Circular 61/2024/TT-NHNN on bank guarantee

CIRCULAR

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; 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; the Government's Decree No. 146/2024/ND-CP dated November 6, 2024, amending, supplementing and 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 bodies, which was 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 issues the Circular on bank guarantee.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

This Circular defines the bank guarantee operation of credit institutions and foreign bank branches for their clients.

Article 2. Subjects of application

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

2. Foreign bank branches.

3. Individuals and organizations related to guarantee operation, including those being residents and non-residents.

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 the clients under which the guarantor being credit institutions or foreign bank branches commits the beneficiary to fulfill financial obligations of the obligated party (hereinafter referred to as the guaranteed party) in case the guaranteed party fails to fulfill or to fully fulfill its obligations as committed the beneficiary. The clients shall acknowledge compulsorily and repay the debt to the guarantor according to agreement.

2. Reciprocal guarantee means a form of bank guarantee in which the reciprocal guarantee provider commits the guarantor to fulfill the financial obligation of the guarantor in case the guarantor must fulfill financial obligations of the guaranteed party; the clients of the reciprocal guarantee provider shall acknowledge compulsorily and repay the debt to reciprocal guarantee provider according to agreement.

3. Guarantee confirmation means a form of bank guarantee in which the guarantee confirming party commits the beneficiary that it shall ensure capacity of performing the obligation of the guarantor for the beneficiary. The guarantee confirming party shall fulfill financial obligations of the guarantor in case the guarantor fails to fulfill or to fully fulfill its obligations as committed the beneficiary. The guarantor shall acknowledge compulsorily and repay the debt to the guarantee confirming party and the clients of the guarantor shall acknowledge compulsorily and repay the debt to the guarantor according to agreement.

4. Guarantee in sale and lease-purchase of off-plan houses (hereinafter referred to as off-plan house guarantee) means a form of bank guarantee in which the guarantor being a commercial bank or foreign bank branch commits the beneficiary being the purchaser or lessee of the house (hereinafter referred to as the purchaser) to fulfill financial obligations of the guaranteed party being the project owner of a off-plan house project (hereinafter referred to as the project owner) in case until the committed deadline of house handover and receipt, the project owner does not hand over the house to the purchaser but fails to fulfill or to fully fulfill its financial obligations stated in the signed housing purchase or lease-purchase contract; the project owner shall acknowledge compulsorily and repay the debt to the guarantor according to agreement. In cases the commercial bank or foreign bank branch guarantees by reciprocal guarantee, the reciprocal guarantee provider shall commit the commercial bank or foreign bank branch to fulfill the financial obligations towards the commercial bank or foreign bank branch in case the latter has to perform financial obligations of the project owner; the project owner shall acknowledge compulsorily and repay the debt to the reciprocal guarantee provider according to agreement.

5. Co-guarantee means a form of syndicated credit extension, in which 02 (two) or more credit institutions or foreign bank branches guarantee concurrently; or credit institutions, foreign bank branches and overseas credit institutions guarantee concurrently.

6. The guarantor means a credit institution or foreign bank branch performing guarantee for the guaranteed party. In cases of co-guarantee, reciprocal guarantee and guarantee confirmation, the guarantor may be overseas credit institution.

7. The guaranteed party means an organization (including credit institutions, foreign bank branches and overseas credit institutions) or an individual that is obligated to the beneficiary and guaranteed by the guarantor or the reciprocal guarantee provider.

8. The beneficiary means an organization (including credit institutions, foreign bank branches and overseas credit institutions) or an individual having the right to enjoy guarantee issued by the guarantor or the guarantee confirming party.

9. The reciprocal guarantee provider means a credit institution, foreign bank branch or overseas credit institution performing reciprocal guarantee for the guaranteed party.

10. The guarantee confirming party means a credit institution, foreign bank branch or overseas credit institution that makes guarantee confirmation for the guarantor.

11. Client of a credit institution, foreign bank branch (hereinafter referred to as client) means an organization (including credit institutions, foreign bank branches, overseas credit institutions) or an individual, to be specific:

a) Regarding to the bank guarantee (except for reciprocal guarantee, guarantee confirmation), the guarantor’s client is the guaranteed party or the party requesting the credit institution or foreign bank branch to provide the guarantee to the guaranteed party;

b) Regarding to the reciprocal guarantee, the reciprocal guarantee provider’s client is the guaranteed party or the party requesting the credit institution or foreign bank branch to provide the reciprocal guarantee to the guaranteed party; the guarantor’s client is the reciprocal guarantee provider;

c) Regarding to the guarantee confirmation, the guarantee-confirming party’s clients is the guarantor; the guarantor’s client is the guaranteed party or the party requesting the credit institution or foreign bank branch to provide the guarantee to the guaranteed party.

12. Guarantee provision agreement refers to the agreement between the guarantor or the reciprocal guarantee provider or the guarantee confirming party and a client and other related parties (if any) on issuance of bank guarantee, reciprocal guarantee and guarantee confirmation to the client.

13. Written commitment to issue a letter of guarantee for off-plan houses (hereinafter referred to as written commitment to issue a letter of guarantee) refers to a written commitment made by the guarantor with the project owner confirming that the guarantor shall issue a letter of guarantee to all purchasers choosing a guarantee in the project owner’s project for which the guarantee has been approved by the guarantor as defined in the guarantee provision agreement.

