Circular No. 07/2015/TT-NHNN on bank guarantees

CIRCULAR

Provisions on Bank Guarantees

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Pursuant to the Civil Code No. 33/2005/QH11 dated June 14, 2005;

Pursuant to the Law on the State Bank of Vietnam No. 46/2010/QH12 dated June 16, 2010;

No. 06/2013/UBTVQH13 dated March 18, 2013;

Pursuant to the Foreign Exchange Law No. 28/2005/PL-UBTVQH11 dated December 13, 2005;

Pursuant to Law No. 06/2013/UBTVQH13 dated March 18, 2013 of the Standing Committee of the National Assembly amending and supplementing certain articles of the Foreign Exchange Law;

Pursuant to Decree No. 156/2013/NĐ-CP dated November 11, 2013, of the Government stipulating the functions, tasks, powers, and organizational structure of the State Bank of Vietnam;

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

The Governor of the State Bank of Vietnam issues this Circular on bank guarantees.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Circular stipulates the bank guarantee business of credit institutions and foreign bank branches for customers.

Article 2. Applicability

1. Credit institutions include commercial banks, cooperative banks, and financial companies (excluding specialized financial companies).

2. Branches of foreign banks.

3. Organizations (including foreign credit institutions participating in joint guarantees, counter-guarantees, and confirmation of guarantees), and individuals related to guarantee transactions.

Article 3. Explanation of Terms

In this Circular, the following terms are understood as follows:

1. Bank Guarantee is a form of credit provision whereby the guarantor commits to the beneficiary to fulfill financial obligations on behalf of the guaranteed party when the guaranteed party fails to perform or performs incompletely its obligations to the beneficiary; the guaranteed party must recognize the debt and repay the guarantor.

2. Counter-guarantee is a form of bank guarantee whereby the counter-guarantor commits to the guarantor to fulfill financial obligations to the guarantor if the guarantor has to fulfill financial obligations on behalf of the guaranteed party, which is a customer of the counter-guarantor; the guaranteed party must recognize the debt and repay the counter-guarantor.

3. Confirmation of Guarantee is a form of bank guarantee whereby the confirming guarantor commits to the beneficiary to ensure the guarantor's ability to fulfill its obligations to the beneficiary. The confirming guarantor will fulfill financial obligations on behalf of the guarantor if the guarantor fails to perform or performs incompletely; the guarantor must recognize the debt and repay the confirming guarantor, while the guaranteed party must recognize the debt and repay the guarantor.

4. Joint Guarantee is a form of syndicated credit provision whereby two or more credit institutions, foreign bank branches, or foreign credit institutions jointly provide guarantees; or a credit institution, foreign bank branch, and foreign credit institution jointly provide guarantees.

5. Guarantor is a credit institution, foreign bank branch providing a guarantee for the guaranteed party. In cases of joint guarantees, counter-guarantees, and confirmation of guarantees, the guarantor includes foreign credit institutions.

6. Guaranteed Party is an organization (including credit institutions, foreign bank branches, foreign credit institutions), individual guaranteed by the guarantor, counter-guarantor.

7. Beneficiary is an organization (including credit institutions, foreign bank branches, foreign credit institutions), individual entitled to benefit from guarantees issued by the guarantor, confirming guarantor.

8. Counter-guarantor is a credit institution, foreign bank branch, foreign credit institution providing a counter-guarantee for the guaranteed party.

9. Confirming Guarantor is a credit institution, foreign bank branch, foreign credit institution providing a confirmation of guarantee for the guarantor.

10. Customer is an organization (including credit institutions, foreign bank branches, foreign credit institutions), individual as follows:

a) In bank guarantee (except for counter-guarantee and confirmation of guarantee), the customer of the guarantor is the guaranteed party;

b) In counter-guarantee, the customer of the guarantor is the counter-guarantor, the customer of the counter-guarantor is the guaranteed party;

c) In confirmation of guarantee, the customer of the guarantor is the guaranteed party, the customer of the confirming guarantor is the guarantor.

11. Guarantee Issuance Agreement is an agreement between the guarantor or counter-guarantor or confirming guarantor with the customer and other related parties (if any) regarding the issuance of bank guarantees, counter-guarantees, and confirmation of guarantees for the customer.

12. Guarantee Commitment is a document issued by the guarantor or counter-guarantor or confirming guarantor in one of the following forms:

a) Guarantee Letter is a commitment letter from the guarantor to the beneficiary stating that the guarantor will fulfill financial obligations on behalf of the guaranteed party when the guaranteed party fails to perform or performs incompletely its obligations to the beneficiary.

