identification number, head office address of the enterprise, number of enterprise registration certificate or paper of equivalent legal validity, legal representative, relationship with the customer.

c/ Documents on guaranteed obligations;

d/ Documents on security measures (if any);

dd/ Documents on other related parties (if any).

2. Based on the actual situation of the guarantee operations of credit institutions and foreign bank branches and the specific characteristics of each group of customers and each method of performing guarantee activities (by conventional means or electronic means), credit institutions and foreign bank branches shall provide specific guidance on the requirements for dossiers to be sent to credit institutions and foreign bank branches for appraisal and consideration of guarantee issuance.

Article 15. Guarantee issuance agreement

1. To issue a guarantee to a customer, the credit institution or foreign bank branch and the customer shall establish a guarantee issuance agreement. In case of issuing a guarantee based on counter-guarantee or guarantee confirmation, the guarantor is not required to establish a guarantee issuance agreement with the counter-guarantor or the guarantee-confirming party.

2. The guarantee issuance agreement must have the following contents:

a/ Applicable law. In case the applicable law is not specified, it is understood that the parties agree to apply Vietnam’s law;

b/ Information about the parties in the guarantee relationship;

c/ Guaranteed obligations;

d/ Guarantee amount, guarantee currency;

dd/ Form of guarantee commitment issuance;

e/ Conditions for performing the guarantee obligations;

g/ Rights and obligations of the parties;

h/ Guarantee fee;

i/ Agreement on mandatory in-lieu debt payment, interest rate applied to the amount paid in lieu and debt repayment obligation when the guarantee obligation must be performed;

k/ Number, date of signing, validity period of the guarantee issuance agreement;

l/ Resolution of arising disputes;

m/ Other contents that are not contrary to law.

3. The revision, supplementation or cancellation of the content of the guarantee issuance agreement shall be agreed upon and decided by the relevant parties in accordance with law.

Article 16. Guarantee commitment

1. Based on the guarantee issuance agreement, the guarantor or the guarantee-confirming party shall issue to the beneficiary a guarantee commitment with the following contents:

a/ Applicable law. In case the applicable law is not specified, it is understood that the parties agree to apply Vietnam’s law;

b/ Number of the guarantee commitment;

c/ Information about the parties in the guarantee relationship;

d/ Date of guarantee issuance, date of commencement of validity of the guarantee and/or case of commencement of validity of the guarantee;

dd/ Date of expiry and/or case of expiry of validity of the guarantee;

e/ Guarantee amount and currency;

g/ Guarantee obligations;

h/ Conditions for performing the guarantee obligations;

i/ Dossier requesting the performance of the guarantee obligations, comprising the written request for performance of the guarantee obligations, together with a list of documents and papers to be provided;

k/ The method for the beneficiary to verify the authenticity of the guarantee commitment;

l/ Other contents that are not contrary to law.

2. The revision, supplementation or cancellation of the content of the guarantee commitment shall be agreed upon by the relevant parties in the guarantee issuance agreement in accordance with law.

3. For guarantee commitments issued through an international communication network, credit institutions and foreign bank branches shall comply with the international communication network’s content and procedures for issuing guarantee commitments. Credit institutions and foreign bank branches must have a process for monitoring and managing guarantee issuance activities in these cases to ensure safety and efficiency.

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

1. Guarantee issuance agreements, guarantee commitments and written commitments to issue letters of guarantee shall be signed by the legal representative of the credit institution or foreign bank branch in accordance with law and internal regulations of the credit institution or foreign bank branch.

2. The use of electronic signatures and the authorization for signing guarantee issuance agreements, guarantee commitments and written commitments to issue letters of guarantee must comply with relevant laws.

Article 18. Security for the performance of customer obligations

1. Credit institutions and foreign bank branches shall agree with customers and related parties (if any) on the application or non-application of security measures when performing guarantee operations.

2. Credit institutions and foreign bank branches shall set specific principles and requirements for not applying security measures. In case of agreement to apply security measures, the parties shall implement them in accordance with the regulations on security for the performance of obligations and the internal regulations of the credit institutions or foreign bank branches.

Article 19. Guarantee fees

1. Credit institutions and foreign bank branches shall agree on the guarantee fee rates for customers and related parties (if any) and publicly post the guarantee fee rates.

2. In case of co-guarantee, the co-guarantors shall agree on the guarantee fee rates for each co-guarantor.

3. In case a credit institution or foreign bank branch guarantees a joint obligation, it shall agree with each customer on the fee rates to be paid based on the respective joint obligation of each customer, unless otherwise agreed by the parties.

