Circular No. 61/2024/TT-NHNN on bank guarantees.

CIRCULAR

Provisions on Bank Guarantees

Pursuant to the Civil Code on 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; Decree No. 146/2024/NĐ-CP dated November 6, 2024 of the Government amending and supplementing some articles of 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 and Decree No. 26/2014/NĐ-CP dated April 7, 2014 of the Government on the organization and operation of banking inspection and supervision which has been amended and supplemented by Decree No. 43/2019/NĐ-CP dated May 17, 2019 of the Government;

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 on bank guarantees.

Chapter 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 organizations include commercial banks, cooperative banks, and comprehensive finance companies.

2. Branches of foreign banks.

3. Individuals and entities related to guarantee business include individuals and entities that are residents and non-residents.

Article 3. Explanation of Terms

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

1. Bank Guarantee is a form of credit provision to customers, whereby the guarantor is a credit organization or a foreign bank branch commits to the beneficiary about performing financial obligations on behalf of the obligor (hereinafter referred to as the guaranteed party) when the guaranteed party fails to perform or performs incompletely the obligations committed to the beneficiary; the customer must compulsorily accept debt and repay the guarantor according to the agreement.

2. Counter-guarantee is a form of bank guarantee, whereby the corresponding guarantor commits to the guarantor about performing financial obligations towards the guarantor in case the guarantor has to perform financial obligations on behalf of the guaranteed party; the customer of the corresponding guarantor must compulsorily accept debt and repay the corresponding guarantor according to the agreement.

3. Confirmation of Guarantee is a form of bank guarantee, whereby the confirming guarantor commits to the beneficiary about ensuring the ability of the guarantor to fulfill obligations towards the beneficiary. The confirming guarantor will perform financial obligations on behalf of the guarantor if the guarantor fails to perform or performs incompletely the obligations committed to the beneficiary; the guarantor must compulsorily accept debt and repay the confirming guarantor, while the customer of the guarantor must compulsorily accept debt and repay the guarantor according to the agreement.

4. Guarantee in selling, leasing houses under construction (hereinafter referred to as guarantee for houses under construction) is a bank guarantee, whereby the guarantor is a commercial bank or a foreign bank branch commits to the beneficiary who is the buyer or lessee of the house (hereinafter referred to as the buyer) about performing financial obligations on behalf of the guaranteed party who is the developer of the housing project under construction (hereinafter referred to as the developer) when the time for delivery and acceptance of the house has arrived but the developer does not deliver the house to the buyer without performing or performing incompletely the financial obligations according to the signed purchase or lease contract; the developer must compulsorily accept debt and repay the guarantor according to the agreement. In case the commercial bank or foreign bank branch guarantees based on corresponding guarantee, the corresponding guarantor commits to the commercial bank or foreign bank branch about performing financial obligations towards the commercial bank or foreign bank branch when the commercial bank or foreign bank branch has to perform financial obligations on behalf of the developer; the developer must compulsorily accept debt and repay the corresponding guarantor according to the agreement.

5. Joint Guarantee is a form of joint credit provision, whereby two or more credit organizations or foreign bank branches jointly undertake the guarantee; or a credit organization or foreign bank branch and a foreign credit organization jointly undertake the guarantee.

6. Guarantor is a credit organization or foreign bank branch providing guarantee for the guaranteed party. In the case of guarantee, corresponding guarantee, and confirmation guarantee, the guarantor includes foreign credit organizations.

7. Guaranteed Party is an entity (including credit organizations, foreign bank branches, foreign credit organizations) or individual having obligations towards the beneficiary, guaranteed by the guarantor or the corresponding guarantor.

8. Beneficiary is an entity (including credit organizations, foreign bank branches, foreign credit organizations) or individual having the right to benefit from the guarantee issued by the guarantor or the confirming guarantor.

9. Counter-guarantor is a credit organization or foreign bank branch or foreign credit organization providing corresponding guarantee for the guaranteed party.

10. Confirming Guarantor is a credit organization or foreign bank branch or foreign credit organization providing confirmation guarantee for the guarantor.

11. Customer of the credit organization or foreign bank branch (hereinafter referred to as the customer) is an entity (including credit organizations, foreign bank branches, foreign credit organizations) or individual, specifically as follows:

a) In bank guarantee (excluding corresponding guarantee, confirmation guarantee), the customer of the guarantor is the guaranteed party or the party requesting the credit organization or foreign bank branch to provide guarantee for the guaranteed party;

b) In corresponding guarantee, the customer of the corresponding guarantor is the guaranteed party or the party requesting the credit organization or foreign bank branch to provide corresponding guarantee for the guaranteed party; the customer of the guarantor is the corresponding guarantor;

c) In confirmation guarantee, the customer of the confirming guarantor is the guarantor; the customer of the guarantor is the guaranteed party or the party requesting the credit organization or foreign bank branch to provide guarantee for the guaranteed party.