In the case of counter-guarantees and confirmation of guarantees, the guarantee letter includes the commitment letter from the counter-guarantor to the guarantor and the confirming guarantor to the beneficiary.

b) Guarantee Contract is an agreement between the guarantor and the beneficiary and other related parties (if any) regarding the guarantor's fulfillment of financial obligations on behalf of the guaranteed party when the guaranteed party fails to perform or performs incompletely its obligations to the beneficiary.

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

Article 4. Provisions on foreign exchange management in guarantees

1. The issuance of guarantees denominated in foreign currency by credit institutions, foreign bank branches must be consistent with the scope of foreign exchange operations on domestic and international markets for each type of credit institution, foreign bank branch.

2. Credit institutions, foreign bank branches may only provide guarantees denominated in foreign currency for organizations and individuals for lawful foreign currency financial obligations as prescribed by law.

Article 5. Cases not eligible for guarantees, restricted guarantees, and implementation of credit limits

When providing guarantees, credit institutions, foreign bank branches must comply with the provisions of the Law on Credit Institutions and guidelines of the State Bank of Vietnam concerning cases not eligible for credit, restricted credit, and credit limits.

Article 6. Determination of the Guarantee Balance for Customers

The guarantee balance for a customer, including a customer and related parties, includes the issued guarantee commitment balance, the issued reciprocal guarantee commitment balance, and the issued confirmation guarantee commitment balance for that customer, that customer, and related parties.

Article 7. Language Usage

Documents used in guarantee transactions include the guarantee issuance agreement and the guarantee commitment which must be drafted in Vietnamese. In cases involving foreign elements, the parties may agree to use a foreign language. If a foreign language is used, the documents must be translated into Vietnamese (with certification from the authorized representative of the credit institution or foreign bank branch) attached to the original foreign language version upon request of the competent authority.

Article 8. Application of Customary Practices and Dispute Resolution

1. Parties participating in bank guarantees, reciprocal guarantees, confirmation guarantees, and joint guarantees may agree to apply commercial practices as stipulated in Clause 4, Article 3 of the Law on Credit Institutions.

2. Disputes arising in guarantee transactions shall be handled according to the agreement of the parties in compliance with the provisions of the law. In cases involving foreign elements, the parties may agree on the applicable law, dispute resolution body (including foreign courts or international commercial arbitration) to resolve disputes regarding guarantee transactions in accordance with Vietnamese law.

Chapter II

SPECIFIC PROVISIONS

Article 9. Scope of Guarantees

The guarantor may commit to guaranteeing part or all of the financial obligations that the guaranteed party has towards the beneficiary.

Article 10. Conditions for Customers

Credit institutions and foreign bank branches shall consider and decide to issue guarantees, reciprocal guarantees, and confirmation guarantees to customers when the customers meet the following conditions:

1. Having full civil legal capacity and civil conduct capacity as prescribed by law.

2. The obligation being guaranteed is a lawful financial obligation.

3. Being assessed by the credit institution or foreign bank branch issuing the guarantee as having the ability to repay the amount that the credit institution or foreign bank branch must pay on behalf of the customer when fulfilling the guarantee obligation.

Article 11. Guarantees for Non-Resident Customers

1. Credit institutions and foreign bank branches may only issue guarantees for non-resident organizational customers. Issuing guarantees for non-resident organizational customers must satisfy one of the following conditions:

a) The customer is a business established and operating abroad with Vietnamese capital contribution in the form of investment as prescribed at point a, c, Clause 1, Article 52 of the Investment Law 2014 or other direct investment forms abroad under the laws of the receiving country;

b) The customer deposits a cash deposit equal to 100% of the guarantee value;

c) The beneficiary is a resident.

2. In cases where the customer is a foreign credit institution, the provisions of Clause 1 of this Article do not need to be implemented.

3. When credit institutions and foreign bank branches issue guarantees for non-resident organizational customers, they must comply with the following regulations:

a) Being permitted by the State Bank of Vietnam to operate basic foreign exchange activities in the domestic market (for cases of guaranteeing non-residents in Vietnam) and basic foreign exchange activities in the international market (for cases of guaranteeing non-residents abroad);

b) Complying with the provisions of Articles 126, 127, 128, and 130 of the Law on Credit Institutions and guidance on implementing these provisions issued by the State Bank of Vietnam at the time of issuing guarantees for customers;

c) Having procedures for assessing and managing credit risks, including risks in guarantees for non-residents;

d) For foreign bank branches, they must comply with the provisions of Clause 4 of this Article.