4. In case the guarantee currency is a foreign currency, the parties shall agree to collect the guarantee fees in foreign currency or convert them into Vietnam dong at the selling rate applied by the guarantor at the time of fee collection or at the time of fee collection notification.

5. The parties may agree to adjust the guarantee fee rates.

Article 20. Validity period of guarantee commitments, guarantee issuance agreements

1. The validity period of a guarantee commitment shall be determined from or after the time of issuance of the guarantee commitment as agreed by the relevant parties until the termination of the guarantee obligations as specified in Article 23 of this Circular. The validity period of the letter of guarantee in the guarantee for future housing must comply with Clause 5, Article 13 of this Circular.

2. The validity period of the guarantee issuance agreement shall be agreed upon by the parties but must be at least equal to the validity period of the guarantee commitment. The validity period of the guarantee issuance agreement in the guarantee for future housing must comply with Clause 3, Article 13 of this Circular.

3. In case the expiry date of the guarantee commitment or guarantee issuance agreement falls on a day off, holiday, or New Year holiday, it shall be moved forward to the next working day.

4. The extension of the validity period of the guarantee commitment and the guarantee issuance agreement shall be agreed upon by the parties in accordance with relevant laws.

Article 21. Exemption from performance of guarantee obligations

1. In case the beneficiary exempts the guarantor or the guarantee-confirming party from performing the obligations, the guaranteed party shall still perform the committed obligations toward the beneficiary, unless the parties otherwise agree or perform joint obligations in accordance with law.

2. In case one or several co-guarantor(s) is or are exempted from performing its/his/her/their part of the guarantee obligations according to the agreement of the relevant parties, the other co-guarantors shall still perform their part of the guarantee obligations according to the guarantee commitment, unless otherwise agreed upon by the parties.

Article 22. Performance of guarantee obligations

1. To request performance of guarantee obligations, the beneficiary shall submit a dossier of request for performance of guarantee obligations as specified at Point i, Clause 1, Article 16 of this Circular to the guarantor. The guarantor shall examine the dossier, compare it with the terms and conditions stipulated in the guarantee commitment, and perform the guarantee obligations as specified in Clause 3 of this Article if the dossier is valid. If finding the dossier invalid, the guarantor may refuse to perform the guarantee obligations as specified in Clause 4 of this Article.

2. A dossier of request for performance of guarantee obligations is valid when:

a/ The guarantor receives a complete dossier within the validity period of the guarantee commitment, specifically as follows:

(i) In case of direct submission of paper documents, the date of receipt of the dossier must be during the working hours of the guarantor;

(ii) In case of sending the dossier by registered mail via postal service, the date the guarantor is considered to have received the dossier is the date of signing the receipt of the registered mail;

(iii) In case of sending the dossier by electronic means, the date of receipt of the dossier shall be the date the guarantor receives the data message as prescribed by the law on e-transactions;

b/ The dossier fully meets the conditions for performing the guarantee obligations specified in the guarantee commitment.

3. Performance of the guarantee obligations:

a/ In case of bank guarantee (except counter-guarantee and guarantee confirmation):

Within 5 working days following the date the guarantor receives the valid dossier of request for performance of guarantee obligations as specified in Clause 2 of this Article, the guarantor shall properly and fully perform the committed guarantee obligations to the beneficiary, and, at the same time, debit to the mandatory loan account for the amount paid on behalf of the guaranteed party and notify thereof to the customer. The customer is obliged to fully repay the amount paid by the guarantor and the interest as specified in Clause 5 of this Article;

b/ In case of counter-guarantee:

Within 5 working days following the date the guarantor receives the valid dossier of request for performance of guarantee obligations as specified in Clause 2 of this Article, the guarantor shall request the counter-guarantor to make payment on behalf of the guaranteed party.

The counter-guarantor shall properly and fully perform the counter-guarantee obligations committed to the guarantor, and, at the same time, debit to the mandatory loan account for the amount paid on behalf of the guaranteed party and notify thereof to the customer. The customer shall fully repay the amount paid on behalf by the counter-guarantor and the interest as specified in Clause 5 of this Article.