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

13. A commitment document for issuing a letter of guarantee for future housing (hereinafter referred to as the commitment document for issuing a letter of guarantee) is a commitment document of the guarantor with the developer affirming that the guarantor will issue a letter of guarantee for all buyers who choose to be guaranteed under the project of the developer and are approved by the guarantor according to the guarantee agreement.

14. Guarantee Commitment is a commitment issued by the guarantor or the corresponding guarantor or the confirming guarantor in one of the following forms:

a) Guarantee Letter is a commitment of the guarantor to the beneficiary regarding the guarantor's performance of financial obligations on behalf of the guaranteed party when the guaranteed party fails to perform or performs incompletely the obligations committed to the beneficiary.

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

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

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

Specifically, for guarantees for future housing, they are only issued in the form of a letter of guarantee.

15. The financial obligation of the developer towards the buyer in a guarantee for future housing (hereinafter referred to as the developer's financial obligation) is the amount of money that the developer is obligated to pay to the buyer when the developer fails to deliver the housing within the agreed deadline in the signed purchase or lease-purchase contract, including: The advance payment received from the buyer after the buyer has received the letter of guarantee from the guarantor and any other amount (if any) that the developer is obligated to pay to the buyer according to the agreement in the signed purchase or lease-purchase contract.

Article 4. Provisions on foreign exchange management in guarantees

1. The issuance of guarantees in foreign currency by credit institutions, branches of foreign banks must comply with the scope of foreign exchange operations in the domestic market and international market as stipulated in the operating license of each type of credit institution, branch of a foreign bank.

2. Credit institutions, branches of foreign banks can only provide guarantees in foreign currency for customers' financial obligations in foreign currency as prescribed by law.

Article 5. Cases not allowed to guarantee, restricted guarantees, and implementation of credit limits

When providing guarantees, credit institutions, branches of foreign banks must comply with the provisions of the Law on Credit Institutions and the regulations of the State Bank of Vietnam (hereinafter referred to as the State Bank) regarding cases not allowed to extend credit, restricted credit extension, and credit limits.

Article 6. Determination of Guarantee Balance

1. The guarantee balance for one customer or one customer and related parties includes the balance of issued commitment guarantees, the balance of issued commitment corresponding guarantees, and the balance of issued commitment confirmation guarantees for that customer, that customer, and related parties.

2. The guarantee balance for one customer or one customer and related parties of that customer is calculated from the date of issuance of the commitment guarantee.

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

Article 7. Language Usage

1. The guarantee issuance agreement, guarantee commitment must be established in Vietnamese, except for the cases specified in Clause 2 of this Article.

2. Credit institutions, branches of foreign banks may agree with related parties to use a foreign language in the following cases:

a) Guarantee transactions falling under civil relations with foreign elements as provided for in the Civil Code;

b) Guaranteed obligations arising from the implementation of projects funded by international financial organizations as stipulated by the State Bank regarding limits and ratios ensuring safety in banking operations, including branches of foreign banks;

c) Guaranteed obligations arising from participating in international tender packages;

d) Guarantee transactions issued through the SWIFT system.

3. In cases where a foreign language is used, upon request of the competent authority, the documents or data messages must be translated into Vietnamese with the confirmation of the legal representative of the credit institution, branch of a foreign bank, or must be notarized or certified with the attachment of the original in a foreign language.

Article 8. Application of Customary Practices and Dispute Resolution

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

2. Disputes arising from guarantee transactions shall be resolved in accordance with the agreement of the parties in compliance with the law. In cases involving foreign elements or where the parties choose to apply international commercial practices, the parties may agree on the applicable law, dispute resolution body (including foreign courts or arbitration tribunals) to resolve disputes concerning guarantee transactions.

Article 9. Electronic Guarantee Activities

1. Credit organizations, foreign bank branches, and customers may choose to conduct banking guarantee activities through the use of electronic means (hereinafter referred to as electronic guarantee activities).

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

2. When conducting customer identification and verification information through electronic means for customers establishing a relationship with credit organizations, foreign bank branches (except in cases where customers submit requests via authenticated electronic messages through the SWIFT system or customers use electronic signatures as prescribed by law), credit organizations, foreign bank branches shall implement as follows:

a) For resident customers: Credit organizations, foreign bank branches shall conduct customer identification and verification information according to the State Bank's regulations on opening and using payment accounts at service providers.

b) For non-resident customers: Credit organizations, foreign bank branches shall conduct customer identification and verification information based on their own risk assessment to select appropriate measures, forms, and technologies to ensure safety and bear the resulting risks.