4. Foreign bank branches may not issue guarantees in foreign currency for non-resident organizational customers abroad, except in the following cases:

a) Guaranteeing the beneficiary in Vietnam based on a reciprocal guarantee from a foreign credit institution;

b) Confirming the guarantee for the obligation of a foreign credit institution towards the beneficiary in Vietnam.

5. In addition to the provisions of this Article, other contents regarding guarantees for non-residents must be implemented in accordance with this Circular.

Article 12. Guarantee in the sale and lease-purchase of future residential units

1. When implementing guarantees for real estate project developers to sell and lease-purchase future residential units as stipulated in Article 56 of the Law on Real Estate Business, commercial banks must comply with the following provisions:

a) Future residential units must meet the conditions for sale and lease-purchase as prescribed in Article 55 of the Law on Real Estate Business;

b) In the sales and lease-purchase contracts signed between the developer and the buyer, lessee, there must be a provision stating the developer's obligation to refund money to the buyer, lessee when the developer breaches the obligation to deliver the residential unit according to the agreed schedule with the buyer, lessee;

c) Commercial banks must assess whether the developer has the capability to implement the project according to the schedule and use the advance payments and other amounts paid by the buyer, lessee to the developer for their intended purpose;

d) The commercial bank must be permitted by the State Bank to conduct guarantee activities as stated in the license for establishment and operation or in the document amending and supplementing the license for establishment and operation;

đ) The agreement to provide guarantees and the commitment to guarantee must comply with the provisions of Clause 2 and 3 of Article 56 of the Law on Real Estate Business 2014;

e) The commitment to guarantee in the sale and lease-purchase of future residential units must remain effective until at least thirty days after the date of delivery of the house to the buyer, lessee as agreed by the developer with the buyer, lessee;

2. The guarantee contract as stipulated in Article 56 of the Law on Real Estate Business shall be established under one of the forms of guarantee commitments prescribed in Clause 12 of Article 3 and Article 15 of this Circular;

3. In addition to the provisions of Clause 1 and 2 of this Article, other contents regarding guarantee in the sale and lease-purchase of future residential units must be implemented in accordance with this Circular;

Article 13. Documents for Requesting Guarantee

1. The documents for requesting guarantee include the main types of documents as follows:

a) A request letter for guarantee;

b) Customer-related documents;

c) Documentation on the obligations being guaranteed;

d) Security measures-related documents (if any);

đ) Documents on other related parties (if any).

2. Based on the actual situation of the guarantee business of credit institutions, foreign bank branches, and the specific characteristics of each group of customers, credit institutions, foreign bank branches shall provide detailed guidance and publicly announce the requirements for documents to be submitted for credit institutions, foreign bank branches to consider issuing guarantees;

Article 14. Agreement to Provide Guarantee

1. To implement the guarantee, the credit institution, foreign bank branch and the customer sign an agreement to provide guarantee. In cases where the guarantee is issued based on a corresponding guarantee, the guarantor is not required to sign an agreement to provide guarantee with the corresponding guarantor;

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

a) Legal regulations applicable;

b) Information about the parties involved in the guarantee relationship;

c) Guaranteed obligation;

d) Amount of guarantee, currency of guarantee;

đ) Form of issuance of the guarantee commitment;

e) Conditions for performing the guarantee obligation;

g) Rights and obligations of the parties;

h) Guarantee fee;

i) Agreement on mandatory acceptance of debt repayment, interest rate applied to the amount repaid, and obligations, deadlines for repayment of debt when performing the guarantee obligation;

k) Number, date of signing, and validity of the agreement;

l) Resolution of disputes arising.

3. In addition to the contents prescribed in Clause 2 of this Article, the parties may agree on other contents in the agreement to provide guarantee that do not contravene the provisions of this Circular and the law;

4. Any amendment, supplementation, or cancellation of the agreement to provide guarantee must be agreed upon and decided by the relevant parties based on ensuring compliance with the law.

Article 15. Guarantee Commitment

1. The guarantee commitment must include the following contents:

a) Legal regulations applicable;

b) Number, form of the guarantee commitment;

c) Information about the parties involved in the guarantee relationship;

d) Date of issuance of the guarantee, date of commencement of the guarantee's effectiveness and/or circumstances under which the guarantee becomes effective;

đ) Date of expiration and/or circumstances under which the guarantee expires;

e) Amount of guarantee, currency of guarantee;

g) Guarantee obligation;

h) Conditions for performing the guarantee obligation;

i) Documents requesting the performance of the guarantee obligation;

k) Methods to verify the authenticity of the guarantee commitment.