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

a) Letter of guarantee means a commitment of the guarantor with the beneficiary that the guarantor shall perform the financial obligation for the guaranteed party when the guaranteed party fails to perform or to fully perform the obligation committed with the beneficiary.

In cases of reciprocal guarantee and guarantee confirmation, letters of guarantee include commitments of the reciprocal guarantee provider to the guarantor, and the guarantee confirming party to the beneficiary;

b) Guarantee contract means an agreement between the guarantor and the beneficiary and related parties (if any) that the guarantor shall perform the financial obligation for the guaranteed party when the guaranteed party fails to perform or to fully perform the obligation committed with the beneficiary.

In cases of reciprocal guarantee and guarantee confirmation, guarantee contracts include agreements of the reciprocal guarantee provider and the guarantor and related parties (if any), between the guarantee confirming party and the beneficiary and other related parties (if any).

Particularly for off-plan house guarantee, only the issuance of guarantee letter is permitted.

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 the purchaser receives 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.

Article 4. Provisions on foreign exchange management in guarantee

1. The issuance of guarantee in a foreign currency by credit institutions or foreign bank branches must suit their scope of foreign exchange operation on the domestic and international markets as specified in the operation license of each type of credit institution or foreign bank branch.

2. Credit institutions and foreign bank branches may guarantee in a foreign currency for clients with respect to the financial obligations in a foreign currency in accordance with law regulations.

Article 5. Cases in which guarantee is not permitted or is limited, implementation of credit extension limit

Upon implementation of guarantee, credit institutions and foreign bank branches must comply with the Law on Credit Institutions and regulations of the State Bank of Vietnam (hereinafter referred to as the State Bank) about cases in which the credit extension is not permitted or is limited, cases of credit extension limit.

Article 6. Identification of guarantee balance

1. The guarantee balance given to one client, or one client and the related person includes the balance arising from the issuance of guarantee commitment, of reciprocal guarantee commitment and of guarantee confirmation commitment to such entity.

2. The guarantee balance given to one client, or one client and the related person of such client shall be determined from the date of issuance of guarantee commitment.

3. The guarantee balance in provision of guarantee for off-plan houses shall be determined in accordance with Clause 7 Article 13 of this Circular.

Article 7. Use of language

1. Guarantee provision agreements, guarantee commitments must be made in Vietnamese, except for the cases specified in Clause 2 of this Article.

2. Credit institutions, foreign bank branches may reach agreement with related parties to use foreign languages in the following cases:

a) Guarantee transactions in cases of civil relations involving foreign elements as specified in the Civil Code;

b) Guaranteed obligations arising when implementing projects funded by international financial institutions in accordance with the State Bank’s regulations on limits and prudential ratios in the operation of banks and foreign bank branches;

c) Guaranteed obligations arising upon participation in international bidding packages;

d) Guarantee transactions issued via the SWIFT system.

3. In cases of use of a foreign language, upon request of competent agencies, documents or data messages must be translated into Vietnamese and such Vietnamese copies must be certified by the legal representative of credit institutions or foreign bank branches, be authorized or certified, and enclosed with the original copy of documents or data messages written in foreign languages.

Article 8. Application of practices and selection of dispute settlement methods

1. The parties to the bank guarantee, reciprocal guarantee, guarantee confirmation, and co-guarantee may reach an agreement on application of commercial practices prescribed in Article 3 of the Law on Credit Institutions.

2. The handling of disputes arising in guarantee transactions shall be according to the agreement of the parties and ensure the observance of law regulations. In cases of guarantee involving foreign elements or the parties choosing the application of international commercial practices, the parties may reach an agreement on law applicable, dispute settlement body (including foreign courts or commercial arbitration) to settle disputes of guarantee transactions.

Article 9. Electronic guarantee

1. Credit institutions, foreign bank branches and clients may carry out bank guarantee by use of electronic means (hereinafter referred to as e-guarantee activities).

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

2. In case of identification and verification of know-your-customer information by electronic means, for clients that establish for the first time relationships with credit institutions or foreign bank branches (except for cases where the clients send a request by authentication telegram via the SWIFT system or the clients use their electronic signatures in accordance with law regulations), the credit institutions or foreign bank branches shall comply with the following regulations:

a) For a client being resident: The credit institutions or foreign bank branches shall carry out identification and verification of know-your-customer information in accordance with the State Bank's regulations on the opening and use of payment accounts at payment service providers;

b) For a client being non-resident: The credit institutions or foreign bank branches shall carry out identification and verification of know-your-customer information on the basis of self-assessment of the risk level to select, decide on appropriate methods, forms, and technologies, ensuring safety and bearing any arising risks.