3. Credit organizations, foreign bank branches shall independently decide on the measures, forms, and technologies for implementing electronic guarantee activities applicable to the entire process or specific stages of the guarantee process, bear any resulting risks (if any), and must meet the following minimum requirements:

a) Measures, forms, and technologies selected by credit organizations, foreign bank branches must comply with the regulations on security, safety, and confidentiality as stipulated by the State Bank.

b) Apply appropriate electronic transaction confirmation methods for customers when conducting electronic transactions during the implementation of electronic guarantee activities in accordance with relevant laws.

c) Store and preserve all documentation, information, and data related to customer identification during the implementation of electronic guarantee activities thoroughly and in detail. Information and data must be stored securely and confidentially, backed up, ensuring completeness and integrity of the data to serve verification work, dispute resolution, complaints, and providing information upon request from competent authorities. Storage and preservation periods must comply with laws on anti-money laundering and electronic transactions.

d) Credit organizations, foreign bank branches must regularly check and evaluate the level of security and confidentiality of measures, forms, and technologies, and promptly upgrade and update them if there are signs of insecurity.

đ) Specify the roles and responsibilities of each individual and department involved in building, setting up, and operating the information system serving the credit decision-making process in electronic guarantee activities. In case of any risks arising, the bank must have mechanisms to identify individuals and departments responsible and promptly address issues and risks to ensure effectiveness and security during the implementation of electronic guarantee activities.

4. If customer identification and verification information is conducted through electronic means, the value of each guarantee commitment issued to individual customers (in cases where the guarantee currency is foreign currency, apply the exchange rate as specified by the guarantor at the time of issuing the guarantee commitment) shall not exceed 4,000,000,000 (four billion) Vietnamese dong, and for corporate customers, it shall not exceed 45,000,000,000 (forty-five billion) Vietnamese dong, except in the following cases:

a) Customer identification information is verified by a competent state agency or electronically verified through an electronic authentication service provider as prescribed by law on electronic identity and authentication.

b) Customers submit guarantee application requests via authenticated electronic messages through the SWIFT system.

c) Customer information and obligations guaranteed are accurately matched through the Customs Electronic Payment Gateway or the National Bidding System.

d) Customers use electronic signatures as prescribed by law when applying for guarantees or signing guarantee agreements with credit organizations, foreign bank branches.

đ) Customers are credit organizations, foreign bank branches.

5. The information system implementing electronic guarantee activities must comply with the regulations on ensuring information system security level 3 or higher as stipulated by laws on information system security levels and the State Bank's regulations on information system security in banking operations.

Chapter II
SPECIFIC PROVISIONS

Article 10. Scope of Guarantee

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

Article 11. Requirements for Customers

1. Credit institutions and foreign bank branches shall consider and decide to issue guarantees, counter-guarantees, and confirm guarantees for customers when such customers meet the following requirements:

a) Having full civil legal capacity and civil conduct capacity as prescribed by law;

b) The obligation being guaranteed is a lawful financial obligation;

c) The credit institution or foreign bank branch issuing the guarantee assesses that the customer has the ability to repay the amount that the credit institution or foreign bank branch must pay on behalf of the customer when performing the guarantee obligation.

2. Credit institutions and foreign bank branches shall not guarantee payment obligations of corporate bond issuers with the purpose of restructuring debts of the issuer itself; contributing capital, purchasing shares in other enterprises, and increasing operational scale.

Article 12. Guarantees for Non-resident Customers

1. Credit institutions and foreign bank branches may only issue guarantees for non-resident organizational customers and must satisfy one of the following requirements (foreign credit institutions do not need to meet this requirement):

a) The customer is an economic organization established and operating abroad with Vietnamese enterprise capital invested in the form prescribed at point a and c, Clause 1, Article 52 of the Investment Law or in another investment form prescribed at point d, Clause 1, Article 52 of the Investment Law;

b) The customer deposits collateral equivalent to 100% of the guarantee value or provides security equivalent to 100% of the guarantee value through assets including the balance of deposits at the credit institution or foreign bank branch issuing the guarantee and deposit certificates issued by the credit institution or foreign bank branch issuing the guarantee;

c) The beneficiary is a resident.

2. Foreign bank branches shall not issue guarantees in foreign currency for non-resident organizational customers except where the beneficiary of the guarantee is a resident.

3. When credit institutions and foreign bank branches issue guarantees in foreign currency for non-resident customers, they must:

a) Comply with the State Bank's regulations on foreign exchange management for lending abroad and recovering guarantees for non-residents;

b) Have procedures for evaluating and managing credit risks, including risks in guarantees for non-residents.

