(English – Tiếng Việt)

CIRCULAR 11/2022/TT-NHNN

September 30, 2022

On bank guarantee

Pursuant to the November 24, 2015 Civil Code;

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

Pursuant to the June 16, 2010 Law on Credit Institutions; and the November 20, 2017 Law Amending and Supplementing a Number of Articles of the Law on Credit Institutions;

Pursuant to the November 25, 2014 Law on Real Estate Business;

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

Pursuant to the Government’s Decree No. 16/2017/ND-CP of February 17, 2017, defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam;

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

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

Chapter I. GENERAL PROVISIONS

Article 1. Scope of regulation

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

Article 2. Subjects of application

1. Credit institutions, including commercial banks, cooperative banks and finance companies (except specialized finance companies).

2. Foreign bank branches.

3. Individuals and organizations involved in guarantee operations, including individuals and organizations that are residents and non-residents.

Article 3. Interpretation of terms

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

1. Bank guarantee means a form of credit extension whereby the guarantor being a credit institution or foreign bank branch makes a commitment with the beneficiary to perform financial obligations on behalf of the guaranteed party when the guaranteed party fails to perform or incompletely performs the obligations committed with the beneficiary; the guaranteed party is required to acknowledge the debt and refund it to the guarantor under the signed agreement.

2. Reciprocal guarantee means a form of bank guarantee whereby the reciprocal guarantee provider makes a commitment with the guarantor to perform financial obligations toward the guarantor in case the guarantor is required to perform financial obligations on behalf of the guaranteed party; the guaranteed party is required to acknowledge the debt and refund it to the reciprocal guarantee provider under the signed agreement.

3. Guarantee confirmation means a form of bank guarantee whereby the guarantee-confirming party makes a commitment with the beneficiary to secure the guarantor’s ability to perform obligations toward the beneficiary. The guarantee-confirming party will perform financial obligations on behalf of the guarantor if the guarantor fails to perform or incompletely performs the obligations committed with the beneficiary; the guarantor is required to acknowledge the debt and refund it to the guarantee-confirming party and, at the same time, the guaranteed party is required to acknowledge the debt and refund it to the guarantor under the signed agreement.

4. Guarantee in the sale or lease-purchase of a future house (below referred to as guarantee for a future house) means a bank guarantee whereby the guarantor being a commercial bank makes a commitment with the beneficiary being the purchaser or hire-purchaser (below collectively referred to as the purchaser) to perform financial obligations on behalf of the guaranteed party being the project owner in case the project owner fails to hand over the house to the purchaser when the committed time of house handover is due while failing to perform or incompletely performing the financial obligations under the signed house purchase or lease-purchase contract; the project owner is required to acknowledge the debt and refund it to the guarantor under the signed agreement. In case a commercial bank provides guarantee on the basis of reciprocal guarantee, the reciprocal guarantee provider will be required to make a commitment with the commercial bank to perform financial obligations toward the commercial bank when the latter is required to perform financial obligations on behalf of the project owner; and the project owner is required to acknowledge the debt and refund it to the reciprocal guarantee provider under the signed agreement.

5. Co-guarantee means a form of syndicated credit extension whereby 2 (two) or more credit institutions or foreign bank branches jointly provide guarantee; or whereby credit institutions or foreign bank branches and overseas credit institutions jointly provide guarantee.

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

7. The guaranteed party means an organization (even a credit institution, a foreign bank branch or an overseas credit institution) or an individual that receives guarantee from a guarantor or a reciprocal guarantee provider.

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

9. Reciprocal guarantee provider means a credit institution, a foreign bank branch or an overseas credit institution that provides reciprocal guarantee to the guaranteed party.

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

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

a/ In bank guarantee (except reciprocal guarantee and guarantee confirmation), customer of the guarantor is the guaranteed party;

b/ In reciprocal guarantee, customer of the guarantor is the reciprocal guarantee provider while customer of the reciprocal guarantee provider is the guaranteed party;

c/ In guarantee confirmation, customer of the guarantor is the guaranteed party while customer of the guarantee-confirming party is the guarantor.

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

13. Contract on provision of guarantee for a future house means a guarantee provision agreement between a commercial bank and a project owner and other related parties (if any) on the commercial bank’s approval of guarantee for the project owner in the sale or lease-purchase of a future house.

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

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

In case of reciprocal guarantee or guarantee confirmation, a letter of guarantee may also be a commitment made by the reciprocal guarantee provider to the guarantor or a commitment made by the guarantee-confirming party to the beneficiary;

b/ Guarantee contract, which is an agreement between a guarantor and a beneficiary and related parties (if any) that the guarantor will perform financial obligations on behalf of the guaranteed party when the guaranteed party fails to perform or incompletely performs the obligations committed with the beneficiary.

In case of reciprocal guarantee or guarantee confirmation, a guarantee contract may also be an agreement between the reciprocal guarantee provider and the guarantor and other related parties (if any) or between the guarantee-confirming party and the beneficiary and other related parties (if any).

Particularly for guarantee for future houses, a guarantee commitment may be issued only in the form of letter of guarantee.

15. Financial obligations of a project owner toward a purchaser in guarantee for a future house (below referred to as financial obligations of a project owner) means a money amount the project owner has received in advance from the purchaser since the date the letter of guarantee takes effect and other money amounts (if any) as agreed upon in the signed contract on house purchase or lease-purchase and is obliged to pay to the purchaser if failing to hand over the house within the committed time limit.