2. In addition to the contents prescribed in Clause 1 of this Article, the guarantee commitment may include other contents consistent with the guarantee issuance agreement, in accordance with the provisions of this Circular and the law.

3. Amendments, supplements, or cancellation of the contents of the guarantee commitment shall be agreed upon by the relevant parties in accordance with the guarantee issuance agreement and comply with legal regulations.

4. Credit institutions, foreign bank branches shall base on the contents of the guarantee issuance agreement and the guarantee commitment stipulated in this Circular to design, print, and issue sample guarantee commitments suitable for each type of guarantee and applicable uniformly throughout the credit institution's system, foreign bank branches. Credit institutions, foreign bank branches must establish internal regulations regarding procedures and responsibilities for designing, printing, issuing, and using sample guarantee commitments to ensure safety and compliance with legal regulations.

5. For guarantee commitments issued through international communication networks between banks, credit institutions, and foreign bank branches, they shall be carried out according to the form and process of issuing guarantee commitments through international communication networks between banks. Credit institutions, foreign bank branches must have supervisory and management procedures for issuing guarantees in these cases to ensure safety and effectiveness.

Article 16. Authority to Sign Guarantee Issuance Agreements and Guarantee Commitments

1. Guarantee issuance agreements and guarantee commitments must be signed by the legal representative or authorized representative of credit institutions, foreign bank branches.

2. The authorization to sign guarantee issuance agreements and guarantee commitments must be established in writing and comply with legal regulations.

Article 17. Security for Customer Obligations

1. Credit institutions, foreign bank branches agree with related parties on the application of security measures or non-application of security measures for the obligation to repay the amount paid on behalf when performing the guarantee obligation.

2. Credit institutions, foreign bank branches specify the principles and specific conditions for applying each security measure or not applying security measures in accordance with legal regulations on guarantee operations, secured transactions, and internal regulations of credit institutions, foreign bank branches.

Article 18. Guarantee Fee

1. Credit institutions, foreign bank branches agree on the guarantee fee level with customers. In the case of reciprocal guarantees or confirmation guarantees, the guarantee fee level is agreed upon by the parties based on the guarantee fee level accepted by the guaranteed party.

2. In the case of joint guarantees, based on the agreement on the participation ratio in joint guarantees and the fees received by the guaranteed party, the participating parties in joint guarantees agree on the guarantee fee level for each joint guarantor.

3. In the case where a credit institution, foreign bank branch guarantees a joint liability obligation, the credit institution, foreign bank branch agrees with each customer on the fee level to be paid based on the corresponding joint liability of each customer, except where the parties have agreed otherwise.

4. In the case where the guarantee currency is foreign currency, the parties agree to collect the guarantee fee in foreign currency or convert it into Vietnamese dong at the selling rate of the guarantor at the time of collection or at the time of notification of collection.

5. The parties may agree to adjust the level of guarantee fees.

Article 19. Duration of Effectiveness of Guarantee Commitments and Guarantee Provision Agreements

Clause 1. The duration of effectiveness of guarantee commitments is determined from the date of issuance of the guarantee commitment or after the issuance date of the guarantee commitment as agreed by the parties until the expiration date of the guarantee obligation as stipulated in Article 23 of this Circular.

Clause 2. The duration of effectiveness of the guarantee provision agreement is agreed upon by the parties but must be at least equal to the duration of effectiveness of the guarantee commitment.

3. In the event that the expiration date of the guarantee commitment, guarantee issuance agreement coincides with a holiday, the expiration date will be extended to the next working day.

Clause 4. The extension of the duration of effectiveness of the guarantee commitment is agreed upon by the parties in accordance with the guarantee provision agreement.

Article 20. Exemption from Fulfilling Guarantee Obligations

Clause 1. In cases where the guarantor releases the obligor from fulfilling the guarantee obligation, the beneficiary and/or related party still must fulfill the committed obligations towards the guarantor, except in cases where the parties have other agreements or fulfill joint obligations as prescribed by law.

Clause 2. In cases where one or some of the joint guarantors are exempted from fulfilling their part of the guarantee obligation, the other guarantors still must fulfill their part of the guarantee obligation as committed, except in cases where the parties have other agreements.

Article 21. Fulfillment of Guarantee Obligations

Clause 1. To request fulfillment of guarantee obligations, the guarantor must send a written request for fulfillment of guarantee obligations along with the documents as agreed in the guarantee commitment to the guarantor. A request for fulfillment of guarantee obligations is considered valid when the guarantor receives it during working hours and within the validity period of the guarantee commitment. If the request for fulfillment of guarantee obligations is sent in the form of a registered letter through public postal services, the date on which the guarantor receives the request is the date of receipt of the registered letter.