In case the counter-guarantor fails to perform or fully perform the obligations committed to the guarantor, the guarantor shall properly and fully perform the guaranteed obligations committed to the beneficiary and, at the same time, debit to the mandatory loan account for the amount paid on behalf of the counter-guarantor and notify thereof to the counter-guarantor. The counter-guarantor shall fully repay the amount paid by the guarantor and the interest as specified in Clause 5 of this Article;

c/ In case of guarantee confirmation:

Within 5 working days following the date the guarantor receives the valid dossier of request for performance of guarantee obligations as specified in Clause 2 of this Article, the guarantor shall properly and fully perform the guaranteed obligations committed to the beneficiary, and, at the same time, debit to the mandatory loan account for the amount paid on behalf of the guaranteed party and notify thereof to the customer. The customer is obliged to fully repay the amount paid by the guarantor and the interest as specified in Clause 5 of this Article.

In case the guarantor fails to perform or fully perform the guarantee obligations committed to the beneficiary, the beneficiary shall send a dossier of request for performance of guarantee obligations as agreed in the guarantee commitment to the guarantee-confirming party. Within 5 working days following the date the guarantee-confirming party receives a valid dossier of request for performance of guarantee obligations as specified in Clause 2 of this Article, the guarantee-confirming party shall properly and fully perform the committed obligations to the beneficiary, and, at the same time, debit to the mandatory loan account for the amount paid on behalf of the guarantor and notify thereof to the guarantor. The guarantor shall fully repay the amount paid by the guarantee-confirming party and the interest as specified in Clause 5 of this Article, and, at the same time, request the customer for mandatory debt payment and repay the debt to the guarantor.

4. In case of refusal to perform the guarantee obligations, within 5 working days following the date of receipt of the dossier of request for performance of guarantee obligations, the refusing party must issue a written reply, stating the reason.

5. The paying party (guarantor, counter-guarantor or guarantee-confirming party) shall apply an interest on the amount paid in lieu in accordance with the guarantee issuance agreement at a rate not exceeding the highest overdue loan interest rate currently applied at the same credit institution or foreign bank branch.

6. In case of payment in foreign currency, the paying party shall account for the mandatory loan in the foreign currency paid in lieu and the customer shall make repayment in the foreign currency paid in lieu or convert it into Vietnam dong or another foreign currency at the agreed exchange rate. In case of payment in Vietnam dong, the paying party shall account for the mandatory loan in Vietnam dong.

Article 23. Termination of guarantee obligations

The guarantee obligations shall terminate in the following cases:

1. The obligation of the guaranteed party terminates.

2. The guarantee obligation has been performed in accordance with the guarantee commitment.

3. The guarantee is cancelled or replaced by another security measure as agreed by the beneficiary and the guarantor, and other relevant parties (if any).

4. The guarantee commitment has expired.

5. The beneficiary is exempted from performing the guarantee obligations for the guarantor.

6. It is so agreed by the parties.

7. The guarantee obligation terminates in other cases as prescribed by law.

Article 24. Co-guarantee

1. The principles, conditions and procedures for organizing the implementation of co-guarantee must comply with the provisions of this Circular, the State Bank’s regulations on syndicated credit extension by credit institutions and foreign bank branches to customers and relevant laws.

2. Co-guarantors shall be jointly responsible for the performance of the guarantee obligations, unless otherwise agreed or prescribed by law that the guarantee shall be provided in independent parts. In case the credit institution or foreign bank branch is required to perform the guarantee obligations, the participating parties shall repay the credit institution or foreign bank branch the corresponding amount according to the co-guarantee participation ratio agreed upon by the parties.

Article 25. Guarantee for a joint obligation

A credit institution or foreign bank branch that guarantees a joint obligation shall perform it on the basis of a joint contract on rights and obligations between the parties.

Article 26. Credit institutions’ and foreign bank branches’ internal regulations on guarantees

1. Pursuant to the provisions of this Circular and relevant laws, credit institutions and foreign bank branches shall issue internal regulations on guarantee operations for customers (including also provisions on electronic guarantees (if any), guarantees for future housing (if any), and guarantees for non-resident customers) in accordance with regulations on credit extension, which must define the responsibilities between the appraisal and approval stages for issuing guarantees.

2. Credit institutions and foreign bank branches shall send their internal regulations on bank guarantee operations to the State Bank of Vietnam and State Bank’s branches in accordance with relevant laws.

Article 27. Rights of the guarantor

1. To accept or reject the requests for guarantee.

2. To request the guarantee-confirming party to confirm the guarantee for its guarantee to the guaranteed party.

3. To request the customers and related parties to provide information and documents related to the appraisal of the guarantee and collateral (if any).

4. To request the customers to have measures to secure the guaranteed obligations (if necessary).

5. To conduct inspection and supervision of the customers’ financial situation during the validity period of the guarantee.