Article 4. Foreign exchange management in guarantee

1. The issuance of guarantee in foreign currency by credit institutions or foreign bank branches must conform to the scope of foreign exchange activities in the domestic market and international market as specified in operation licenses of credit institutions or foreign bank branches.

2. Credit institutions and foreign bank branches shall only provide guarantee in foreign currency to customers for performance of lawful financial obligations in foreign currency in accordance with law.

Article 5. Cases in which guarantee is not allowed or is restricted or which are subject to a credit extension limit

When providing guarantee, credit institutions and foreign bank branches shall comply with the Law on Credit Institutions and guidance of the State Bank of Vietnam (below referred to as the State Bank) regarding cases in which credit extension is not allowed or is restricted or which are subject to a credit extension limit.

Article 6. Determination of guarantee balance

1. The guarantee balance for a customer or for a customer and related persons includes the balance in the issuance of a guarantee commitment, balance in the issuance of a reciprocal guarantee commitment or balance in the issuance of a guarantee confirmation commitment for such customer or for such customer and related persons.

2. The guarantee balance for a customer or for a customer and related persons shall be counted from the date of issuance of a guarantee commitment.

3. The guarantee balance in guarantee for a future house shall be determined under Clause 8, Article 13 of this Circular.

Article 7. Use of languages

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

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

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

b/ Guaranteed obligations arising upon implementation of projects funded by international financial institutions. The list of international financial institutions is provided in the State Bank’s regulations on limits and prudential ratios in the operation of banks and foreign bank branches;

c/ Guaranteed obligations arising upon participation in international bidding packages.

3. For foreign-language documents and data messages, they must be translated into Vietnamese at the request of a competent agency; the Vietnamese translations must be certified by a lawful representative of the concerned credit institution or foreign bank branch or must be notarized or authenticated and accompanied by the foreign-language versions.

Article 8. Application of customary practices and selection of dispute resolution forms

1. Parties participating in bank guarantee, reciprocal guarantee, guarantee confirmation or co-guarantee may reach agreement on application of commercial practices as provided in Clause 4, Article 3 of the Law on Credit Institutions.

2. The resolution of disputes arising in guarantee transactions must comply with the agreement of related parties in accordance with law. In case of guarantee involving foreign elements, the parties may reach agreement on applicable law and dispute resolution body (which may also be a foreign court or commercial arbitration) to resolve disputes over guarantee transactions.

Article 9. E-guarantee activities

1. Credit institutions or foreign bank branches and customers may choose performing bank guarantee activities by electronic means (below referred to as e-guarantee activities).

The performance of e-guarantee activities must ensure security, safety, protection of data messages and confidentiality of information in accordance with the anti-money laundering law, the law on e-transactions, the State Bank’s guidance on risk management in e-banking activities, and other relevant legal documents.

2. Credit institutions and foreign bank branches may themselves decide on measures, forms and technologies for performance of e-guarantee activities for all stages or each stage of the guarantee process and bear arising risks (if any), and must satisfy at least the following requirements:

a/ Having technical solutions and technologies to ensure accuracy, confidentiality and safety of the process of collecting, using and checking information and data;

b/ Taking measures to check, collate, update and verify information and data; taking measures to prevent acts of making forgery, interference or alteration that falsify information and data;

c/ Taking measures to evaluate, manage and control risks; assigning specific responsibilities to each division or individual involved in e-guarantee activities and in risk management and supervision.

3. In case of identification and verification of know-your-customer information by electronic means, for customers that establish for the first time relationships with credit institutions or foreign bank branches (except the cases specified at Points b and d, Clause 4 of this Article), credit institutions or foreign bank branches are required to have technical solutions and technologies to collect, check and collate information, ensuring satisfaction of at least the following requirements:

a/ For individual customers: ensuring the consistency of know-your-customer information, and biometric data of customers (i.e., biological factors and characteristics that are associated with the identified customers, difficult to counterfeit, have a low rate of overlap such as fingerprints, face, iris, voice and other biometric factors) with the corresponding biometric information and factors in relevant papers in order to identify customers in accordance with the anti-money laundering law at the request of credit institutions or foreign bank branches, or with personal identification data authenticated by competent state agencies or e-authentication service providers in accordance with regulations on electronic identification and authentication;

b/ For institutional customers:

(i) Information about an institution: ensuring the consistency of know-your-customer information in accordance with the anti-money laundering law and the legal status of the institution (having been lawfully established and still operating in accordance with law) with information and data from the National Business Registration Database or with information and data authenticated by competent state agencies or e-authentication service providers in accordance with regulations on electronic identification and authentication;

(ii) Information about the individual being a lawful representative of the institution: Information about such individual shall be identified and verified in accordance with the provisions on identification and verification of individual customers of Point a of this Clause in order to ensure that such information is consistent with the information about the at-law representative or authorized representative of the institution based on the enterprise registration certificate and letter of authorization (in case of authorization).

4. In case of identification and verification of know-your-customer information by electronic means, the value of each issuance underwriting commitment must not exceed VND 4,000,000,000 (four billion) for an individual customer or VND 45,000,000,000 (forty-five billion) for an institutional customer, except the following cases:

a/ Know-your-customer information is authenticated by a competent state agency or electronically authenticated through an e-authentication service provider in accordance with regulations on electronic identification and authentication;

b/ The customer sends a request for guarantee provision by authentication telegram via the SWIFT system;

c/ Customer information and guaranteed obligation are consistent after being collated via the Customs E-Payment Portal or the Vietnam National E-Procurement System;

d/ The customer uses a digital signature in accordance with law when requesting guarantee provision or signs a guarantee provision agreement with the credit institution or foreign bank branch;

dd/ The customer is a credit institution or foreign bank branch.

