Circular No. 49/2024/TT-NHNN amending and supplementing certain Articles of Circular No. 11/2022/TT-NHNN dated September 30, 2022, issued by the Governor of the State Bank of Vietnam on bank guarantees

CIRCULAR

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

concerning bank guarantees

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;

On the basis of the Foreign Exchange Law dated December 13, 2005; the Ordinance Amending and Supplementing Certain Articles of the Foreign Exchange Law dated March 18, 2013;

Pursuant to Decree No. 102/2022/NĐ-CP dated December 12, 2022 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 promulgates this Circular amending and supplementing some articles of Circular No. 11/2022/TT-NHNN dated September 30, 2022 of the Governor of the State Bank of Vietnam on bank guarantees.

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

1. Amending and supplementing Clause 4, Clause 13, Clause 15 Article 3 as follows:

 “4. Bank guarantee in the sale, lease-purchase of future residential property (hereinafter referred to as bank guarantee for future residential property) is a bank guarantee whereby the guarantor is a commercial bank or a foreign bank branch commits to the beneficiary being the buyer or lessee of the residential property (hereinafter referred to as the buyer) that the guarantor will fulfill the financial obligation on behalf of the principal being the developer of the future residential property project (hereinafter referred to as the developer) when the time for delivery of the residential property has arrived but the developer does not deliver the residential property to the buyer without performing or performing incompletely the financial obligations under the purchase or lease-purchase contract signed; the developer must accept the debt compulsorily and repay the guarantor according to the agreement signed. In case the commercial bank or foreign bank branch guarantees based on counter-guarantee, the counter-guarantor commits to the commercial bank or foreign bank branch to fulfill the financial obligation to the commercial bank or foreign bank branch when the commercial bank or foreign bank branch fulfills the financial obligation on behalf of the developer; the developer must accept the debt compulsorily and repay the counter-guarantor according to the agreement signed.”

“13. Commitment document for issuing a letter of guarantee for future residential property (hereinafter referred to as the commitment document for issuing a letter of guarantee) is a commitment document of the guarantor to the developer affirming that the guarantor will issue a letter of guarantee for all buyers choosing to be guaranteed within the project of the developer as approved by the guarantor in accordance with the guarantee issuance agreement.”

“15. Financial obligation of the developer to the buyer in the bank guarantee for future residential property (hereinafter referred to as the financial obligation of the developer) is the amount of money that the developer is obliged to pay to the buyer when the developer fails to deliver the residential property on time as committed in the purchase or lease-purchase contract signed, including: The advance payment received by the developer from the buyer after the buyer has received the letter of guarantee from the guarantor and other amounts (if any) that the developer is obliged to pay to the buyer according to the agreement in the purchase or lease-purchase contract signed.”

“2. Amending and supplementing Clause 3 Article 6 as follows:

“3. The balance of the guarantee in the bank guarantee for future residential property shall be determined in accordance with Clause 7 Article 13 of this Circular.”

1. To take the lead and coordinate with the Ministry of National Defense, provincial People's Committees, and relevant agencies and units:

“Article 13. Bank guarantee for future residential property

1. A commercial bank or foreign bank branch shall consider and decide to grant a guarantee to the developer when:

a) The developer meets all requirements stipulated in Article 11 of this Circular (except in cases where the commercial bank or foreign bank branch guarantees the developer based on counter-guarantee);

b) The developer has received a document from the provincial competent authority on real estate business responding to the developer regarding housing meeting the conditions for sale or lease-purchase.

2. Procedures for implementing the bank guarantee for future residential property:

a) Based on the proposal of the developer or the counter-guarantor, the commercial bank or foreign bank branch shall examine, appraise and decide to grant a guarantee to the developer;

b) The guarantor and the developer sign a guarantee issuance 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 signed guarantee issuance agreement, the guarantor issues a commitment document for issuing a letter of guarantee to the developer for the developer to send a copy to the buyer when signing the purchase or lease-purchase contract;

d) After signing the purchase or lease-purchase contract, which includes the financial obligation of the developer, the developer sends the purchase or lease-purchase contract to the guarantor to request the guarantor to issue a letter of guarantee for the buyer;

đ) The guarantor bases on the purchase or lease-purchase contract, the guarantee issuance agreement, and the commitment document for issuing a letter of guarantee to issue a letter of guarantee and send it to the developer to provide the letter of guarantee to the buyer.