3. Credit institutions, foreign bank branches shall decide the methods, forms and technologies to be applied to carry out e-guarantee for the whole guarantee process or each stage of the process, bear arising risks (if any) on their own and must meet the following minimum requirements:

a) Methods, forms, and technologies selected by credit institutions or foreign bank branches must comply with regulations on security, safety, and confidentiality in accordance with the State Bank's regulations;

b) Apply appropriate forms of electronic transaction confirmation to clients when performing electronic transactions during the implementation of electronic guarantee operations in accordance with relevant law regulations;

c) Store and preserve fully and in detail documents, information, and know-your-customer data during the implementation of electronic guarantee operations. Information and data must be stored safely, securely, backed up, ensuring the completeness and integrity of data to serve the work of checking, comparing, and verifying clients during the implementation of electronic guarantee operations; resolving inquiries, complaints, disputes, and providing information upon request from competent agencies. The storage and preservation period shall comply with the law regulations on anti-money laundering and on electronic transactions;

d) Credit institutions and foreign bank branches must conduct inspection and assessment of the safety and security of methods, forms, and technologies and promptly upgrade and update them in case of signs of insecurity;

dd) Specify the specific roles and responsibilities of each individual and department in building, establishing and operating the information system serving the appraisal and decision-making stages of credit extension in electronic guarantee operations. In case of risks arising, the banks must have a mechanism to identify each individual and department taking responsibility for and promptly handling issues and risks arising to ensure efficiency and safety in the process of implementing the banks’ electronic guarantee operations.

4. In case of identifying and verifying client identification information via electronic means, the value of each guarantee commitment (in cases the currency used in guarantee is a foreign currency, applying the exchange rate according to the guarantor's regulations at the time of issuance of the guarantee commitment) issued for personal clients must not exceed 4,000,000,000 (four billion) Vietnamese dong and for institutional clients must not exceed 45,000,000,000 (forty-five billion) Vietnamese dong, except for the following cases:

a) The client identification information is authenticated by a competent state agency or is authenticated electronically by an organization providing electronic authentication service in accordance with the law regulations on electronic identification and authentication;

b) The client sends an application of guarantee provision by authentication telegram via the SWIFT system;

c) Client information and guaranteed obligations are consistent after being collated via the Customs E-Payment Portal or the Vietnam National E-Procurement System;

d) The client uses the electronic signature in accordance with law regulations when requesting guarantee provision or signing a guarantee provision agreement with the credit institution or foreign bank branch;

dd) The client is a credit institution or foreign bank branch.

5. The information system used for performance of e-guarantee activities must comply with regulations on assurance of information system security at level 3 or higher according to the law regulations on assurance of information system security by level and regulations of the State Bank’s regulations on information system security in banking activities.

Chapter II

SPECIFIC PROVISIONS

Article 10. Scope of guarantee obligation

The guarantor may commit to guaranteeing part or the whole of the guaranteed party’s financial obligations towards the beneficiary.

Article 11. Requirements for clients

1. A credit institution or foreign bank branch shall consider and decide to issue guarantee, reciprocal guarantee, or guarantee confirmation for a client if the client meet the following requirements:

a) Fully have the civil legal capacity and civil act capacity in accordance with law regulations;

b) The guaranteed obligation is a legal financial obligation;

c) The client is capable of refunding the money amount payable by the credit institution or foreign bank branch on the client’s behalf upon performance of the guarantee obligation, according to the assessment of the credit institution or foreign bank branch providing the guarantee.

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

Article 12. Requirements for clients being non-residents

1. Credit institutions, foreign bank branches are only allowed to give guarantee to institutional clients who are non-residents and must meet one of the following requirements (clients being overseas credit institutions are not required to satisfy such requirements):

a) Clients are economic organizations established and operating overseas with contributed capital of Vietnamese enterprises in the forms of investment specified at Points a and c Clause 1 Article 52 of the Law on Investment or in other forms of investment specified at Point dd Clause 1 Article 52 of the Law on Investment;

b) Clients make a deposit equal to 100% of guarantee value or have assets equal to 100% of the guarantee value, including the deposit balance at such guaranteeing credit institutions or foreign bank branches and deposit certificates of such guaranteeing credit institutions or foreign bank branches;

c) The beneficiary is a resident.

2. Foreign bank branches may not provide guarantee in foreign currency to institutional customers being non-residents, except for cases where the beneficiaries are residents.

3. When giving guarantee in a foreign currency for clients being non-residents, credit institutions and foreign bank branches must:

a) Comply with the State Bank’s regulations on foreign exchange management for offshore lending and collection of debts from guarantee for non-residents;

b) Formulate a process of assessing and managing credit risks, including risks involved in guarantee for non-residents.

4. In addition to this Article, other contents about the guarantee for clients who are non-residents must comply with the corresponding regulations in this Circular.

Article 13. Off-plan house guarantee

1. A commercial bank or foreign bank branch shall consider and decide to issue guarantee to a project owner when:

a) The project owner fully meets the requirements specified in Article 11 of this Circular (except for cases where commercial banks or foreign bank branches provide guarantee to project owners on the basis of reciprocal guarantee);

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 houses are eligible for purchase or lease-purchase.

2. Order of off-plan house guarantee:

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

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

c) Based on the guarantee provision agreement, the guarantor shall issue a written commitment to issue a letter of guarantee to the project owner and the latter sends a copy to the purchaser upon signing house purchase or lease-purchase contracts;

d) After signing house purchase or lease-purchase contracts with regulations on the project owner’s financial obligations, the project owner shall send the house purchase or lease-purchase contracts to the guarantor to request the guarantor to issue letters of guarantee to the purchasers;

dd) The guarantor shall, based on the house purchase or lease-purchase contracts, the guarantee provision agreement and the written commitment to issue a letter of guarantee, issue letters of guarantee and send them to the project owner for providing them to the purchasers.