5. Information systems for performance of e-guarantee activities must comply with regulations on assurance of security for information systems, which must be of level 3 or higher level under the Government’s regulations on assurance of level-based security of information systems and the State Bank’s regulations on information system security in banking activities.

6. Credit institutions and foreign bank branches shall store and preserve e-guarantee information and data in accordance with law, ensuring their safety and confidentiality, and that such information and data are put for back-up to ensure the completeness and integrity of dossiers and permission for access and use when necessary or to serve the checking, collation, review, settlement of complaints and disputes, and provision of information at the request of competent state management agencies.

Chapter II. SPECIFIC PROVISIONS

Article 10. Scope of guarantee

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

Article 11. Requirements on customers

1. A credit institution or foreign bank branch shall consider and decide on the provision of guarantee, reciprocal guarantee or guarantee confirmation to a customer when the following requirements are fully satisfied:

a/ The customer has full civil legal capacity and civil act capacity as provided by law;

b/ The guaranteed obligation is a lawful financial obligation;

c/ The customer is evaluated by the credit institution or foreign bank branch as being capable of refunding the money amount payable by the credit institution or foreign bank branch on the customer’s behalf when performing the guarantee obligation.

2. Credit institutions and foreign bank branches may not provide guarantee for the obligation of bond-issuing corporations to pay for bonds for the purpose of restructuring debts of the bond-issuing corporations; contributing capital to and purchasing shares in other enterprises; or increasing the operating capital.

Article 12. Guarantee for non-residential customers

1. A credit institution or foreign bank branch may only provide guarantee to an institutional customer that is a non-resident and must satisfy one of the following requirements (not applicable to customers being overseas credit institutions):

a/ The customer is an enterprise established and operating overseas and has contributed capital of a Vietnamese enterprise in the form of investment specified at Point a or c, Clause 1, Article 52 of the Law on Investment or in another form of investment specified at Point dd, Clause 1, Article 52 of the Law on Investment;

b/ The customer has paid a deposit equal to 100% of the guarantee value or has received a security amount equal to 100% of the guarantee value with its assets, including the balance of deposits at the guarantee-providing credit institution or foreign bank branch and the deposit certificate issued by such credit institution or foreign bank branch;

c/ The beneficiary is a resident.

2. Foreign bank branches may not provide guarantee in foreign currency to institutional customers being non-residents, except cases of providing guarantee on the basis of reciprocal guarantee by overseas credit institutions or providing guarantee confirmation for the guarantee obligation of overseas credit institutions in which the beneficiary is a resident.

3. When providing guarantee in foreign currency to non-residential customers, credit institutions and foreign bank branches shall:

a/ Comply with regulations guiding foreign exchange management for outward lending and recovery of guaranteed debts for non-residents;

b/ Have a process of evaluating and managing credit risks, including risks in guarantee for non-residents.

4. In addition to the provisions of this Article, other matters on guarantee for non-residential customers must comply with the relevant provisions of this Circular.

Article 13. Guarantee for future houses

1. A commercial bank may be regarded as capable of providing guarantee for future houses when:

a/ Its establishment and operation license or a document modifying its establishment and operation license has contents on bank guarantee activities;

b/ It is not subject to prohibition, restriction, termination or suspension from providing guarantee for future houses.

2. The State Bank shall publicly announce on its Portal the list of commercial banks capable of providing guarantee for future houses in each period.

3. A commercial bank shall consider and decide on the provision of guarantee to a project owner when:

a/ The project owner fully satisfies the requirements specified in Article 11 of this Circular (unless the commercial bank provides guarantee to the project owner on the basis of reciprocal guarantee);

b/ The project owner’s project fully satisfies the conditions on future real estate to be put into trading under Article 55 of the Law on Real Estate Business and relevant regulations.

4. Procedures for provision of guarantee for future houses:

a/ Based on the request of a project owner or reciprocal guarantee provider, a commercial bank shall consider, appraise and decide on the provision of guarantee to the project owner;

b/ The commercial bank and the project owner sign a contract on provision of guarantee for future houses under Article 56 of the Law on Real Estate Business and Clause 13, Article 3, and Article 15, of this Circular;

c/ After signing a house purchase or lease-purchase contract that contains a provision on the financial obligations of the project owner, the project owner shall send such contract to the commercial bank to request the latter to issue a letter of guarantee to the purchaser;

d/ The commercial bank shall base itself on the house purchase or lease-purchase contract and contract on provision of guarantee for future houses to issue a letter of guarantee and send it to every purchaser or to the project owner for forwarding to the purchaser as agreed upon.

5. Validity period and contents of a contract on provision of guarantee for a future house:

a/ A contract on provision of guarantee for a future house is valid from the date of its signing to the date the guarantee obligation under all letters of guarantee to the purchasers expire under Article 23 of this Circular and all contractual obligations of the project owner toward the commercial bank have been fulfilled;

b/ In addition to the provisions of Clause 2, Article 15 of this Circular (except the provisions of Points h and i in case of providing guarantee on the basis of reciprocal guarantee), a contract on provision of guarantee for a future house must also have the following contents:

(i) A content stating that the commercial bank is obliged to issue a letter of guarantee to the purchaser upon receiving the house purchase or lease-purchase contract from the project owner before the deadline for house handover as committed in such contract;

(ii) A content stating that the commercial bank and the project owner specifically agree that either of them is obliged to send a letter of guarantee to the purchaser after it is issued by the commercial bank;

(iii) Financial obligations of the project owner;

(iv) The dossier sent by the purchaser to the commercial bank requesting performance of the guarantee obligation, which must be accompanied by the letter of guarantee issued by the commercial bank to the purchaser.