Clause 2. Fulfillment of guarantee obligations:

a) In the case of bank guarantees (excluding reciprocal guarantees and confirmation guarantees):

Not later than five working days from the date the guarantor receives a valid written request for fulfillment of guarantee obligations as stipulated in Clause 1 of this Article, the guarantor has the responsibility to fulfill the guarantee obligation committed to the guarantor fully and accurately, simultaneously recording the amount paid on behalf of the beneficiary in the mandatory loan account, and notifying the beneficiary. The beneficiary is obligated to repay the full amount paid on their behalf and interest as stipulated in Clause 3 of this Article.

b) In the case of reciprocal guarantees:

Not later than five working days from the date the guarantor receives a valid written request for fulfillment of guarantee obligations as stipulated in Clause 1 of this Article, the guarantor fulfills the guarantee obligation committed to the guarantor fully and accurately.

After fulfilling the guarantee obligation, the guarantor sends a written request for fulfillment of the counter-guarantee obligation committed along with the documents as agreed in the counter-guarantee commitment to the counter-guarantor. A request for fulfillment of the counter-guarantee obligation is considered valid when the counter-guarantor receives it during working hours and within the validity period of the counter-guarantee commitment. If the request for fulfillment of the counter-guarantee obligation is sent in the form of a registered letter through public postal services, the date on which the counter-guarantor receives the request is the date of receipt of the registered letter.

Not later than five working days from the date the counter-guarantor receives the request for fulfillment of the guarantee obligation, the counter-guarantor fulfills the counter-guarantee obligation committed to the guarantor fully and accurately, simultaneously recording the amount paid on behalf of the beneficiary in the mandatory loan account, and notifying the beneficiary. The guarantor is responsible for repaying the full amount paid on their behalf and interest as stipulated in Clause 3 of this Article.

In cases where the counter-guarantor does not fulfill or does not fulfill fully the committed obligation with the guarantor, the guarantor records the amount paid on behalf of the beneficiary in the mandatory loan account and notifies the counter-guarantor. The counter-guarantor is responsible for repaying the full amount paid on behalf of the guarantor and interest as stipulated in Clause 3 of this Article.

c) In the case of confirmation guarantees:

Not later than five working days from the date the guarantor receives a valid written request for fulfillment of guarantee obligations as stipulated in Clause 1 of this Article, the guarantor fulfills the guarantee obligation committed to the guarantor fully and accurately, simultaneously recording the amount paid on behalf of the beneficiary in the mandatory loan account, and notifying the beneficiary. The beneficiary is obligated to repay the full amount paid on their behalf and interest as stipulated in Clause 3 of this Article.

In cases where the guarantor does not fulfill or does not fulfill fully the committed guarantee obligation with the guarantor, the guarantor sends a written request for fulfillment of guarantee obligations along with the documents as agreed in the guarantee commitment to the confirming guarantor. A request for fulfillment of guarantee obligations is considered valid when the confirming guarantor receives it during working hours and within the validity period of the guarantee commitment. If the request for fulfillment of guarantee obligations is sent in the form of a registered letter through public postal services, the date on which the confirming guarantor receives the request is the date of receipt of the registered letter.

Not later than five working days from the date the confirming guarantor receives the request for fulfillment of guarantee obligations, the confirming guarantor fulfills the committed obligation to the guarantor fully and accurately, simultaneously recording the amount paid on behalf of the guarantor in the mandatory loan account, and notifying the guarantor. The guarantor is responsible for repaying the full amount paid on their behalf and interest as stipulated in Clause 3 of this Article, and simultaneously requesting the beneficiary to recognize the debt and repay the guarantor.

3. The party providing the substitute payment determines the loan term, repayment period, and interest rate applicable to the substitute payment amount in accordance with the guarantee issuance agreement. The interest rate applicable to the substitute payment amount shall be agreed upon by the parties in the guarantee issuance agreement but shall not exceed 150% of the prevailing interest rate for loans with corresponding terms currently applied by the same credit institution or foreign bank branch.

4. In case of refusal to perform the guarantee obligation, the refusing party must respond in writing within no more than five working days from the date of receipt of the request to perform the guarantee obligation, clearly stating the reasons for the refusal.

5. In case of substitute payment in foreign currency, the credit institution or foreign bank branch shall record the mandatory loan in the same foreign currency as that of the substitute payment.