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

a) A 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 under the guarantee provision agreement have been fulfilled; except for cases where the parties agree on the termination of guarantee provision agreement prematurely;

b) In addition to the contents prescribed in Clause 2, Article 15 of this Circular (except for the contents defined at Point h and Point i in the case of providing guarantee on the basis of reciprocal guarantee), the guarantee provision agreement must also include the regulations that the guarantor is obliged to issue a letter of guarantee to the purchaser before the deadline for house handover as committed in the house purchase or lease-purchase contract upon receiving such contract sent by the project owner and send the letter of guarantee to the project owner to provide it 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 the issuance of letters of guarantee to all purchasers before the deadline for house handover as committed in the house purchase or lease-purchase contract is completed or to the expiration date of the guarantee provision agreement (whichever comes first);

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

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

(ii) Validity of the document;

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

(iv) The guarantor's commitment to issue a letter of guarantee to all purchasers choosing a guarantee in the project owner’s project for which the guarantee has been approved by the guarantor;

(v) Financial obligations of the project owner toward a purchaser guaranteed by the commercial bank or foreign bank branch that is 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 deadline 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 the purchaser receives 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) Dossier of request for performance of the guarantee obligation that is sent by the purchaser to the guarantor, enclosed with 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) The 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 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 and a content defining that the dossiers sent by the purchaser 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 purchaser.

6. The maximum guarantee amount for each purchaser shall be equal to the total advance amount the project owner is allowed to receive from the purchaser as prescribed in Article 25 of the Law on Real Estate Business and other amounts (if any) under the house purchase or lease-purchase contract.

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

a) The guarantee balance for the project owner or the reciprocal guarantee provider shall be equal to the amount covered by the project owner’s financial obligation. The guarantee balance shall decrease incrementally upon the termination of the guarantee obligation towards each purchaser 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 amounts received in advance from the house purchasers 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 to notify and update the advance payment of the purchasers received in the month but not later than the last working day of the month, serving as a basis for determining the guarantee balance. The project owner shall be responsible before the law for correctly notifying the advance payment and time of receiving the advance payment of the purchasers to the guarantor.

8. The guarantor has the following rights and obligations:

a) The guarantor has the following rights:

(i) Refuse to issue a letter of guarantee to the purchaser if the house purchase or lease-purchase contract is not in accordance with relevant law regulations or after the termination of guarantee provision agreement;

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

b) The guarantor has the obligations to:

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

(ii) In case the guarantor and the project owner terminate the guarantee provision agreement ahead of time, on the next working day at the latest, the guarantor must announce it on its website and notify it in writing to the provincial-level housing management agency in the locality where the project owner's housing project is located, clearly stating that the guarantor will not continue to issue letter of guarantee for the purchaser to sign a house purchase or lease-purchase contract with the project owner after the guarantor terminates the guarantee provision agreement with the project owner. For letters of guarantee previously issued to the purchaser, the guarantor shall continue to perform the commitment until the termination of the guarantee obligation;

(iii) Perform the guarantee obligation with the paid amount corresponding to the project owner's financial obligation that is determined based on the dossier of request for guarantee obligation performance provided by the purchaser in conformity with conditions for performance of guarantee obligations specified in the letter of guarantee.

9. A 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 purchasers choosing a guarantee in the project owner’s guaranteed off-plan house project in the validity period of the written commitment to issue a letter of guarantee;

b) The project owner has the obligations to:

(i) Send a letter of guarantee issued by the guarantor to the 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. The purchaser has the rights to:

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

b) 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 this Article, other contents about the off-plan house guarantee shall comply with corresponding regulations in this Circular.

Article 14. Dossiers of request for guarantee

1. A dossier of request for guarantee comprises the following main documents:

a) Written request for guarantee;

b) Documents on the client; including information about persons related to the client as prescribed by the Law on Credit Institutions if the total credit balance of that client at the credit institution or foreign bank branch (including the amount being requested for guarantee provision) is greater than or equal to 0.1% of the equity capital of the credit institution or foreign bank branch at the end of the nearest working day of the time the client requests the guarantee provision, except in cases where the client is a foreign credit institution. In the case that the credit institution or foreign bank branch has negative equity capital, the above ratio is applied to charter capital or allocated capital (for foreign bank branches). The information about an affiliated person includes:

(i) The information about an affiliated person being individual includes: full name; personal identification number for a Vietnamese citizen; nationality, passport number, date of issue, place of issue for a foreigner; relationship with the client;

(ii) The information about an affiliated person being organization includes: name, identification number and head office address of the enterprise, number of enterprise registration certificate or equivalent legal papers, at-law representative, relationship with the client.

c) Documents on the guaranteed obligation;

d) Documents on security measures (if any);

dd) Documents on related parties (if any).

2. Based on the actual situation of guarantee operation of credit institutions, foreign bank branches and specific characteristics of each group of clients, each method of guarantee (by traditional methods or by electronic methods), credit institutions, foreign bank branches shall provide specific instructions on the requirements for dossiers to be sent to the credit institutions or foreign bank branches for appraisal and consideration of provision of guarantee.

Article 15. Guarantee provision agreements

1. In order to provide guarantee to clients, credit institutions or foreign bank branches and clients shall make a guarantee provision agreement. In case of issuance of guarantee on the basis of reciprocal guarantee or guarantee confirmation, the guarantor is not required to make a guarantee provision agreement with the reciprocal guarantee provider or guarantee confirming party.