6. Validity period and contents of a letter of guarantee:

a/ A letter of guarantee is valid from the date of its issuance to the date which is at least 30 days following the deadline for the house handover as committed in the house purchase or lease-purchase contract, except the case in which the guarantee obligation terminates as specified in Article 23 of this Circular. In case the commercial bank and the project owner prematurely terminate the contract on provision of guarantee for a future house, the letters of guarantee previously issued to the house purchasers remain valid until the guarantee obligation terminates;

b/ In addition to the contents specified in Clause 1, Article 16 of this Circular, a letter of guarantee must also have a content clearly stating the financial obligations of the project owner that are guaranteed by the commercial bank.

7. The amount of guarantee for a future house project must not exceed the total amount which the project owner is allowed to receive in advance from the house purchaser as specified in Article 57 of the Law on Real Estate Business and other amounts (if any) under the house purchase or lease-purchase contract.

8. Guarantee balance in provision of guarantee for future houses:

a/ The guarantee balance for a project owner or reciprocal guarantee provider is equal to the amount covered by the financial obligation of the project owner. The guarantee balance shall gradually be reduced when the guarantee obligation toward the house purchaser terminates under Article 23 of this Circular;

b/ The time of recording the guarantee balance is the time when the project owner notifies the commercial bank of amounts received in advance from the house purchasers from the date the letter of guarantee becomes valid as specified at Point c of this Clause;

c/ The commercial bank and the project owner shall agree on the time to notify and update amounts received in advance from the house purchasers from the date the letter of guarantee becomes valid in the month which, however, must not be later than the last working day of the month, to serve as a basis for determining the guarantee balance. The project owner shall take responsibility before law for notifying the commercial bank of accurate amounts received in advance from the house purchasers and the time of receipt.

9. A commercial bank has the following rights and obligations:

a/ A commercial bank has the following rights:

(i) To refuse to issue a letter of guarantee to the house purchaser if the house purchase or lease-purchase contract is incompliant with relevant regulations or after terminating the contract on provision of guarantee for a future house with the project owner;

(ii) To refuse to perform the guarantee obligation for the money amount not covered by the project owner’s financial obligations or for the money amount paid by the house purchaser in excess of the rate specified in Article 57 of the Law on Real Estate Business or when the house purchaser fails to produce the letter of guarantee issued by the commercial bank to the beneficiary being the house purchaser.

b/ A commercial bank has the following obligations:

(i) To issue a letter of guarantee and send it to the project owner or the house purchaser (as agreed) upon receiving a valid house purchase or lease-purchase contract before the deadline for house handover stated in such contract;

(ii) In case the commercial bank and the project owner prematurely terminate the contract on provision of guarantee for future houses, no later than the working day following the date of contract termination, the commercial bank shall publicly notify the termination on its website and notify such in writing to the provincial-level housing management agency in the locality where the project owner’s housing project is implemented; such a notice must clearly state that the commercial bank will no longer issue a letter of guarantee to the house purchaser that signs a house purchase or lease-purchase contract with the project owner after the commercial bank terminates the contract on provision of guarantee for future houses with the project owner. For the letters of guarantee previously issued to the house purchasers, the commercial bank shall continue to fulfill its commitments until the guarantee obligation terminates;

(iii) To perform the guarantee obligation for the money amount paid on behalf of the project owner which is equivalent to the project owner’s financial obligation as determined in the dossier of request for performance of the guarantee obligation provided by the house purchaser as suitable to the conditions for performance of the guarantee obligation specified in the letter of guarantee.

10. A project owner has the following rights and obligations:

a/ A project owner has the right to request the commercial bank to issue a letter of guarantee to all house purchasers under a future housing project for which the commercial bank provides guarantee in the validity period of the contract on provision of guarantee for future houses.

b/ A project owner has the following obligations:

(i) To send a letter of guarantee issued by the commercial bank to the house purchaser after receiving it from the commercial bank (as agreed upon);

(ii) In case the commercial bank and the project owner prematurely terminate the contract on provision of guarantee for future houses, no later than the working day following the date of contract termination, the project owner shall publicly notify the termination on its website (if any) and notify such in writing to the provincial-level housing management agency in the locality where the project owner’s housing project is implemented;

(iii) To notify the commercial bank of the accurate money amount received in advance from every purchaser from the date the letter of guarantee becomes valid.

11. A purchaser has the following rights:

a/ To receive the commercial bank-issued letter of guarantee from the commercial bank or the project owner within the validity period of the contract on provision of guarantee for future houses and before the expected deadline for house handover stated in the house purchase or lease-purchase contract;

b/ To request the commercial bank to perform the guarantee obligation for the project owner’s financial obligations on the basis of producing the letter of guarantee accompanied by supporting documents (if any).

12. In addition to the provisions of this Article, other contents on provision of guarantee for future houses must comply with the relevant provisions of this Circular.

