Circular No. 49/2024/TT-NHNN dated October 25, 2024 on amending Circular No. 11/2022/TT-NHNN on bank guarantee

CIRCULAR

amending Circular No. 11/2022/TT-NHNN dated September 30, 2022 of the Governor of the State Bank of Vietnam on bank guarantee

Pursuant to Civil Code dated November 24, 2015;

Pursuant to the Law on 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 Property Business dated November 28, 2023;

Pursuant to the Ordinance on Foreign Exchange dated December 13, 2005; and the Ordinance dated March 18, 2013 on amendments to certain Articles of the Ordinance on Foreign Exchange;

Pursuant to Decree No. 102/2022/ND-CP dated February 12, 2022 of the Government on function, tasks, powers and organizational structures 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 hereby promulgates a Circular amending Circular No. 11/2022/TT-NHNN dated September 30, 2022 of the Governor of the State Bank of Vietnam on bank guarantee.

Article 1. Amendments to Circular No. 11/2022/TT-NHNN

1. Amendments to Clauses 4, 13 and 15 of Article 3:

“4. “guarantee for sale or lease-purchase of off-plan housing” (hereinafter referred to as “off-plan housing guarantee”) means a type of bank guarantee whereby the guarantor that is a commercial bank or a foreign bank branch undertakes to act on behalf of the obligor that is the investor in an off-plan housing project (hereinafter referred to as "investor") to fulfil their financial obligations to the obligee that is the buyer or the tenant-buyer (hereinafter referred to as the buyer) in the event the investor fails to transfer the house to the buyer on the agreed-upon schedule and fails to fulfil or insufficiently fulfils their financial obligations under the signed purchase contract or lease-purchase contract; the investor shall have the mandatory obligation to repay the debt to the guarantor under the signed agreement. In case the commercial bank or the foreign bank branch enters into a counter-guarantee, the counter-guarantor shall fulfil financial obligations to the commercial bank or the foreign bank branch when it is obliged to fulfil financial obligations on behalf of the investor; the investor shall have the mandatory obligation to repay the debt to the counter-guarantor under the signed agreement.”

“13. “written commitment to issue letter of off-plan housing guarantee (hereinafter referred to as “written commitment to issue letter of guarantee”) means a written commitment of the guarantor to the investor affirming that the guarantor will issue a letter of guarantee to all buyers that require guarantee for the investor's project provided by the guarantor as stipulated in the guarantee issuance agreement”.

“15. “investor's financial obligation to buyer in off-plan housing guarantee (hereinafter referred to as “investor's financial obligation”)” means an amount that the investor is required to repay the buyer if the investor fails to transfer the house on the agreed-upon schedule in the signed purchase contract or lease-purchase contract, including: The sum of advanced payment made by the buyer to the investor after the day on which the buyer has received the letter of guarantee from the guarantor and any other amounts (if any) that the investor is required to repay the buyer as agreed upon in the signed purchase contract or lease-purchase contract”.

2. Amendments to Clause 3 of Article 6:

“3. The balance of off-plan housing guarantee shall be determined according to the provisions of Clause 7 Article 13 of this Circular”.

3. Amendments to Article 13:

“Article 13. Off-plan housing guarantee

1. A commercial bank or a foreign bank branch (FBB) shall consider giving a guarantee to an investor if:

a) The investor has satisfied all of requirements in Article 11 of this Circular (except the cases where a commercial bank or an FBB issues a guarantee to the investor on the basis of a counter guarantee);

b) The investor has received a written response concerning the housing that is eligible for sale or lease-purchase from the province-level agency in charge of state management of real estate business.

2. Procedures for issuing off-plan housing guarantee:

a) Based on the request of the investor or the counter-guarantor, the commercial bank or FBB shall consider, appraise and decide to issue guarantee to the investor;

b) The guarantor and the investor shall conclude a guarantee issuance agreement in accordance with the provisions of Article 26 of the Law on Real Estate Business and Clause 12 of Article 3, and Article 15 of this Circular;

c) On the basis of the signed guarantee issuance agreement, the guarantor shall issue a written commitment to issue the letter of guarantee to the investor who will send its copy to the buyer when signing the housing purchase or lease-purchase contract;

c) The investor shall send the signed purchase contract or lease-purchase contract in which the investor's financial obligations are specified to the guarantor and request it to issue the letter of guarantee to the buyer;

d) The guarantor shall, based on the received purchase contract, lease-purchase contract, guarantee issuance agreement and the written commitment to issue the letter of guarantee, issue the letter of guarantee and send it to each buyer or to the investor that shall then provide it for the buyer.

3. Validity and contents of a guarantee issuance agreement:

a) The guarantee issuance agreement becomes effective from the day on which it is signed until all letters of guarantee given to the buyer cease to have effect as prescribed in Article 23 of this Circular and the investor has fulfilled all obligations to the guarantor under the guarantee issuance agreement; except for the case where the parties agree to terminate the guarantee issuance agreement ahead of schedule;

b) In addition to the contents specified in Clause 2 Article 15 of this Circular (excluding the contents in Points h and i which are applied in case the guarantee is issued on the basis of a counter guarantee), the guarantee issuance agreement shall also include the content that the guarantor is obliged to issue a letter of guarantee to the buyer upon receipt of the purchase contract or lease-purchase contract from the investor before the agreed-upon house transfer date specified in the purchase contract or lease-purchase contract and submit the letter of guarantee to the investor to be given to the buyer.