2. A guarantee provision agreement must comprise the following contents:

a) Applicable law. In case the applicable law is not specified, it is understood that the parties agree to apply the Vietnamese law;

b) Information about the parties in guarantee relation;

c) The guaranteed obligation;

d) Guarantee amount, currency used for guarantee;

dd) Form of issuing guarantee commitment;

e) Conditions for performance of the guarantee obligation;

g) Rights and obligations of the parties;

h) Guarantee charge;

i) Agreement on compulsory acknowledging and paying debts for the guaranteed party, interest rate of the paid amount and obligation of debt repayment upon of performance of the guarantee obligation;

k)  Serial number, date of signing and effect of the guarantee provision agreement;

l) Settlement of arising disputes;

m) Other contents that are not contrary to the law regulations.

3. The amendment, supplementation or cancellation of contents of guarantee provision agreement shall be agreed upon and decided by the related parties on the basis of ensuring compliance with the law regulations.

Article 16. Guarantee commitment

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

a) Applicable law. In case the applicable law is not specified, it is understood that the parties agree to apply the Vietnamese law;

b) Serial number of guarantee commitment;

c) Information on the parties in guarantee relation;

d) Date of issue, starting date of effect of guarantee and/or case in which the guarantee will start to take effect;

dd) The expiry day and/or case of termination of the effect of guarantee;

e) Guarantee amount, currency used for guarantee;

g) The guarantee obligation;

h) Conditions for performance of the guarantee obligation;

i) Dossier of request for performance of guarantee obligation including the request for performance of guarantee obligation together with a list of documents and records to be provided;

k) Methods for the beneficiary to check the authenticity of the guarantee commitment;

l) Other contents that are not contrary to the law regulations.

2. The amendment, supplementation or cancellation of contents of guarantee commitment shall be agreed upon by the related parties in conformity with guarantee provision agreement and in compliance with the law regulations.

3. For guarantee commitments issued through the international information and communication network, credit institutions or foreign bank branches shall follow contents and process of the guarantee commitment issuance of the international information and communication network. Credit institutions or foreign bank branches must have a process for supervision and management of guarantee issuance in such cases to ensure the safety and efficiency.

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

1. The guarantee provision agreements, guarantee commitments and written commitments to issue letters of guarantee must be signed by the legal representatives of credit institutions or foreign bank branches in accordance with law regulations and internal regulations of the credit institutions or foreign bank branches.

2. The use of electronic signatures and authorization to sign guarantee provision agreements, guarantee commitments and written commitments to issue letters of guarantee shall comply with relevant law regulations.

Article 18. Security for obligation performance by clients

1. Credit institutions or foreign bank branches shall reach agreement with clients and related parties (if any) on the application or non-application of security interests once the guarantee obligation is required to be performed.

2. Credit institutions or foreign bank branches shall set out principles and specific requirements on the non-application of security interests. In case of reaching agreement on the application of security interests, the parties shall implement them in conformity with the law regulations on security for obligation performance and in accordance with the internal regulations of the credit institutions or foreign bank branches.

Article 19. Guarantee charge

1. Credit institutions or foreign bank branches shall reach agreement on guarantee charge amounts to be charged on clients and related parties (if any) and must publicly post such guarantee charge amounts.

2. In case of co-guarantee, the parties participating in the co-guarantee shall agree on the guarantee charge for each co-guarantor.

3. In cases credit institutions or foreign bank branches guarantee for a joint obligation, they shall reach agreement with every client on the payable charge amount on the basis of the joint obligation corresponding to each client, unless otherwise agreed upon by the parties.

4. If the guarantee currency is a foreign currency, the parties may agree to collect the guarantee charge in the foreign currency or convert it into Vietnamese dong at the selling exchange rate applied by the guarantor at the time of charge collection or at the time of charge collection notification.

5. The parties may agree to adjust the guarantee charge level.

Article 20. Validity period of guarantee commitments and guarantee provision agreements

1. The validity period of a guarantee commitment shall be determined from the time of issuance of the guarantee commitment or after the time of issuance of the guarantee commitment as agreed upon by the related parties until the expiration date of the guarantee obligation specified in Article 23 of this Circular. The validity period of a letter of guarantee in guarantee of off-plan houses shall comply with Clause 5 Article 13 of this Circular.

2. The validity period of a guarantee provision agreement shall be agreed upon by the parties but at least equal to the validity period of the guarantee commitment. The validity period of a guarantee provision agreement in guarantee of off-plan house shall comply with Clause 3 Article 13 of this Circular.

3. If the expiration day of the guarantee commitment, guarantee provision agreement falls on a non-working day or public holiday, it will be shifted to the following working day.

4. Extension of validity period of guarantee commitments and guarantee provision agreements shall be agreed upon by the parties in accordance with relevant law regulations.

Article 21. Exemption from performance of the guarantee obligation

1. If the beneficiary exempts the guarantor or the guarantee confirming party from performance of the obligation, the guaranteed party shall still perform the obligation they have committed with the beneficiary, unless otherwise agreed by the parties, or shall perform the joint obligation as prescribed by law regulations.

2. If one or several of co-guarantors is exempted from performance of part of the guarantee obligation which is the obligation of such member(s) under the relevant parties’ agreement, the other co-guarantors shall still perform their guarantee obligation as committed, unless otherwise agreed upon.