4. In addition to the provisions of this Article, other contents regarding guarantees for non-resident customers must be implemented according to corresponding provisions in this Circular.

Article 13. Guarantees for Future Housing Projects

1. Commercial banks and foreign bank branches shall consider and decide to issue guarantees for project owners when:

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

b) The project owner has received a document from the provincial state management agency on real estate business responding to the project owner about housing meeting conditions for sale or lease purchase.

2. Procedures for issuing guarantees for future housing projects:

a) Based on the request of the project owner or the counter-guarantor, commercial banks and foreign bank branches shall examine, evaluate, and decide to issue guarantees for the project owner;

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

c) Based on the guarantee issuance agreement, the guarantor issues a commitment letter to issue a guarantee letter to the project owner for the project owner to send a copy to the buyer when signing a purchase or lease purchase contract for housing;

d) After signing the purchase or lease purchase contract for housing, which includes the financial obligations of the project owner, the project owner sends the purchase or lease purchase contract for housing to the guarantor to request the guarantor to issue a guarantee letter to the buyer;

đ) Based on the purchase or lease purchase contract for housing, the guarantee issuance agreement, and the commitment letter to issue a guarantee letter, the guarantor issues the guarantee letter and sends it to the project owner to provide the guarantee letter to the buyer.

3. Duration and Content of the Guarantee Issuance Agreement:

a) The guarantee issuance agreement is effective from the date of signature until the guarantee obligation for all guarantee letters to buyers ends according to Article 23 of this Circular and all obligations of the project owner towards the guarantor under the guarantee issuance agreement are completed; except in cases where the parties agree to terminate the guarantee issuance agreement before the expiration date;

b) In addition to the contents stipulated in Clause 2, Article 15 of this Circular (excluding points h and i in the case of guarantees based on counter-guarantees), the guarantee issuance agreement must also include the content that the guarantor has the obligation to issue a guarantee letter to the buyer before the delivery and acceptance of the house according to the commitment stipulated in the purchase or lease purchase contract for housing upon receipt of the purchase or lease purchase contract for housing sent by the project owner and sending the guarantee letter to the project owner to provide to the buyer.

4. Duration and Content of the Commitment Letter to Issue a Guarantee Letter:

a) The commitment letter to issue a guarantee letter is effective from the date of signature until the completion of issuing guarantee letters to all buyers before the delivery and acceptance of the house according to the commitment in the purchase or lease purchase contract for housing or when the guarantee issuance agreement expires (whichever occurs first);

b) The commitment letter to issue a guarantee letter must include the following contents:

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

(ii) The validity of the document;

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

(iv) The guarantor's commitment to issue a guarantee letter to all buyers who choose to have a guarantee within the project of the project owner that the guarantor has agreed to guarantee for the project owner.

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

(vi) The documents submitted by the buyer to the guarantor requesting the fulfillment of the guarantee obligation must be accompanied by the guarantee letter issued by the commercial bank or foreign bank branch for the buyer.

5. Duration and contents of the guarantee letter:

a) The guarantee letter shall be effective from the issuance date until at least thirty days after the deadline for the investor's financial obligation towards the buyer as stipulated in the purchase or lease-purchase agreement, except in cases where the guarantee obligation terminates as provided in Article 23 of this Circular. In cases where the guarantor and the investor terminate the guarantee provision agreement before the deadline, the guarantee letters issued previously to buyers will remain valid until the termination of the guarantee obligation.

b) In addition to the contents prescribed in Clause 1, Article 16 of this Circular, the guarantee letter must clearly state the investor's financial obligation covered by the guarantee and specify that the documents submitted by the buyer to the guarantor requesting the fulfillment of the guarantee obligation must be accompanied by the guarantee letter issued by the commercial bank or foreign bank branch for the buyer.

6. The maximum guarantee amount for each buyer shall be equal to the total amount of advance payments permitted to be received by the investor from the buyer as stipulated in Article 25 of the Law on Real Estate Business and any other amounts (if any) according to the purchase or lease-purchase agreement.

7. Remaining guarantee balance in future housing project guarantees:

a) The remaining guarantee balance for the investor or corresponding guarantor is determined based on the amount of the investor's financial obligation. The remaining guarantee balance decreases gradually as the guarantee obligation for each buyer terminates as provided in Article 23 of this Circular.

b) The time of recording the remaining guarantee balance is the time when the investor notifies the guarantor of the advance payments received from buyers as specified in point c of this clause and any other amounts (if any) according to the purchase or lease-purchase agreement.

c) The guarantor and the investor agree on the time to notify and update the advance payments received from buyers in the month but not later than the last working day of the month to serve as the basis for determining the remaining guarantee balance. The investor is responsible under the law for accurately notifying the guarantor of the amount and time of advance payments received from buyers.