6. To collect and adjust guarantee fees; to apply and adjust interest rates and penalty interest rates.

7. To refuse to perform the guarantee obligations when the dossier of request for performance of guarantee obligations is invalid or there is evidence proving that the presented documents and papers are forged.

8. To request the counter-guarantor to perform the committed obligations.

9. To debit to the mandatory account for customers for the amount paid on behalf of the guaranteed party immediately upon performance of the guarantee obligation; to request the customers to refund the amount paid by the guarantor according to the commitment.

10. To request other co-guarantors to refund the amount paid on behalf of the guaranteed party corresponding to the co-guarantee participation ratio agreed upon by the parties, in case the co-guarantor acting as the focal point performs the guarantee obligations in the co-guarantee.

11. To dispose of the collateral as agreed and prescribed by law.

12. To transfer its rights and obligations to other credit institutions and foreign bank branches according to the agreement of the relevant parties in accordance with law.

13. To file lawsuits in accordance with law when customers violate the committed obligations.

14. Other rights as agreed by the parties in accordance with law.

Article 28. Rights of the counter-guarantor

1. To accept or reject the requests to issue a counter-guarantee.

2. To request the guarantor to issue a guarantee for its customers’ obligations to the beneficiary.

3. To request the customers to provide documents and information related to the appraisal of the counter-guarantee and collateral (if any).

4. To request the customers to take measures to secure the guarantee obligations (if necessary).

5. To conduct inspection and supervision of the customers’ financial situation during the validity period of the guarantee.

6. To collect and adjust guarantee fees; to apply and adjust interest rates and penalty interest rates.

7. To refuse to perform the counter-guarantee obligation when the dossier of request for performance of guarantee obligations is invalid or there is evidence proving that the presented documents and papers are forged.

8. To debit to the mandatory account for the amount paid on behalf of the customer immediately upon performing the counter-guarantee obligation to the guarantor, requesting the customer to refund the amount as the counter-guarantee obligation already performed by the counter-guarantor to the guarantor as committed.

9. To dispose of the customers’ collateral as agreed and prescribed by law.

10. To initiate lawsuits in accordance with law when a customer or the guarantor violates the committed obligations.

11. To transfer its rights and obligations to other credit institutions and foreign bank branches as agreed by the relevant parties in accordance with law.

12. Other rights as agreed by the parties in accordance with law.

Article 29. Rights of the guarantee-confirming party

1. To accept or reject the guarantee confirmation requests.

2. To request customers to provide information and documents related to the appraisal of the guarantee and collateral (if any).

3. To request customers to have measures to secure the guarantee obligations (if necessary).

4. To collect and adjust guarantee fees; to apply and adjust interest rates and penalty interest rates.

5. To conduct inspections and monitor the customers’ financial situation during the validity period of the guarantee.

6. To debit to the mandatory account for the amount paid on behalf of the guarantor immediately upon performing the guarantee confirmation obligation, requesting the guarantor to refund the amount paid by the guarantee-confirming party as committed.

7. To dispose of the collateral of the guarantor or the guaranteed party as agreed and prescribed by law.

8. To file a lawsuit in accordance with law when the guarantor violates the committed obligations.

9. To transfer its rights and obligations to other credit institutions and foreign bank branches as agreed by the relevant parties in accordance with law.

10. To refuse to perform the guarantee obligations when the dossier of request for performance of guarantee obligations is invalid or there is evidence proving that the presented documents and papers are forged.

11. Other rights as agreed by the parties in accordance with law.

Article 30. Obligations of the guarantor, counter-guarantor and guarantee-confirming party

1. To provide information and documents related to the competence to issue the guarantee commitment to the relevant parties; to perform the guarantee obligations upon +2. To fully and properly perform the guarantee obligations specified in Article 22 of this Circular.

3. To conduct inspection and supervision of the customers’ financial situation during the validity period of the guarantee agreement.

4. To fully return the collateral (if any) and related documents to the guarantor upon liquidation of the guarantee issuance agreement, unless otherwise agreed.

5. Within 5 working days following the date of receipt of a written complaint from the beneficiary regarding the reason for refusing to perform the guarantee obligations, to send a written reply to the complainant.

6. To retain the guarantee records in accordance with law.

7. To instruct the beneficiary on the inspection and confirmation of the authenticity of the issued guarantee commitment.