Article 22. Performance of the guarantee obligation

1. In order to request the performance of the guarantee obligation, the beneficiary must send the dossier of request for guarantee obligation performance prescribed at Point i Clause 1 Article 16 of this Circular to the guarantor. The guarantor shall examine the presented dossier of request for guarantee obligation performance and compare it with the terms and conditions specified in the guarantee commitment in order to perform the guarantee obligation as prescribed in Clause 3 of this Article if such dossier of request for guarantee obligation performance is valid. If the dossier of request for guarantee obligation performance is invalid, the guarantor shall refuse to perform the guarantee obligation in accordance with Clause 4 of this Article.

2. The dossier of request for guarantee obligation performance is valid if:

a) The guarantor receives a sufficient dossier of request for guarantee obligation performance within the validity period of the guarantee commitment, to be specific:

(i) In case of directly sending it, it must be sent within the working time of the guarantor;

(ii) In case of sending it by using registered mail via postal service, the date of request receipt by the guarantor is the date of signing for receipt of the registered letter;

(iii) In case of sending it by electronic means, the date of request receipt shall be according to the time the guarantor receives the data message under the law regulations on e-transactions;

b) Fully satisfy the conditions for performance of guarantee obligation specified in the guarantee commitment.

3. Performance of the guarantee obligation:

a) In case of bank guarantee (except for cases of reciprocal guarantee, guarantee confirmation):

Within 5 working days after the date on which the guarantor receives a valid dossier of request for guarantee obligation performance as prescribed in Clause 2 of this Article, the guarantor shall fully and properly perform the committed guarantee obligation to the beneficiary, and at the same time, account debit entry into the compulsory loan account for the amount paid for the debt of the guaranteed party and notify it to the client. The client is obliged to fully repay their debts paid by the guarantor and interest amount as specified in Clause 5 of this Article;

b) In case of reciprocal guarantee:

Within 5 working days after the date on which the guarantor receives a valid dossier of request for guarantee obligation performance as prescribed in Clause 2 of this Article, the guarantor shall request the reciprocal guarantee provider to pay the debt of the guaranteed party.

The reciprocal guarantee provider shall fully and properly perform the reciprocal guarantee obligation committed to the guarantor, and at the same time, account debit entry into the compulsory loan account for the amount paid for the debt of the guaranteed party and notify it to the client. The client shall be responsible for repaying their debts paid by the reciprocal guarantee provider and interest amount specified in Clause 5 of this Article.

In case the reciprocal guarantee provider fails to perform or to fully perform the committed obligation to the guarantor, the guarantor shall fully and properly perform the guarantee obligation committed to the beneficiary, at the same time, account debit entry into the compulsory loan account for the paid amount for the reciprocal guarantee provider and notify it to the reciprocal guarantee provider. The reciprocal guarantee provider shall be responsible for fully repaying the amount paid by the guarantor and interest amount as specified in Clause 5 of this Article;

c) In case of guarantee confirmation:

Within 5 working days after the date on which the guarantor receives a valid dossier of request for guarantee obligation performance as prescribed in Clause 2 of this Article, the guarantor shall fully and properly perform the guarantee obligation committed to the beneficiary, and at the same time, account debit entry into the compulsory loan account for the amount paid for the debt of the guaranteed party and notify it to the client. The client is obliged to fully repay their debts paid by the guarantor and interest amount as specified in Clause 5 of this Article.

In case the guarantor fails to perform or to fully perform the guarantee obligation committed to the beneficiary, the beneficiary shall send the dossier of request for guarantee obligation performance as agreed upon in the guarantee commitment to the guarantee confirming party. Within 5 working days after the date on which the guarantee confirming party receives a valid dossier of request for guarantee obligation performance as prescribed in Clause 2 of this Article, the guarantee confirming party shall fully and properly perform the obligation committed to the beneficiary, and at the same time, account debit entry into the compulsory loan account for the paid amount for the guarantor and notify it to the guarantor. The guarantor shall be responsible for fully repaying the amount paid by the guarantee confirming party and interest amount as specified in Clause 5 of this Article, at the same time, request the client to acknowledge the compulsory debts and repay the guarantor.

4. In case of refusal to perform the guarantee obligation, within 5 working days after the date of receipt of the request for guarantee obligation performance, the refusing party must reply in writing and clearly state reasons.

5. The party making payment for debts of another party (the paying party) (the guarantor, reciprocal guarantee provider or guarantee confirming party) shall apply an interest rate on the paid amount in conformity with the guarantee provision agreement but not exceed the highest overdue loan interest rate applied at such credit institution or foreign bank branch.

6. In case the currency used for such on-behalf payment is a foreign currency, the paying party shall account the mandatory loan amount in such foreign currency and the client shall pay the debts in such foreign currency or or pay the debts by converting to Vietnamese dong or another foreign currency at the exchange rate as agreed upon. In case the currency used for such on-behalf payment is Vietnamese dong, the paying party shall account the compulsory loan by Vietnamese dong.

Article 23. Termination of the guarantee obligation

The guarantee obligation is terminated in the following cases:

1. The obligation of the guaranteed party is terminated.

2. The guarantee obligation has been performed according to the guarantee commitment.

3. The guarantee is canceled or replaced by another security measure according to an agreement of the beneficiary and the guarantor, other relevant parties (if any).