8. Rights and obligations of the guarantor:

a) The guarantor has the right:

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

(ii) To refuse to fulfill the guarantee obligation for amounts not included in the investor's financial obligation or for amounts paid by the buyer exceeding the ratio prescribed in Article 25 of the Law on Real Estate Business, or if the buyer 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 acceptance deadline stipulated in the purchase or lease-purchase agreement upon receiving a valid purchase or lease-purchase agreement and sending it to the investor;

(ii) In cases where the guarantor and the investor terminate the guarantee provision agreement before the deadline, the guarantor must publicly announce on its electronic information website and notify in writing the provincial housing management agency in the area where the investor's housing project is located, stating that the guarantor will no longer issue guarantee letters for buyers who sign purchase or lease-purchase agreements with the investor after the guarantor terminates the guarantee provision agreement with the investor. For guarantee letters already issued to buyers prior to the termination, the guarantor will continue to fulfill its commitment until the guarantee obligation ends;

(iii) To fulfill the guarantee obligation with the corresponding substitute payment based on the documents submitted by the buyer requesting the fulfillment of the guarantee obligation, which are consistent with the conditions for fulfilling the guarantee obligation as stipulated in the guarantee letter.

9. Rights and obligations of the investor:

a) The investor has the right: To request the guarantor to issue guarantee letters for all selected buyers who choose to have guarantees within the future housing project guarantee period as stipulated in the effective commitment letter issuance document.

b) The investor has the obligation:

(i) To send the guarantee letter issued by the guarantor to the buyer 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 investor terminate the guarantee provision agreement before the deadline, the investor must publicly announce on its electronic information website (if available) and notify in writing the provincial housing management agency in the area where the investor's housing project is located about the termination of the guarantor's guarantee for the investor. The investor must stop providing buyers with expired commitment letters for issuing guarantee letters once the guarantee provision agreement between the investor and the guarantor becomes ineffective;

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

10. Rights of the buyer:

a) To receive the guarantee letter issued by the guarantor sent by the investor;

b) To request the guarantor to fulfill the guarantee obligation for the investor's financial obligation based on presenting the guarantee letter along with the appropriate documents as required by the guarantee letter.

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

Article 14. Application Documents for Guarantee

1. The application documents for guarantee include the following main documents:

a) Request for guarantee;

b) Customer-related documents, including information about related parties of the customer as prescribed in the Law on Credit Institutions if the total credit limit granted to that customer at the credit institution, foreign bank branch (including the amount requested for guarantee) exceeds or equals 0.1% of the credit institution's, foreign bank branch's own capital at the end of the working day closest to the date when the customer requests the guarantee, except in cases where the customer is a foreign credit institution. In cases where the credit institution, foreign bank branch has negative own capital, the ratio is applied based on the charter capital or issued capital (for foreign bank branches). Information about related parties includes:

(i) Information about individual related parties, including: full name, personal identification number for Vietnamese citizens; nationality, passport number, date of issue, place of issue for foreigners; relationship with the customer;

(ii) Information about organizational related parties, including: name, business registration code, headquarters address of the enterprise, business registration certificate number or equivalent legal document, legal representative, relationship with the customer.

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 the credit institution, foreign bank branch and specific characteristics of each group of customers, each method of implementing guarantee activities (traditional or electronic methods), the credit institution, foreign bank branch shall provide detailed guidance on the requirements for documents to be submitted to the credit institution, foreign bank branch for review and consideration of granting guarantees.

Article 15. Agreement on Granting Guarantee

1. To grant a guarantee to a customer, the credit institution, foreign bank branch and the customer shall establish an agreement on granting guarantee. In cases where a guarantee is issued based on a corresponding guarantee or confirmation of guarantee, the guarantor is not required to establish an agreement on granting guarantee with the corresponding guarantor or the confirming party.

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

a) Applicable law. If there is no specific provision on applicable law, it is understood that the parties agree to apply Vietnamese law;

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 debt assumption, interest rate applicable to the assumed amount, and obligation to repay the debt when performing the guarantee obligation;

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

l) Dispute resolution;

m) Other contents not contrary to the provisions of the law.

3. Any amendment, supplementation, or cancellation of the content of the agreement on granting guarantee shall be agreed upon and decided by the relevant parties based on ensuring compliance with the provisions of the law.

Article 16. Guarantee Commitment

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

a) Applicable law. If there is no specific provision on applicable law, it is understood that the parties agree to apply Vietnamese law;

b) Number 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) Request documents for performing the guarantee obligation including the request for performance of the guarantee obligation accompanied by a list of required documents and certificates;

k) Method for the beneficiary to verify the authenticity of the guarantee commitment;

l) Other contents not contrary to the provisions of the law.