Article 14. Dossier of request for guarantee provision

1. A dossier of request for guarantee provision must comprise:

a/ A request for guarantee provision;

b/ Documents on the customer;

c/ Documents on the guaranteed obligation;

d/ Documents on the security interest (if any);

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

2. Based on their actual guarantee operations and specific characteristics of each group of customers or each method of performing guarantee activities (traditional method or electronic means), credit institutions or foreign bank branches shall specifically guide requirements on dossiers to be sent to them for appraisal for and consideration of guarantee provision.

Article 15. Guarantee provision agreements

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

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

a/ Applicable law. In case no applicable law is indicated, it can be understood that the parties agree on application of Vietnam’s law;

b/ Information about the parties in the guarantee relationship;

c/ The guaranteed obligation;

d/ Guarantee amount and currency;

dd/ Form of issuance of the guarantee commitment;

e/ Conditions for performance of the guarantee obligation;

g/ Rights and obligations of the parties;

h/ Guarantee fee;

i/ Agreement on mandatory acknowledgement of the debt to be paid on the customer’s behalf, interest rate applicable to the debt amount to be paid on the customer’s behalf, and the debt payment obligation once the guarantee obligation is required to be performed;    

k/ Serial number, date of signing, and validity of the guarantee provision agreement;

l/ Resolution of arising disputes;

m/ Other contents which must not contravene law.

3. The modification, supplementation or cancellation of contents of a guarantee provision agreement shall be agreed upon and decided by related parties in accordance with law.

Article 16. Guarantee commitments

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

a/ Applicable law. In case no applicable law is indicated, it can be understood that the parties agree on application of Vietnam’s law;

b/ Serial number of the guarantee commitment;

c/ Information about the parties in the guarantee relationship;

d/ Date of issuance of the guarantee and date on which the guarantee starts to become valid and/or cases in which the guarantee starts to become valid;

dd/ Date and/or cases of expiration of the validity period of the guarantee;

e/ Guarantee amount and currency;

g/ The guarantee obligation;

h/ Conditions for performance of the guarantee obligation;

i/ Dossier of request for performance of the guarantee obligation (comprising a written request for performance of the guarantee obligation accompanied by a list of required documents);

k/ Method for the beneficiary to check authenticity of the guarantee commitment;

l/ Other contents which must not contravene law.

2. The modification, supplementation or cancellation of contents of a guarantee commitment shall be agreed upon by related parties in accordance with law and the guarantee provision agreement.

3. For guarantee commitments issued through international information and communication networks, credit institutions or foreign bank branches shall comply with contents and process of issuance of guarantee commitments of such networks. Credit institutions or foreign bank branches shall adopt the process of monitoring and managing the issuance of guarantee for these cases, ensuring safety and efficiency.

Article 17. Competence to sign guarantee provision agreements and guarantee commitments  

1. Guarantee provision agreements and guarantee commitments shall be signed by lawful representatives of credit institutions or foreign bank branches in accordance with law and internal regulations of such credit institutions or foreign bank branches.

2. The use of e-signatures and authorization for signing of guarantee provision agreements and guarantee commitments must comply with law.

Article 18. Security for obligation performance by customers

1. Credit institutions or foreign bank branches shall reach agreement with related parties on the application or non-application of security interests for the obligation to refund money amounts paid on behalf of customers once the guarantee obligation is required to be performed.

2. Credit institutions or foreign bank branches shall set out principles and specific requirements on the application of each security interest or non-application of security interests in accordance with regulations on guarantee operations and security transactions and their own internal regulations.

Article 19. Guarantee fee

1. Credit institutions or foreign bank branches shall reach agreement on guarantee fee amounts to be charged on customers and related parties (if any). In case of reciprocal guarantee or guarantee confirmation, guarantee fee amounts shall be agreed upon by the parties.

2. In case of co-guarantee, the parties shall reach agreement on guarantee fee amount to be charged on every co-guarantor.

3. In case of providing guarantee for a joint obligation, a credit institution or foreign bank branch shall reach agreement with every customer on a payable fee amount on the basis of the corresponding joint obligation of every customer, unless otherwise agreed upon by the parties. 

4. In case the guarantee currency is a foreign currency, the parties shall reach agreement on collection of guarantee fee in such foreign currency or on conversion of such foreign currency into Vietnam dong at the selling rate applied by the guarantor at the time of fee collection or fee collection notification.

5. The parties may reach agreement on adjustment of guarantee fee amounts.  

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

1. The validity period of a guarantee commitment shall be counted from the date of its issuance or after the date of its issuance as agreed upon by related parties to the date of expiration of the validity period of the guarantee obligation provided in Article 23 of this Circular.

2. The validity period of a guarantee provision agreement may be agreed upon by the parties but must be at least equal to the validity period of the corresponding guarantee commitment.

3. In case the date of expiration of the validity period of a guarantee commitment or guarantee provision agreement falls on a weekend or public holiday, it shall automatically be shifted to the subsequent working day.

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

Article 21. Exemption from performance of the guarantee obligation

1. In case a beneficiary grants exemption from performance of the guarantee obligation to the guarantor or guarantee-confirming party, the guaranteed party shall still perform the obligations committed with the beneficiary, unless the parties otherwise agree upon or perform joint obligations in accordance with law. 

2. In case one or several of co-guarantee members is/are exempted from performance of its/their guarantee obligations as agreed upon by related parties, the other members shall still perform their guarantee obligations under the guarantee commitments, unless otherwise agreed upon by the parties. 