4. The guarantee commitment expires.

5. The beneficiary exempts the guarantor from performance of the guarantee obligation.

6. Under agreement of the parties.

7. The guarantee obligation is terminated in other cases as prescribed by law regulations.

Article 24. Co-guarantee

1. Principles, conditions, process of organizing the performance of co-guarantee comply with this Circular, the State Bank’s regulations on granting syndicated credit of credit institutions or foreign bank branches for clients, and relevant law regulations.

2. Co-guarantors shall take joint responsibility for performance of the guarantee obligation, unless it is agreed upon or prescribed by law that the guaranty comprises independent parts. If credit institutions or foreign bank branches are focal points to perform the guarantee obligation, the involved parties shall repay credit institutions or foreign bank branches being focal points the amounts corresponding to the proportions of participation in the co-guarantee as agreed upon by the parties.

Article 25. Guarantee for a joint obligation

Credit institutions or foreign bank branches shall perform guarantee for a joint obligation on the basis of a contract on joint rights and obligations of the parties.

Article 26. Internal regulations of credit institutions and foreign bank branches on guarantee

1. Pursuant to this Circular and relevant law regulations, credit institutions and foreign bank branches shall issue internal regulations on guarantee operation applicable to clients (including regulations on e-guarantee (if any), on off-plan house guarantee (if any), guarantee for clients being non-residents) in accordance with regulations on credit extension, in which the division of responsibilities between the stages of appraisal and approval for guarantee provision is required.

2. Credit institutions or foreign bank branches shall send the internal regulations on guarantee operation to the State Bank of Vietnam and the State Bank branches in accordance with relevant law regulations.

Article 27. Rights of the guarantor

1. Accept or refuse requests for guarantee issuance.

2. Request the guarantee confirming party to confirm guarantee for its guarantee amount for the guaranteed party.

3. Request clients and related parties to provide information and documents relating to the appraisal of guarantee and collateral (if any).

4. Request clients to take security measures for the guaranteed obligation (when necessary).

5. Check and supervise the financial situation of clients within the validity period of the guarantee.

6. Collect guarantee charges or adjust guarantee charges; apply and adjust interest rates and punitive interest rates.

7. Refuse performance of the guarantee obligation when the dossier of request for guarantee payment performance is invalid or there is an evidence to prove that the presented documents, records are fake.

8. Request the reciprocal guarantee provider to perform the committed obligation.

9. Account compulsory debit entry for the client for the amount paid on behalf of the guaranteed party immediately after performing the obligation to guarantee; request the client to repay the amount which the guarantor has paid as committed.

10. Request other co-guarantors to repay the amount which it has paid for the guaranteed party. The amounts payable by co-guarantors are corresponding to the proportions of participation in the co-guarantee as agreed upon by the parties in the case the member being the focal point has performed the guarantee obligation in co-guarantee.

11. Handle collateral as agreed upon and prescribed by law regulations.

12. Transfer its rights and obligations to other credit institutions or foreign bank branches as agreed by related parties and in accordance with law regulations.

13. Initiate lawsuits in accordance with law regulations when the client violates committed obligations.

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

Article 28. Rights of the reciprocal guarantee provider

1. Accept or refuse requests for reciprocal guarantee issuance.

2. Request the guarantor to issue guarantee for obligations of its clients with respect to the beneficiary.

3. Request clients to provide documents and information relating to the appraisal of reciprocal guarantee and collateral (if any).

4. Request clients to take security measures for the guarantee obligation (when necessary).

5. Check and supervise the financial situation of clients within the validity period of the guarantee.

6. Collect guarantee charges or adjust guarantee charges; apply and adjust interest rates and punitive interest rates.

7. Refuse performance of the reciprocal guarantee obligation when the dossier of request for guarantee obligation performance is invalid or there is an evidence to prove that the presented documents, records are fake.

8. Account compulsory debit entry for the paid amount for debts of the client when performing the reciprocal guarantee obligation for the guarantor, request the client to repay the amount which the reciprocal guarantee provider has paid as committed for the guarantor.

9. Handle the clients’ collateral as agreed upon and prescribed by law regulations.

10. Initiate lawsuits in accordance with law regulations when the client violates committed obligations.

11. Transfer its rights and obligations to other credit institutions or foreign bank branches as agreed by related parties and in accordance with law regulations.

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

Article 29. Rights of the guarantee confirming party

1. Accept or refuse requests for guarantee confirmation.

2. Request clients to provide information and documents relating to the appraisal of guarantee and collateral (if any).

3. Request clients to take security measures for the guarantee obligation (when necessary).

4. Collect guarantee charges or adjust guarantee charges; apply and adjust interest rates and punitive interest rates.

5. Check and supervise the financial situation of clients within the validity period of the guarantee.

6. Account compulsory debit entry for the amount paid on behalf of the guarantor immediately after performing the obligation to confirm guarantee, request the guarantor to repay the amount which the guarantee confirming party has paid as committed.

7. Handle collateral of the guarantor or the guaranteed party as agreed upon and prescribed by law regulations.

8. Initiate lawsuits in accordance with law regulations when the guarantor violates committed obligations.

9. Transfer its rights and obligations to other credit institutions or foreign bank branches as agreed by related parties and in accordance with law regulations.