Article 22. Relationship between the Guarantee Commitment and the Contract with Guaranteed Obligations

1. If the contract with guaranteed obligations becomes void and the parties have not yet performed the contract, the guarantee commitment terminates; if the contract has been partially or fully performed, the guarantee commitment does not terminate, except where otherwise agreed.

2. If the contract with guaranteed obligations is rescinded or unilaterally terminated and the parties have not yet performed the contract, the guarantee commitment terminates; if the contract has been partially or fully performed, the guarantee commitment does not terminate, except where otherwise agreed.

3. In cases where the guarantee commitment does not terminate as provided for in Clause 1 and Clause 2 of this Article, the beneficiary of the guarantee may request the guarantor to fulfill its financial obligation to settle the repayment obligation of the guaranteed party towards itself.

Article 23. Termination of Guarantee Obligations

The guarantee obligations shall terminate in the following cases:

1. The obligation of the guaranteed party has been terminated.

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

3. The guarantee is rescinded or replaced by another form of security.

4. The guarantee commitment has expired.

5. The beneficiary waives the guarantor's guarantee obligation.

6. By agreement among the parties.

7. As stipulated in Clause 1 and Clause 2 of Article 22.

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

Article 24. Joint Guarantees

1. Principles, conditions, and procedures for organizing and implementing joint guarantees shall be carried out in accordance with the provisions of this Circular, the State Bank's regulations on credit syndication by credit institutions and foreign bank branches for customers, and relevant laws.

2. Parties participating in joint guarantees shall jointly and severally bear responsibility for performing the guarantee obligation unless otherwise agreed. In case the lead credit institution or foreign bank branch must perform the guarantee obligation, the participating parties shall be responsible for repaying the lead credit institution or foreign bank branch the corresponding amount according to the agreed ratio of participation in the joint guarantee.

Article 25. Guarantee for a Joint Liability

Credit institutions and foreign bank branches providing guarantee for a joint liability must base it on a joint rights and obligations contract between the parties.

Article 26. Internal Regulations of Credit Institutions and Foreign Bank Branches on Guarantees

1. Based on the provisions of this Circular and related laws, credit institutions and foreign bank branches must issue internal regulations on guarantee business for organizations and individuals who are residents and non-residents organizations, consistent with credit regulations, including distinguishing between the assessment and approval stages of issuing guarantees.

2. Credit institutions and foreign bank branches shall submit one copy of their internal regulations on guarantee business to the State Bank (Department of Credit for Economic Sectors) no later than five working days from the date of issuance or amendment.

Article 27. Rights of the Guarantor

1. Accept or reject requests for guarantee issuance.

2. Request the confirmation party to confirm the guarantee for the guarantor's portion of the guarantee for the guaranteed party.

3. Request the guaranteed party or counter-guarantor and related parties to provide documents and information related to the assessment of collateral (if any).

4. Require the guaranteed party or counter-guarantor to provide security measures for the guaranteed obligation (if necessary).

5. Conduct financial monitoring of the customer during the validity period of the guarantee.

6. Charge guarantee fees, adjust guarantee fees; apply and adjust interest rates and penalty interest rates.

7. Refuse to perform the guarantee obligation when the guarantee commitment expires or the request document does not meet the conditions specified in the guarantee commitment, or there is evidence proving that the presented documents are forged.

8. Require the counter-guarantor to fulfill the committed obligation.

9. Record a debit entry for the guaranteed party (in the case of bank guarantee) or the counter-guarantor (in the case of counter-guarantee) immediately upon performing the guarantee obligation, and request the guaranteed party or the counter-guarantor to repay the amount that the guarantor has paid on behalf of them according to the commitment.

10. Request other joint guarantors to repay the amount that the guarantor has paid on behalf of the guaranteed party in the event that the guarantor acts as the lead party in the joint guarantee.

11. Dispose of the collateral according to the agreement and the law.

12. Transfer its rights and obligations to another credit institution or foreign bank branch according to the agreement of the relevant parties in compliance with the law.

13. Initiate legal proceedings as prescribed by law when the guaranteed party or counter-guarantor breaches the committed obligation.

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

Article 28. Rights of the Counter-Guarantor Party

1. Accepting or rejecting the request for issuance of a counter-guarantee.

2. Requesting the guarantor to issue a guarantee for the obligation of its customer towards the beneficiary of the guarantee.

3. Requiring the customer to provide documents and information related to the assessment of the counter-guarantee and collateral (if any).