3. Duration of effectiveness and contents of the guarantee issuance agreement:

a) The guarantee issuance agreement takes effect from the date of signing until the guarantee obligation of all letters of guarantee for the buyer expires in accordance with Article 23 of this Circular and all obligations of the developer towards the guarantor under the guarantee issuance agreement have been completed; except in cases where the parties agree to terminate the guarantee issuance agreement before the expiration date;

b) In addition to the contents prescribed in Clause 2 Article 15 of this Circular (excluding the contents at point h and point i in cases of guarantee based on counter-guarantee), the guarantee issuance agreement must also include provisions stating that the guarantor is obliged to issue a letter of guarantee for the buyer before the agreed delivery date of the house under the purchase or lease-purchase contract upon receipt of the purchase or lease-purchase contract sent by the developer and send the letter of guarantee to the developer to provide to the buyer.

4. Duration of effectiveness and contents of the commitment document for issuing a letter of guarantee:

a) The commitment document for issuing a letter of guarantee takes effect from the date of signing until the completion of issuing the letter of guarantee before the agreed delivery date of the house under the purchase or lease-purchase contract or when the guarantee issuance agreement expires (whichever occurs first);

b) The commitment document for issuing a letter of guarantee must contain the following contents:

(i) Information about the guarantor and the developer;

(ii) Effectiveness of the document;

(iii) Information on the project that is guaranteed or the portion of the project that is guaranteed (if only a portion of the project is guaranteed);

(iv) The guarantor's commitment to issue a guarantee letter for all purchasers who have chosen to be guaranteed within the project of the developer, which has been approved by the guarantor;

(v) The financial obligation of the developer towards the purchaser, guaranteed by a commercial bank or a foreign bank branch, is the amount of money that the developer is obligated to pay to the purchaser when the developer fails to deliver the housing unit according to the agreed deadline in the signed purchase or lease-purchase contract, including: The advance payment received by the developer from the purchaser after the purchaser has received the guarantee letter from the guarantor, and other amounts (if any) that the developer is obligated to pay to the purchaser according to the agreement in the signed purchase or lease-purchase contract;

(vi) The documentation submitted by the purchaser to the guarantor requesting the fulfillment of the guarantee obligation must be accompanied by a guarantee letter issued by a commercial bank or a foreign bank branch for the purchaser;

5. Duration of validity and contents of the guarantee letter:

a) The guarantee letter shall be valid from the date of issuance until at least thirty days after the deadline for the developer to fulfill its financial obligations towards the purchaser when the developer fails to deliver the housing unit according to the commitment in the purchase or lease-purchase contract, except where the guarantee obligation terminates as provided for in Article 23 of this Circular. In cases where the guarantor and the developer terminate the guarantee agreement before the deadline, the guarantee letters issued previously to purchasers will remain valid until the termination of the guarantee obligation;

b) In addition to the contents stipulated in Clause 1, Article 16 of this Circular, the guarantee letter must clearly state the financial obligation of the developer under guarantee;

6. The amount of guarantee for each purchaser shall not exceed the total amount of advance payments permitted to be received by the developer from the purchaser as prescribed in Article 25 of the Law on Real Estate Business and other amounts (if any) according to the purchase or lease-purchase contract;

7. Balance of guarantee in future housing guarantee:

a) The balance of guarantee for the developer or the corresponding guarantor is determined by the amount of money under the developer's financial obligation. The balance of guarantee decreases gradually when the guarantee obligation towards each purchaser terminates as provided for in Article 23 of this Circular;

b) The time of recording the balance of guarantee is the time when the developer informs the guarantor about the advance payments received from the purchasers as stipulated in point c of this clause and other amounts (if any) according to the purchase or lease-purchase contract;

c) The guarantor and the developer agree on the time to inform and update the advance payments received from the purchasers in the month but no later than the last working day of the month to serve as the basis for determining the balance of guarantee. The developer bears legal responsibility for accurately informing the guarantor about the amount and time of advance payments received from the purchasers;

8. Rights and obligations of the guarantor:

a) The guarantor has the right:

(i) To refuse to issue a guarantee letter to the purchaser if the purchase or lease-purchase contract does not comply with relevant laws or after terminating the guarantee agreement;

(ii) To refuse to fulfill the guarantee obligation for amounts that do not fall under the developer's financial obligation, or amounts paid by the purchaser exceeding the ratio prescribed in Article 25 of the Law on Real Estate Business, or if the purchaser cannot present the guarantee letter issued by the guarantor;

b) The guarantor has the obligation:

(i) To issue a guarantee letter before the delivery and receipt of housing units as stipulated in the purchase or lease-purchase contract upon receiving a valid purchase or lease-purchase contract and sending it to the developer;

(ii) In cases where the guarantor and the developer terminate the guarantee agreement before the deadline, no later than the next working day, the guarantor must publicly announce on its electronic information website and notify in writing the provincial housing management authority in the area where the developer's housing project is located, stating that the guarantor will no longer issue guarantee letters to purchasers who sign purchase or lease-purchase contracts with the developer after the guarantor terminates the guarantee agreement with the developer. For guarantee letters already issued to purchasers prior to the termination, the guarantor will continue to fulfill its commitments until the guarantee obligation terminates;

(iii) To fulfill the guarantee obligation with the corresponding substitute payment based on the documentation submitted by the purchaser requesting the fulfillment of the guarantee obligation, which is consistent with the conditions for fulfilling the guarantee obligation as stipulated in the guarantee letter;

9. Rights and obligations of the developer:

a) The developer has the right:

To request the guarantor to issue a guarantee letter for all purchasers who have chosen to be guaranteed within the future housing project, during the validity period of the commitment to issue guarantee letters;

b) The developer has the obligation:

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

(ii) In cases where the guarantor and the developer terminate the guarantee agreement before the deadline, no later than the next working day, the developer must publicly announce on its electronic information website (if available) and notify in writing the provincial housing management authority in the area where the developer's housing project is located regarding the termination of the guarantor's guarantee for the developer. The developer must stop providing purchasers with expired guarantee letter issuance commitment documents when the guarantee agreement between the developer and the guarantor becomes invalid;

(iii) To accurately inform the guarantor about the advance payments received from each purchaser and other amounts (if any) according to the agreed time as stipulated in point c of Clause 7 of this Article;

10. Rights of the purchaser:

a) To receive the guarantee letter issued by the guarantor sent by the developer.

b) Request the guarantor to fulfill the guarantee obligation for the financial obligations of the project investor based on presenting the guarantee letter along with the relevant documentation consistent with the guarantee letter.

11. In addition to the provisions of this Article, other contents regarding the guarantee of future housing projects shall be implemented in accordance with the corresponding provisions of this Circular.

 4. Amend and supplement Article 17 as follows:

“Article 17. Authority to sign guarantee issuance agreements, guarantee commitments and commitment documents for issuing guarantee letters

1. Guarantee issuance agreements, guarantee commitments, and commitment documents for issuing guarantee letters must be signed by the legally authorized representative of credit institutions, foreign bank branches, in compliance with the laws and internal regulations of credit institutions, foreign bank branches.

2. The use of electronic signatures and delegation to sign guarantee issuance agreements, guarantee commitments, and commitment documents for issuing guarantee letters shall be carried out in accordance with the relevant laws.

Article 2. Repeal certain points of Circular No. 11/2022/TT-NHNN

Repeal point b clause 1, point b clause 2 and clause 5 Article 34 of Circular No. 11/2022/TT-NHNN.

Article 3. Implementation Organization

The Director of the Office, Heads of the Credit Department for Economic Sectors, Heads of units under the State Bank of Vietnam, credit institutions, and foreign bank branches are responsible for organizing the implementation of this Circular.

Article 4. Implementation Provisions

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

2. For guarantee issuance agreements and guarantee commitments concluded and effective before the date this Circular takes effect, credit institutions, foreign bank branches, and customers shall continue to implement the contents already agreed upon in compliance with the laws in force at the time of signing such guarantee issuance agreements and guarantee commitments. Any amendments or supplements to the aforementioned guarantee issuance agreements and guarantee commitments may only be made if the amended or supplemented contents comply with the provisions of this Circular.