Article 22. Performance of the guarantee obligation

1. In order to request performance of the guarantee obligation, a beneficiary shall send a dossier of request for performance of the guarantee obligation specified at Point i, Clause 1, Article 16 of this Circular to the guarantor. The guarantor shall check the dossier, and collate it with the terms and conditions specified in the guarantee commitment for performance of the guarantee obligation under Clause 3 of this Article if such dossier is valid. In case the dossier of request for performance of the guarantee obligation is invalid, the guarantor may refuse to perform the guarantee obligation under Clause 4 of this Article.

2. A dossier of request for performance of the guarantee obligation is deemed valid when:

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

(i) In case the dossier is hand-delivered, it must be delivered within the working time of the guarantor;

(ii) In case the dossier is sent as a registered mail by post, the date on which the guarantor is regarded as receiving the request is the date on which the recipient signs for certifying the receipt of the registered mail;

(iii) In case the dossier is sent by electronic means, the date of receipt of the request is the date on which the guarantor receives the data message in accordance with the law on e-transactions.

b/ Conditions for performance of the guarantee obligation specified in the guarantee commitment are fully satisfied.

3. Performance of the guarantee obligation:

a/ In case of bank guarantee (except the case of reciprocal guarantee or guarantee confirmation):

Within 5 working days after receiving the valid dossier of request for performance of the guarantee obligation as specified in Clause 2 of this Article, the guarantor shall properly and fully perform the guarantee obligation committed with the beneficiary and, at the same time, make a debit entry in the mandatory loan account the money amount already paid on behalf of the guaranteed party and notify such to the guaranteed party. The guaranteed party is obliged to fully refund the money amount paid by the guarantor on the former’s behalf and an interest amount specified in Clause 5 of this Article;

b/ In case of reciprocal guarantee:

Within 5 working days after receiving the valid dossier of request for performance of the guarantee obligation as specified in Clause 2 of this Article, the guarantor shall request the reciprocal guarantee provider to make payment on behalf of the guaranteed party.

The reciprocal guarantee provider shall properly and fully perform the reciprocal guarantee obligation committed with the guarantor and, at the same time, make a debit entry in the mandatory loan account the money amount already paid on behalf of the guaranteed party and notify such to the guaranteed party. The guaranteed party is obliged to fully refund the money amount paid by the reciprocal guarantee provider on the former’s behalf and an interest amount specified in Clause 5 of this Article.

In case the reciprocal guarantee provider fails to perform or incompletely performs the obligation committed with the guarantor, the guarantor shall properly and fully perform the guarantee obligation committed with the beneficiary and, at the same time, make a debit entry in the mandatory loan account the money amount already paid on behalf of the reciprocal guarantee provider and notify such to the reciprocal guarantee provider. The reciprocal guarantee provider is obliged to fully refund the money amount already paid by the guarantor on the former’s behalf and an interest amount specified in Clause 5 of this Article;

c/ In case of guarantee confirmation:

Within 5 working days after receiving the valid dossier of request for performance of the guarantee obligation as specified in Clause 2 of this Article, the guarantor shall properly and fully perform the guarantee obligation committed with the beneficiary and, at the same time, make a debit entry in the mandatory loan account the money amount already paid on behalf of the guaranteed party and notify such to the guaranteed party. The guaranteed party is obliged to fully refund the money amount paid by the guarantor on the former’s behalf and an interest amount specified in Clause 5 of this Article.

In case the guarantor fails to perform or incompletely performs the guarantee obligation committed with the beneficiary, the beneficiary shall send a dossier of request for performance of the guarantee obligation as agreed upon in the guarantee commitment to the guarantee-confirming party. Within 5 working days after receiving the valid dossier of request for performance of the guarantee obligation as specified in Clause 2 of this Article, the guarantee-confirming party shall properly and fully perform the obligation committed with the beneficiary and, at the same time, make a debit entry in the mandatory loan account the money amount already paid on behalf of the guarantor and notify such to the guarantor. The guarantor is obliged to fully refund the money amount already paid by the guarantee-confirming party on the former’s behalf and an interest amount specified in Clause 5 of this Article and, at the same time, request the guaranteed party to acknowledge such amount as a debt and refund it to the guarantor.

4. In case of refusal to perform the guarantee obligation, within 5 working days after receiving the request for performance of the guarantee obligation, the refusing party shall issue a written reply, clearly stating the reason.

5. The party making payment on another party’s behalf (the guarantor, reciprocal guarantee provider or guarantee-confirming party) shall apply an interest rate to the paid-on-behalf money amount in accordance with the guarantee provision agreement which, however, must not exceed the highest overdue loan interest rate currently applied by such credit institution or foreign bank branch.

6. In case of making on-behalf payment in a foreign currency, the party making on-behalf payment shall account the mandatory loan amount in such foreign currency. In case of making on-behalf payment in Vietnam dong, the party making on-behalf payment shall account the mandatory loan amount in Vietnam dong.

Article 23. Termination of the guarantee obligation 

The guarantee obligation will be terminated in the following cases:

1. The obligation of the guaranteed party is terminated.

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

3. The guarantee is cancelled or is replaced with another security interest as agreed upon by the beneficiary and the guarantor and other related parties (if any).

4. The validity period of the guarantee commitment has expired.

5. The beneficiary grants exemption from performance of the guarantee obligation to the guarantor.

6. The parties so agree.

7. Other cases as specified by law.

Article 24. Co-guarantee

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

2. Co-guarantee parties shall take joint responsibility for performing the guarantee obligation, unless they otherwise agree upon or the law provides the provision of guarantee in independent parts. In case a focal-point credit institution or foreign bank branch is required to perform the guarantee obligation, co-guarantee parties shall refund to such credit institution or foreign bank branch the money amounts in proportion to their ratios of contribution to co-guarantee as agreed upon.    