4. Requiring the customer to take measures to secure the obligation of the counter-guarantee (if necessary).

5. Conduct financial monitoring of the customer during the validity period of the guarantee.

6. Charge guarantee fees, adjust guarantee fees; apply and adjust interest rates.

7. Refuse to perform the counter-guarantee obligation when the guarantee commitment expires or the payment request document does not meet the conditions specified in the guarantee commitment, or there is evidence proving that the presented documents are forged.

8. Record a debit entry for the guaranteed party immediately upon performing the counter-guarantee obligation for the guarantor, and request the guaranteed party to repay the amount that the counter-guarantor has performed the counter-guarantee obligation for the guarantor according to the commitment.

9. Processing the collateral of the guaranteed party in accordance with the agreement and the provisions of the law.

10. Initiating legal proceedings in accordance with the law when the guaranteed party or the guarantor breaches the committed obligations.

11. Transferring rights and obligations to another credit organization or foreign bank branch in accordance with the agreement of the relevant parties in compliance with the provisions of the law.

12. Other rights agreed by the parties in compliance with the provisions of the law.

Article 29. Rights of the Guarantee Confirmation Party

1. Approving or rejecting the request for confirmation of the guarantee.

2. Require customers to provide documents and information related to the assessment of guarantees and collateral (if any).

3. Requiring the customer to take measures to secure the obligation of the guarantee (if necessary).

4. Agree with the guaranteed party and/or customer on the obligation to confirm the guarantee, the procedure, and formalities for repayment regarding the confirmed guarantee obligation that the confirming guarantor has performed for the beneficiary.

5. Charge guarantee fees, adjust guarantee fees; apply and adjust interest rates.

6. Conduct financial status checks and supervision of customers during the validity period of the guarantee.

7. Record a debit entry for the guarantor immediately upon performing the confirmed guarantee obligation, and request the guarantor to repay the amount that the confirming guarantor has paid on behalf of them according to the commitment.

8. Dispose of the collateral of the guarantor or the guaranteed party according to the agreement and the provisions of the law.

9. Initiate legal proceedings as prescribed by law when the guarantor breaches its committed obligations.

10. Transfer rights and obligations to another credit institution or foreign bank branch as agreed by the relevant parties in compliance with the law.

11. Refuse to perform the guarantee obligation when the guarantee commitment expires or the payment request document does not meet the conditions specified in the guarantee commitment, or there is evidence proving that the presented documents are forged.

12. Other rights agreed by the parties in compliance with the provisions of the law.

Article 30. Obligations of the Guarantor, Counter-Guarantor, and Guarantee Confirmation Party

1. Shall be responsible for providing relevant information and documents related to the authority to issue guarantee commitments to the interested parties; fulfill the guarantee obligation upon receipt of a request in accordance with the provisions of the guarantee commitment.

2. Fully and correctly perform the guarantee obligations as stipulated in Article 21 of this Circular.

3. Return all collateral assets (if any) and related documents to the guarantor when settling the guarantee issuance agreement, unless otherwise agreed.

4. Provide a written response to the complainant within the latest ten (10) working days from the date of receipt of the complaint letter from the beneficiary regarding the refusal to fulfill the guarantee obligation.

5. Maintain guarantee files in accordance with the provisions of the law.

6. Guide the beneficiary on how to verify and confirm the authenticity of the issued guarantee commitment.

7. Other obligations as agreed by the parties in compliance with the provisions of the law.

Article 31. Rights and Obligations of the Guaranteed Party

1. The guaranteed party has the following rights:

a) Refuse requests from the guarantor, counter-guarantor, and guarantor confirmation party that are inconsistent with the terms of the guarantee issuance agreement or the guarantee commitment.

b) To request the guarantor and counter-guarantor to fulfill their obligations and responsibilities as committed;

c) To initiate legal proceedings as prescribed by law when the guarantor and counter-guarantor violate their committed obligations;

d) Exercise rights and fulfill obligations in accordance with the law when the parties involved transfer rights and obligations under the guarantee.

đ) To verify the authenticity of the guarantee commitment;

e) Other rights agreed upon by the parties in compliance with the provisions of the law.

2. The guaranteed party has the following obligations:

a) Provide complete, accurate, and truthful information and documents related to the guarantee and bear legal responsibility for the accuracy, truthfulness, and completeness of the provided information and documents.

b) Fully and timely fulfill the obligations and responsibilities committed to and as stipulated in the guarantee issuance agreement.

c) Reimburse the guarantor and counter-guarantor the amount they have fulfilled according to the guarantee issuance agreement or the mutual agreement between the parties and the costs arising from fulfilling the guarantee obligation.

d) Be subject to inspection and supervision by the guarantor and counter-guarantor regarding the fulfillment of the guaranteed obligations. Have the obligation to report situations related to the guarantee transaction to the guarantor and counter-guarantor.