2. Any amendment, supplementation, or cancellation of the content of the guarantee commitment shall be agreed upon by the relevant parties in accordance with the agreement on granting guarantee and comply with the legal regulations.

3. For guarantee commitments issued through international communication networks, the credit institution, foreign bank branch shall implement according to the content and procedures for issuing guarantee commitments of the international communication network. The credit institution, foreign bank branch must have a monitoring and management process for issuing guarantees in these cases to ensure safety and effectiveness.

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 authorized representative of credit organizations, foreign bank branches, in accordance with the provisions of the law and internal regulations of credit organizations, foreign bank branches.

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

Article 18. Ensuring the fulfillment of customer obligations

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

2. Credit organizations, foreign bank branches stipulate principles and specific requirements for not applying security measures. In cases where security measures are agreed upon, the parties shall implement them in accordance with the provisions of the law on ensuring the fulfillment of obligations and according to the internal regulations of credit organizations, foreign bank branches.

Article 19. Guarantee Fees

1. Credit organizations, foreign bank branches agree on the guarantee fee level with customers and related parties (if any) and must publicly display the guarantee fee level.

2. In cases of joint guarantees, participating parties in joint guarantees agree on the guarantee fee level for each joint guarantor.

3. In cases where credit organizations, foreign bank branches guarantee a joint obligation, credit organizations, foreign bank branches agree with each customer on the fee level to be paid based on the corresponding joint obligation of each customer, except in cases where the parties have other agreements..

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

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

Article 20. Validity Period of Guarantee Commitments and Guarantee Issuance Agreements

1. The validity period 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 related parties until the end of the guarantee obligation as specified in Article 23 of this Circular. The validity period of the guarantee letter in future housing guarantee is implemented in accordance with the provisions of Clause 5, Article 13 of this Circular.

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

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.

4. The extension of the validity period of guarantee commitments and guarantee issuance agreements is agreed upon by the parties in accordance with relevant legal provisions.

Article 21. Exemption from Fulfilling Guarantee Obligations

1. In cases where the beneficiary of the guarantee waives the obligation to the guarantor or the confirming party, the guaranteed party still has to fulfill the committed obligation to the beneficiary of the guarantee, except in cases where the parties have other agreements or perform joint obligations as provided by law.

2. In cases where one or some members of joint guarantors are exempted from fulfilling their part of the guarantee obligation according to the agreement of the related parties, the other members still have to fulfill their part of the guarantee obligation according to the guarantee commitment, except in cases where the parties have other agreements.

Article 22. Performance of Guarantee Obligations

1. To request the performance of guarantee obligations, the beneficiary must submit the request file for the performance of guarantee obligations in accordance with point i, Clause 1, Article 16 of this Circular to the guarantor. The guarantor shall examine the submitted request file for the performance of guarantee obligations, compare it with the terms and conditions stipulated in the guarantee commitment, and perform the guarantee obligation in accordance with Clause 3 of this Article if the request file for the performance of guarantee obligations is valid. If the request file for the performance of guarantee obligations is not valid, the guarantor shall refuse to perform the guarantee obligation in accordance with Clause 4 of this Article.

2. The request file for the performance of guarantee obligations is valid when:

a) The guarantor receives all the request files for the performance of guarantee obligations within the validity period of the guarantee commitment, specifically:

(i) In case of direct submission by written document, it must be within the working hours of the guarantor;

(ii) In case of submission through registered mail service, the date on which the guarantor receives the request is the date of signing for the registered letter;

(iii) In case of submission via electronic means, it is calculated based on the time when the guarantor receives the data message in accordance with the law on electronic transactions;

b) Fulfilling all the conditions for performing the guarantee obligation as stipulated in the guarantee commitment.

3. Performance of Guarantee Obligation:

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

Within five working days following the receipt of a valid request file for the performance of guarantee obligations in accordance with Clause 2 of this Article, the guarantor shall fulfill the guarantee obligation committed to the beneficiary accurately and fully, simultaneously record a debit entry in the mandatory loan account for the amount paid on behalf of the guaranteed party, and notify the customer accordingly. The customer has the obligation to repay the full amount paid on their behalf and the interest as stipulated in Clause 5 of this Article.

b) In the case of reciprocal guarantees:

Within five working days following the receipt of a valid request file for the performance of guarantee obligations in accordance with Clause 2 of this Article, the guarantor requests the corresponding guarantor to pay on behalf of the guaranteed party.

The corresponding guarantor shall fulfill the corresponding guarantee obligation committed to the guarantor accurately and fully, simultaneously record a debit entry in the mandatory loan account for the amount paid on behalf of the guaranteed party, and notify the customer accordingly. The customer has the responsibility to repay the full amount paid on their behalf and the interest as stipulated in Clause 5 of this Article.