10. Refuse performance of the guarantee obligation when the dossier of request for guarantee payment performance is invalid or there is an evidence to prove that the presented documents, records are fake.

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

Article 30. Obligations of the guarantor, reciprocal guarantee provider and guarantee confirming party

1. Provide information and documents related to the competence to issue guarantee commitments to the relevant parties and perform guarantee obligations when receiving a request in accordance with the guarantee commitment.

2. Fully and properly perform the guarantee obligation specified in Article 22 of this Circular.

3. Check and supervise the financial situation of clients within the validity period of the guarantee provision agreement.

4. Fully return collateral (if any) and relevant documents to the securing party when liquidating guarantee provision agreement, unless otherwise agreed upon.

5. Issue written replies to written complaints of the beneficiary about reasons for refusal of performance of guarantee obligation within 05 working days after receiving such complaints.

6. Preserve guarantee dossiers as prescribed by law regulations;

7. Guide the beneficiary to check and verify the authenticity of the issued guarantee commitment.

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

Article 31. Rights and obligations of clients:

1. A client has the following rights:

a) Refuse requests of the guarantor or reciprocal guarantee provider or guarantee confirming party which are inconsistent with agreements in guarantee provision agreements or guarantee commitments;

b) Request the guarantor or reciprocal guarantee provider or guarantee confirming party to properly perform their obligations and responsibilities as committed;

c) Initiate lawsuits in accordance with law regulations when the guarantor or reciprocal guarantee provider or guarantee confirming party violates committed obligations;

d) Transfer its rights and obligations as agreed upon by the related parties in accordance with law regulations. Perform its rights and obligations as prescribed by law regulations when related parties transfer their guarantee rights and obligations with respect to guarantee amounts;

dd) Check the authenticity of the guarantee commitment;

e) Other rights as agreed upon by the parties in accordance with law regulations.

2. A client has the following obligations:

a) Provide full, accurate and truthful information and documents related to guarantee amounts and take responsibility before law for the accuracy, truthfulness and completeness of such information and documents;

b) Fully and timely perform obligations and responsibilities as committed in guarantee provision agreements;

c) Repay the amounts paid by the guarantor or reciprocal guarantee provider or guarantee confirming party to perform their guarantee obligation under the guarantee provision agreements or commitments between the parties, and expenses arising from performance of the guarantee obligation;

d) Submit to the inspection and supervision of process of guaranteed obligation performance by the guarantor or reciprocal guarantee provider or guarantee confirming party. Report on operations related to guarantee transaction to the guarantor or reciprocal guarantee provider or guarantee confirming party;

dd) Coordinate with the guarantor or reciprocal guarantee provider or guarantee confirming party and related parties in handling collateral (if any);

e) Other obligations as agreed upon by the parties in accordance with law regulations.

Article 32. Rights and obligations of the beneficiary

1. Rights of the beneficiary:

a) Request the guarantor and the guarantee confirming party to properly perform obligations and responsibilities as specified in guarantee commitments;

b) Complain to the guarantor, the guarantee confirming party within 05 working days after the date of receiving the notice on refusal from the guarantor or the guarantee confirming party if the reasons for refusal to perform the guarantee obligation of the parties are inconsistent with the conditions for performance of the guarantee obligation defined in the guarantee commitment;

c) Initiate lawsuits in accordance with law regulations when the guarantor or the guarantee confirming party violates committed obligations;

d) Check the authenticity of the guarantee commitment;

dd) Transfer its rights and obligations to other organizations or individuals as agreed upon by the related parties in accordance with law regulations;

e) Exempt the guarantor, the guarantee confirming party from performance of the guarantee obligation;

g) Other rights as agreed upon by the parties in accordance with law regulations.

2. Obligations of the beneficiary:

a) Fully and properly perform obligations in contracts related to the guarantee obligation; fully perform obligations specified in guarantee commitment (if any);

b) Timely notify the guarantor, the guarantee confirming party and related parties of signs and acts of violation committed by the guaranteed party;

c) Take responsibility before law for the accuracy, completeness, validity and legality of the documents and records presented under guarantee commitment and contents declared in the dossier of request for guarantee obligation performance of the beneficiary;

d) Other obligations as agreed upon by the parties in accordance with law regulations.

Chapter III

REPORTING AND ORGANIZATION OF IMPLEMENTATION

Article 33. Accounting, information and reporting

1. Credit institutions and foreign bank branches shall perform accounting and keep track of all arising guarantee amounts according to regulations.

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

Article 34. Transitional provisions

Guarantee provision agreements and guarantee commitments signed and effective before the effective date of this Circular shall continue to be implemented in accordance with the agreements and commitments in accordance with law regulations in effect at the time of signing such guarantee provision agreements and guarantee commitments until the guarantee obligations terminate. The amendment and supplementation of the above-mentioned guarantee provision agreements, guarantee commitments are permitted if the amending and supplementing contents comply with this Circular.

Article 35. Effect

1. This Circular takes effect on April 01, 2025.

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

Article 36. Organization of implementation

1. The Department of Credit for Economic Sectors shall be responsible for monitoring, synthesizing, and inspecting the implementation of guarantee operations of credit institutions and foreign bank branches and be the focal point for handling arising problems related to guarantee operations.

2. Heads of units of the State Bank of Vietnam; credit institutions, foreign bank branches shall be responsible for organizing the implementation of this Circular.