Article 25. Guarantee for a joint obligation

Credit institutions or foreign bank branches shall provide guarantee for a joint obligation under a contract on joint rights and obligations between the parties.

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

1. Based on this Circular and relevant regulations, credit institutions or foreign bank branches shall issue their internal regulations on guarantee operations for customers (including also regulations on e-guarantee (if any), guarantee for future houses (if any), and guarantee for non-residential customers) in accordance with regulations on credit extension, which must define specific responsibilities for appraisal for and approval of guarantee provision.

2. A credit institution or foreign bank branch shall send 1 (one) copy of its internal regulations on bank guarantee operations to the State Bank (the Banking Supervision Agency or the State Bank’s provincial-level branch) in accordance with relevant regulations.

Article 27. Rights of the guarantor

1. To accept or reject requests for guarantee provision.

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

3. To request the guaranteed party or the reciprocal guarantee provider and related parties to provide information and documents related to the appraisal for guarantee provision and appraisal of collateral (if any).

4. To request the guaranteed party or the reciprocal guarantee provider to take measures to secure the guaranteed obligation (when necessary).

5. To examine and supervise the financial status of customers within the validity period of the guarantee. 

6. To collect and adjust the guarantee fee; to apply and adjust interest rates and break fee rates.

7. To refuse to perform the guarantee obligation if a dossier of request for performance of the guarantee obligation is invalid or there is evidence proving that a produced document is forged.

8. To request the reciprocal guarantee provider to perform the committed obligation.

9. To make a debit entry of the money amount paid on behalf of the guaranteed party (in case of bank guarantee) upon performance of the guarantee obligation under regulations of the State Bank; or on behalf of the reciprocal guarantee provider (in case of provision of guarantee on the basis of reciprocal guarantee) when the reciprocal guarantee provider fails to perform or incompletely performs the committed obligation; to request the guaranteed party or the reciprocal guarantee provider to refund the money amount the guarantor has paid on the latter’s behalf as committed.

10. To request other co-guarantee members to refund the money amount paid on behalf of the guaranteed party in proportion to their ratios of contribution to co-guarantee as agreed upon by the parties in case the focal-point member performs the guarantee obligation in provision of co-guarantee.

11. To dispose of the collateral as agreed upon and under regulations.

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

13. To initiate a lawsuit in accordance with law when the guaranteed party or the reciprocal guarantee provider breaches the committed obligation.

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

Article 28. Rights of the reciprocal guarantee provider

1. To accept or reject requests for issuance of reciprocal guarantee.

2. To request the guarantor to issue guarantee for the obligation of the former’s customers toward the beneficiary.

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

4. To request customers to take measures to secure the guarantee obligation (when necessary).

5. To examine and supervise the financial status of customers within the validity period of the guarantee. 

6. To collect and adjust the guarantee fee; to apply and adjust interest rates and break fee rates.

7. To refuse to perform the reciprocal guarantee obligation if a dossier of request for performance of the guarantee obligation is invalid or there is evidence proving that a produced document is forged.

8. To make a debit entry of the money amount paid on behalf of the guaranteed party upon performance of the reciprocal guarantee obligation for the guarantor under regulations of the State Bank; to request the guaranteed party to refund the money amount the reciprocal guarantee provider has paid for performance of the reciprocal guarantee obligation for the guarantor as committed.

9. To dispose of the collateral of the guaranteed party as agreed upon and under regulations.

10. To initiate a lawsuit in accordance with law when the guaranteed party or the guarantor breaches the committed obligation.

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

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

Article 29. Rights of the guarantee-confirming party

1. To accept or reject requests for guarantee confirmation.

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

3. To request customers to take measures to secure the guarantee obligation (when necessary).

4. To collect and adjust the guarantee fee; to apply and adjust interest rates and break fee rates.

5. To examine and supervise the financial status of customers within the validity period of the guarantee. 

6. To make a debit entry of the money amount paid on behalf of the guarantor upon performance of the guarantee confirmation obligation under regulations of the State Bank; to request the guarantor to refund the money amount the guarantee-confirming party has paid on the latter’s behalf as committed.

7. To dispose of the collateral of the guarantor or the guaranteed party as agreed upon and under regulations.

8. To initiate a lawsuit in accordance with law when the guarantor breaches the committed obligation.

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

10. To refuse to perform the guarantee obligation if a dossier of request for performance of the guarantee obligation is invalid or there is evidence proving that a produced document is forged.

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

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

1. To provide information and documents related to the competence to issue the guarantee commitment to related parties; to perform the guarantee obligation upon receiving a request compliant with provisions of the guarantee commitment.

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

3. To examine and supervise the financial status of customers within the validity period of the guarantee provision agreement. 

4. To fully refund the collateral (if any) and relevant papers to the securing party upon liquidation of the guarantee provision agreement, unless otherwise agreed upon.

5. To issue a written reply to the complainant within 5 working days after receiving a written complaint from the beneficiary about the reason for refusal to perform the guarantee obligation.