In case the corresponding guarantor does not perform or performs incompletely the obligation committed to the guarantor, the guarantor shall fulfill the guarantee obligation committed to the beneficiary accurately and fully, simultaneously record a debit entry in the mandatory loan account for the amount paid on behalf of the corresponding guarantor, and notify the corresponding guarantor accordingly. The corresponding guarantor has the responsibility to repay the full amount paid on their behalf and the interest as stipulated in Clause 5 of this Article.

c) In the case of confirmation guarantees:

Within five working days following the receipt of a valid request file for the performance of guarantee obligations in accordance with Clause 2 of this Article, the guarantor shall fulfill the guarantee obligation committed to the beneficiary accurately and fully, simultaneously record a debit entry in the mandatory loan account for the amount paid on behalf of the guaranteed party, and notify the customer accordingly. The customer has the obligation to repay the full amount paid on their behalf and the interest as stipulated in Clause 5 of this Article.

In case the guarantor does not perform or performs incompletely the guarantee obligation committed to the beneficiary, the beneficiary shall submit the request file for the performance of guarantee obligations in accordance with the guarantee commitment to the confirming guarantor. Within five working days following the receipt of a valid request file for the performance of guarantee obligations in accordance with Clause 2 of this Article, the confirming guarantor shall fulfill the obligation committed to the beneficiary accurately and fully, simultaneously record a debit entry in the mandatory loan account for the amount paid on behalf of the guarantor, and notify the guarantor accordingly. The guarantor has the responsibility to repay the full amount paid on their behalf and the interest as stipulated in Clause 5 of this Article, and at the same time require the customer to accept the mandatory debt and repay the guarantor.

4. In case of refusal to perform the guarantee obligation, within five working days following the receipt of the request for the performance of guarantee obligations, the refusing party must provide a written response stating the reasons for the refusal.

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

6. In case of payment in foreign currency, the paying party shall record a mandatory loan in the paid foreign currency, and the customer shall repay the debt in the paid foreign currency or convert it into Vietnamese dong or another foreign currency at the agreed exchange rate. In case of payment in Vietnamese dong, the paying party shall record a mandatory loan in Vietnamese dong.

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 may be canceled or replaced by another security measure according to the agreement between the beneficiary and the guarantor, and other related parties (if any).

4. The guarantee commitment has expired.

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

6. By agreement among the parties.

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

Article 24. Joint Guarantees

1. The principles, conditions, and procedures for organizing joint guarantees shall be implemented in accordance with this Circular, the regulations of the State Bank of Vietnam on credit syndication by credit institutions and foreign bank branches for customers, and relevant laws.

2. The parties participating in joint guarantee shall jointly and severally be responsible for performing the guarantee obligation, unless otherwise agreed or if the law provides for independent guarantees. In the case where the lead credit institution or foreign bank branch must perform the guarantee obligation, the participating parties shall be responsible for repaying to the lead credit institution or foreign bank branch the corresponding amount according to the agreed ratio of their 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 relevant laws, credit institutions and foreign bank branches shall establish internal regulations regarding guarantee services for customers (including provisions on electronic guarantees, if applicable, guarantees for future residential properties, if applicable, and guarantees for non-resident customers) in accordance with credit granting regulations, including defining responsibilities between the appraisal stage and the approval stage for issuing guarantees.

2. Credit institutions and foreign bank branches shall submit their internal regulations on guarantee banking services to the State Bank of Vietnam and its branches as prescribed by relevant laws.

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 customers and related parties to provide information and documents related to the appraisal of guarantees and collateral (if any).

4. Require customers to provide security measures for the guaranteed obligations (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 request document for performing the guarantee obligation is not valid or there is evidence proving that the presented documents and materials are forged.

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

9. Record a mandatory debit against the customer's account for the amount paid on behalf of the beneficiary immediately upon performing the guarantee obligation; require the customer to repay the amount that the guarantor has paid on behalf of the beneficiary according to the agreement.

10. Require other co-guarantors to repay the amount paid on behalf of the beneficiary according to the agreed ratio of their participation in the joint guarantee when the lead guarantor performs the guarantee obligation.

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 in accordance with the law when the customer breaches the committed obligations.

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 and penalty interest rates.

7. Refuse to perform the counter-guarantee obligation when the request document for performing the counter-guarantee obligation is not valid or there is evidence proving that the presented documents and materials are forged.

8. Record a mandatory debit against the customer's account for the amount paid on behalf of the guarantor immediately upon performing the counter-guarantee obligation; require the customer to repay the amount that the counter-guarantor has performed the counter-guarantee obligation for the guarantor according to the agreement.