8. Other obligations as agreed by the parties in accordance with law.

Article 31. Rights and obligations of customers

1. A customer has the following rights:

a/ To reject the requests of the guarantor/counter-guarantor/guarantee-conforming party that is contrary to the guarantee issuance agreement or guarantee commitment;

b/ To request the guarantor/counter-guarantor/guarantee-conforming party to perform its committed obligations and responsibilities;

c/ To file a lawsuit in accordance with law when the guarantor/counter-guarantor/guarantee-conforming party breaches the committed obligations;

d/ To transfer its/his/her rights and obligations as agreed by the relevant parties in accordance with law. To exercise and perform its/his/her rights and obligations in accordance with law when related parties transfer their guarantee rights and obligations toward the guarantee amount;

dd/ To check the authenticity of the guarantee commitment;

e/ Other rights as agreed by the parties in accordance with law.

2. A customer has the following obligations:

a/ To provide information and documents related to the guarantee amount and take responsibility before law for the accuracy, truthfulness and adequacy of the provided information and documents;

b/ To fully and properly perform the obligations and responsibilities committed in the guarantee issuance agreement;

c/ To refund to the guarantor/counter-guarantor/guarantee-conforming party the amount paid by the latter as the guarantee obligation as stated in the guarantee issuance agreement or committed between the parties and expenses arising from the performance of the guarantee obligations;

d/ To submit to inspection and supervision by the guarantor/counter-guarantor/guarantee-conforming party in terms of the performance of the guaranteed obligations. To report on activities related to guarantee transactions to the guarantor/counter-guarantor/guarantee-conforming party;

dd/ To coordinate with the guarantor/counter-guarantor/guarantee-conforming party and related parties in the process of disposing of collateral (if any);

e/ Other obligations as agreed by the parties in accordance with law.

Article 32. Rights and obligations of the beneficiary

1. Rights of the beneficiary:

a/ To request the guarantor or guarantee-confirming party to duly perform their obligations and responsibilities under the guarantee commitment;

b/ To file a complaint against the guarantor or guarantee-confirming party within 5 (five) working days after receiving the latter’s notice of refusal, if the reason for such refusal is inconsistent with the conditions for performance of the guarantee obligation as stated in the guarantee commitment;

c/ To file a lawsuit in accordance with law if the guarantor or guarantee-confirming party breaches their committed obligations;

d/ To verify the authenticity of the guarantee commitment;

dd) To transfer its rights and obligations to other organizations and individuals as agreed by related parties in accordance with law;

e/ To provide exemption from performance of the guarantee obligation for the guarantor or guarantee-confirming party;

g/ Other rights as agreed by the parties in accordance with law.

2. Obligations of the beneficiary:

a/ To fully and properly perform the obligations under contracts related to the guarantee obligation; to fulfill all obligations stated in the guarantee commitment (if any);

b/ To promptly notify the guarantor, guarantee-confirming party and related parties of any signs or acts of violations committed by the guaranteed party;

c/ To take responsibility before law for the accuracy, completeness, validity, and lawfulness of the presented documents and papers under the guarantee commitment, and for the contents in the dossier of request for performance of the guarantee obligation;

d/ Other obligations as agreed by the parties in accordance with law.

Chapter III

REPORTING, ORGANIZATION OF IMPLEMENTATION

Article 33. Accounting, reporting information

1. Credit institutions and foreign bank branches shall conduct accounting and monitor all arising guarantee amounts according to regulations.

2. Credit institutions and foreign bank branches shall report on the performance of guarantees according to the State Bank’s regulations on the statistical reporting regime.

Article 34. Transitional provisions

Guarantee issuance agreements and guarantee commitments signed and effective before the effective date of this Circular shall continue to be valid in accordance with the provisions of law in effect at the time of signing such agreements and commitments until the guarantee obligations terminate. Amendments and supplements to the above-mentioned guarantee issuance agreements and guarantee commitments may only be made if they are consistent with the provisions of this Circular.

Article 35. Effect

1. This Circular takes effect on April 1, 2025

2. This Circular replaces the State Bank Governor’s Circular No. 11/2022/TT-NHNN of September 30, 2022, prescribing bank guarantee, and the State Bank Governor’s Circular No. 49/2024/TT-NHNN of October 25, 2024, amending and supplementing a number of articles of State Bank Governor’s Circular 11/2022/TT-NHNN of September 30, 2022, prescribing bank guarantee.

Article 36. Organization of implementation

1. The Department of Credit for Economic Sectors shall monitor, review, and inspect the implementation of guarantee operations of credit institutions and foreign bank branches, and act as the focal point for handling arising problems related to guarantee operations.

2. Heads of units under the State Bank, credit institutions and foreign bank branches shall organize the implementation of this Circular.-

For the State Bank Governor
Deputy Governor
DAO MINH TU