6. To preserve guarantee dossiers in accordance with law.

7. To guide the beneficiary in checking and certifying authenticity of the issued guarantee commitment.

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

Article 31. Rights and obligations of the guaranteed party 

1. The guaranteed party has the following rights:

a/ To reject requests of the guarantor or reciprocal guarantee provider that are incompliant with contents in the guarantee provision agreement or guarantee commitment;

b/ To request the guarantor or reciprocal guarantee provider to properly perform its committed obligations and responsibilities;

c/ To initiate a lawsuit in accordance with law when the guarantor or reciprocal guarantee provider breaches its committed obligations;

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

dd/ To check authenticity of the guarantee commitment;

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

2. The guaranteed party has the following obligations:

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

b/ To perform fully and on time its/his/her obligations and responsibilities as committed in the guarantee provision agreement;

c/ To refund to the guarantor or reciprocal guarantee provider the money amount the latter has paid for the performance of the guarantee obligation under the guarantee provision agreement or the commitment among the parties, and costs arising from performance of the guarantee obligation;

d/ To submit to examination and supervision by the guarantor or reciprocal guarantee provider of the process of performance of the guaranteed obligation; to report on activities related to guarantee transactions to the guarantor or reciprocal guarantee provider;

dd/ To coordinate with the guarantor or reciprocal guarantee provider and related parties in the process of disposing of the collateral (if any);

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

Article 32. Rights and obligations of the beneficiary

1. Rights of the beneficiary:

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

b/ To file a complaint against the guarantor or guarantee-confirming party within 5 working days after receiving the latter’s notice of refusal to perform the guarantee obligation if the reason for such refusal does not conform to conditions for performance of the guarantee obligation stated in the guarantee commitment;

c/ To initiate a lawsuit in accordance with law when the guarantor or guarantee-confirming party breaches its committed obligations;

d/ To check authenticity of the guarantee commitment;

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

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

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

2. Obligations of the beneficiary:

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

b/ To promptly notify the guarantor or guarantee-confirming party and related parties of signs and acts of violation of the guaranteed party;

c/ To take responsibility before law for the accuracy, adequacy, validity and lawfulness of documents produced under the guarantee commitment and declaration contents in its/his/her dossier of request for performance of the guarantee obligation;  

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

Chapter III. REPORTING REGIME AND ORGANIZATION OF IMPLEMENTATION

Article 33. Cost-accounting, information disclosure and reporting regimes

1. Credit institutions and foreign bank branches shall carry out cost-accounting of and monitor all guarantee amounts they provide under regulations.

2. Credit institutions and foreign bank branches shall report on the provision of guarantee under the State Bank’s regulations on reporting and statistical regime.

Article 34. Responsibilities of the units of the State Bank

1. Responsibilities of the Credit Department for Economic Sectors:

a/ To monitor and sum up the practical performance of guarantee operations by credit institutions or foreign bank branches;

b/ To coordinate with the Banking Supervision Agency in announcing the list of commercial banks under Point b, Clause 2 of this Article;

c/ To act as the focal point for addressing problems arising in relation to guarantee operations.

2. Responsibilities of the Banking Supervision Agency:

a/ To assume the prime responsibility for, and coordinate with related units in, examining, inspecting and supervising guarantee operations of credit institutions and foreign bank branches, and handle violations according to its competence;

b/ To act as the focal point for summing up and proposing the State Bank Governor to promulgate a decision announcing the list of commercial banks capable of providing guarantee for future houses under Clause 2, Article 13 of this Circular, and adjust such list upon occurrence of any change.

3. The Finance and Accounting Department shall guide credit institutions and foreign bank branches in implementing the cost-accounting regime for transactions related to guarantee operations under this Circular.

4. The Department of Foreign Exchange Management shall provide guidance on foreign exchange management of the performance of the guarantee obligation and collection of guarantee debts for non-residents by credit institutions and foreign bank branches.

5. The Information Technology Department shall coordinate with the Banking Supervision Agency in examining the compliance with regulations on risk management in the application of information technology for organization of e-guarantee operations by credit institutions and foreign bank branches.

6. The State Bank’s provincial-level branches shall supervise, examine and inspect the compliance with this Circular by credit institutions and foreign bank branches according to their competence.

Chapter IV. IMPLEMENTATION PROVISIONS

Article 35. Transitional provisions    

1. Guarantee provision agreements and guarantee commitments that are signed and become valid before the effective date of this Circular may continue to be implemented until the guarantee obligation is terminated. The modification or supplementation of such guarantee provision agreements and guarantee commitments may only be made if the to-be-modified or -supplemented contents are compliant with this Circular.

2. Commercial banks subject to cessation of the provision of guarantee for future houses for the reason that they no longer satisfy the conditions specified in Clause 1, Article 13 of this Circular shall continue to implement the signed agreements and commitments until the guarantee obligation is terminated. The modification or supplementation of the signed guarantee provision agreements and guarantee commitments may only be made if the to-be-modified or -supplemented contents do not change guarantee benefits of house purchasers and are compliant with this Circular. 

Article 36. Effect

1. This Circular takes effect on April 1, 2023.

2. This Circular replaces the State Bank Governor’s Circular No. 07/2015/TT-NHNN of June 25, 2015, on bank guarantee, and the State Bank Governor’s Circular No. 13/2017/TT-NHNN of September 29, 2017, amending and supplementing a number of articles of the State Bank Governor’s Circular No. 07/2015/TT-NHNN of June 25, 2015, on bank guarantee.

Article 37. Organization of implementation

The Chief of the Office, the Director of the Credit Department for Economic Sectors, and heads of the units of the State Bank, credit institutions and foreign bank branches shall organize the implementation of this Circular.