9. Dispose of the customer's collateral in accordance with the agreement and the law.

10. Initiate legal proceedings in accordance with the law when the customer or 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. Request customers to provide information and documents related to the appraisal of guarantees and collateral (if any).

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

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

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

6. Record a mandatory debit against the guarantor's account for the amount paid on behalf of the guarantor immediately upon performing the confirmation guarantee obligation; require the guarantor to repay the amount that the confirming guarantor has paid on behalf of the guarantor according to the agreement.

7. Dispose of the guarantor's or beneficiary's collateral in accordance with the agreement and the law.

8. Initiate legal proceedings in accordance with the law when the guarantor breaches the committed obligations.

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

10. Refuse to perform the guarantee obligation when the request document for performing the guarantee obligation is not valid or there is evidence proving that the presented documents and materials are forged.

11. 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 information and documents related to the authority to issue guarantee commitments to related parties; perform the guarantee obligation upon receiving a request in accordance with the provisions of the guarantee commitment.

2. Fully and correctly perform the guarantee obligations as stipulated in Article 22 of this Circular.

3. Conduct financial status checks on customers during the validity period of the guarantee agreement.

4. Return the full collateral (if any) and related documents to the guarantor when settling the guarantee agreement, unless otherwise agreed.

5. Within five working days following the receipt of the complaint letter from the beneficiary regarding the refusal to perform the guarantee obligation, must respond in writing to the complainant.

6. Comply with legal requirements for retaining guarantee records.

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

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

Article 31. Rights and Obligations of Customers:

1. The customer has the following rights:

a) To refuse requests from the guarantor/surety/certifying party that are not in accordance with the guarantee agreement or guarantee commitment;

b) To request the guarantor/surety/certifying party to fulfill their obligations and responsibilities as committed;

c) To initiate legal proceedings in accordance with the law when the guarantor/surety/certifying party breaches their committed obligations;

d) To transfer their rights and obligations according to the agreement of the relevant parties in compliance with the law. To exercise their rights and fulfill their obligations in accordance with the law when the relevant parties carry out the transfer of the guarantor's rights and obligations for the guarantee amount;

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 customer has the following obligations:

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

b) To fully and timely fulfill the obligations and responsibilities committed in the guarantee agreement;

c) To repay the guarantor/surety/certifying party the amount the guarantor/surety/certifying party has fulfilled under the guarantee agreement or the commitment between the parties, along with any costs incurred from fulfilling the guarantee obligation;

d) To be subject to inspection and supervision by the guarantor/surety/certifying party regarding the process of fulfilling the guaranteed obligation. To have the obligation to report on activities related to the guarantee transaction to the guarantor/surety/certifying party;

e) To cooperate with the guarantor/surety/certifying party 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) To request the guarantor and confirming guarantor to fulfill their obligations and responsibilities as committed in the guarantee commitment;

b) To lodge a complaint against the guarantor, certifying party within five working days following receipt of the refusal notice from the guarantor, certifying party if the reason for refusing to fulfill the guarantee obligation does not comply with the conditions for performing the guarantee obligation as stipulated in 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 Guaranteed Party:

a) To fully perform all obligations in contracts related to the guarantee obligation; to fully perform the obligations specified in the guarantee commitment (if any);

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) To bear legal responsibility for the accuracy, completeness, validity, and legality of the documents and materials presented in accordance with the guarantee commitment and the contents declared in the application for fulfillment of the guarantee obligation submitted by the guaranteed party;

d) Other obligations agreed upon by the parties in compliance with 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. Transitional Provisions

Guarantee agreements and guarantee commitments signed and effective before this Circular takes effect shall continue to be implemented in accordance with the agreements and commitments in compliance with the laws in force at the time of signing the guarantee agreement and guarantee commitment until the guarantee obligation ends. Any amendments or supplements to the aforementioned guarantee agreements and guarantee commitments may only be made if the amended or supplemented content complies with the provisions of this Circular.

Article 35. Effective Date

1. This Circular takes effect from April 1, 2025.

2. This Circular replaces Circular No. 11/2022/TT-NHNN dated September 30, 2022, issued by the Governor of the State Bank of Vietnam on bank guarantees and Circular No. 49/2024/TT-NHNN dated October 25, 2024, issued by the Governor of the State Bank of Vietnam 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.

Article 36. Implementation Organization

1. The Department of Credit for Economic Sectors is responsible for monitoring, summarizing, and inspecting the implementation of guarantee transactions by credit institutions, foreign bank branches, and handling any issues arising from guarantee transactions.

2. Heads of units under the State Bank of Vietnam, credit institutions, and foreign bank branches are responsible for organizing the implementation of this Circular.