đ) To cooperate with the guarantor, counter-guarantor, and other relevant parties in the process of handling collateral (if any);

e) Other obligations agreed upon by the parties in compliance with the provisions of the law.

Article 32. Rights and Obligations of the Beneficiary of the Guarantee

1. Rights of the beneficiary of the guarantee:

a) Request the guarantor and guarantor confirmation party to fulfill the guarantee obligation.

b) Request the guarantor and guarantor confirmation party to fulfill their obligations and responsibilities in accordance with the guarantee commitment.

c) To initiate legal proceedings as prescribed by law when the guarantor and confirming guarantor violate their committed obligations;

d) To verify the authenticity of the guarantee commitment;

đ) To transfer its rights and obligations to another organization or individual according to the agreement of the relevant parties in compliance with the provisions of the law;

e) To exempt the guarantor and confirming guarantor from performing the guarantee obligation;

g) Other rights agreed upon by the parties in compliance with the provisions of the law.

2. Obligations of the Beneficiary

a) Fulfill the obligations accurately and completely in contracts related to the guarantee obligation, ensuring consistency with the content of the guarantee commitment.

b) To promptly notify the guarantor, confirming guarantor, and other relevant parties of any signs of violation or violation behavior by the guaranteed party;

c) Other obligations as agreed by the parties in compliance with the provisions of the law.

Chapter III

REPORTING AND IMPLEMENTATION ORGANIZATION

Article 33. Accounting Entries and Reporting Information

1. Credit institutions and foreign bank branches must perform accounting entries and monitor all issued guarantees in accordance with the regulations.

2. Credit institutions and foreign bank branches shall report on the implementation of guarantees in accordance with the reporting and statistical system of the State Bank of Vietnam.

Article 34. Responsibilities of Units under the State Bank of Vietnam

1. Responsibilities of the Department of Credit for Economic Sectors:

a) Serve as the focal point for receiving internal regulations concerning the guarantee business of credit institutions and foreign bank branches as stipulated in Article 26 of this Circular; monitor and compile the implementation status of the guarantee business of credit institutions and foreign bank branches.

b) Serve as the focal point for compiling and publishing the list of commercial banks as prescribed in Clause 1, Article 56 of the Law on Real Estate Business 2014, which meet the conditions specified in Point d, Clause 1 of this Circular on the State Bank's electronic portal.

c) Serve as the focal point for handling issues arising from guarantee operations.

2. Responsibilities of the Banking Inspection and Supervision Authority:

a) Take the lead and coordinate with relevant units to inspect, audit, supervise the guarantee business of credit institutions and foreign bank branches and handle violations arising within their jurisdiction.

b) Coordinate with the Credit Department to publish the list of commercial banks as prescribed in Point b, Clause 1 of this Article.

3. The Financial Accounting Department shall be responsible for guiding credit institutions and foreign bank branches to implement accounting procedures for transactions related to the guarantee business in accordance with this Circular.

4. The Foreign Exchange Management Department shall be responsible for guiding foreign exchange management in the performance of guarantee obligations and recovery of non-resident debts for credit institutions and foreign bank branches.

5. The State Bank branch in provinces and centrally-administered cities without a Banking Inspection and Supervision Bureau shall be responsible for supervising, inspecting, and auditing credit institutions and foreign bank branches in implementing this Circular within their jurisdiction.

Chapter IV

IMPLEMENTING PROVISIONS

Article 35. Transitional Provisions

Guarantee issuance agreements and guarantee commitments signed and effective before the date this Circular takes effect shall continue to be implemented in accordance with the signed agreements and commitments until the guarantee obligation ends. Any amendments or supplements to these guarantee issuance agreements and guarantee commitments may only be made if the amended or supplemented content complies with the provisions of this Circular.

Article 36. Effective Date

1. This Circular takes effect from August 9, 2015.

2. This Circular replaces Circular No. 28/2012/TT-NHNN dated October 3, 2012, of the State Bank on bank guarantees.

Article 37. Implementation

The Director of the Office, Heads of the Credit Department for Economic Sectors, Heads of relevant units under the State Bank, Directors of State Bank branches in provinces and centrally-administered cities, Chairmen of the Board of Directors, Chairmen of the Board of Members, and General Managers (Directors) of credit institutions and foreign bank branches are responsible for organizing the implementation of this Circular.