4. Validity and contents of a written commitment to issue a letter of guarantee:

a) A written commitment to issue a letter of guarantee becomes effective from the day on which it is signed until the day on which the issuance of letter of guarantee is completed before the agreed-upon house transfer date specified in the purchase contract or lease-purchase contract or until the day on which the guarantee issuance agreement is null and void (whichever occurs first);

b) The written commitment must consist of the following contents:

(i) information on the guarantor and the investor;

(ii) its validity;

(iii) information on the whole project or the partial project under guarantee (if only part of the project is under guarantee);

(iv) Commitment of the guarantor on issuing the letter of guarantee to all buyers that require guarantee for the investor's project provided by the guarantor;

(v) Financial obligations of the investor to a buyer that is guaranteed by a commercial bank or FBB are the amount that the investor is required to repay the buyer if the investor fails to transfer the house on the agreed-upon schedule in the signed purchase contract or lease-purchase contract, including: The sum of advanced payment made by the buyer to the investor after the day on which the buyer has received the letter of guarantee from the guarantor and any other amounts (if any) that the investor is required to repay the buyer as agreed upon in the signed purchase contract or lease-purchase contract;

(vi) Documents submitted by the buyer to request the guarantor to fulfil guarantee obligations must be accompanied by the letter of guarantee issued by the commercial bank or FBB to the buyer.

5. Validity and contents of a letter of guarantee:

a) A letter of guarantee becomes effective from its date of issue until at least 30 days after the day on which the investor must fulfil their financial obligations to the buyer if the investor fails to transfer the house as agreed upon in the signed purchase contract or lease-purchase contract, unless guarantee obligations are terminated as prescribed in Article 23 of this Circular. In case the guarantor and the investor have agreed to terminate the guarantee issuance agreement before its expiry date, the letters of guarantee issued to the buyers shall still remain valid until guarantee obligations are terminated;

b) In addition to the contents specified in Clause 1 Article 16 of this Circular, the letter of guarantee must also indicate the investor’s financial obligations which are under guarantee.

6. The maximum guarantee sum for a buyer shall be equal to the sum of amounts that the investor is allowed to receive in advance from the buyer in accordance with provisions of Article 25 of the Law on Real Estate Business and any other amounts (if any) paid under the purchase contract or lease-purchase contract.

7. Balance of off-plan housing guarantee:

a) The balance of guarantee for the investor or the counter-guarantor is the sum equivalent to the investor’s financial obligation. The balance of guarantee decreases gradually when the guarantee obligations to the buyer are terminated as prescribed in Article 23 of this Circular;

b) The balance of guarantee shall be determined at the time when the investor informs the guarantor of total amount that the investor has received from buyers as prescribed in Point c of this Clause and any other amounts (if any) paid under the purchase contract or lease-purchase contract;

c) The guarantor and the investor shall reach an agreement on time of announcing and updating total amount of advanced payments received from buyers in the month provided that it shall not be later than the last working day of the month for use as the basis for determination of guarantee balance. The investor shall assume legal responsibility to inform the guarantor of the accurate amount and time of receipt of advanced payments from buyers.

8. The guarantor shall have the following rights and obligations:

a) The guarantor is entitled to:

(i) refuse to issue the letter of guarantee to the buyer if the purchase contract or lease-purchase contract is not conformable with regulations of relevant law or after the guarantee issuance agreement has been terminated;

(ii) refuse to fulfil guarantee obligations in respect of any sums which are not included in the investor’s financial obligations or amounts paid by the buyer in excess of the ratio specified in Article 25 of the Law on Real Estate Business or when the buyer fails to present the letter of guarantee issued by the guarantor.

b) The guarantor is obliged to:

(i) issue and send the letter of guarantee to the investor upon receipt of a valid purchase contract or lease-purchase contract before the planned house transfer date specified in the purchase contract or lease-purchase contract;

(ii) In case the guarantor and the investor have agreed to terminate the guarantee issuance agreement before its expiry date, within the following working day, the guarantor shall post a notice on its website and send a written notice to the housing authority of province where the investor’s housing project is located. Such notice must clearly indicate that the guarantor will no longer issue letter of guarantee to any buyer that enters into purchase contract or lease-purchase contract with the investor after the guarantee issuance agreement has been terminated. The guarantor shall still fulfil its obligations under letters of guarantee which have been issued to buyers until guarantee obligations are terminated;

(iii) Fulfil guarantee obligations in respect of the sum paid in proportion to the investor’s financial obligation which is determined according to the application for fulfilment of guarantee obligations submitted by the buyer in conformity with the conditions for fulfilment of guarantee obligations set out in the letter of guarantee.

9. The investor shall have the following rights and obligations:

a) The investor is entitled to:

Request the guarantor to issue the letter of guarantee to all buyers that require off-plan housing guarantee and are guaranteed during the validity period of the written commitment to issue letter of guarantee.

b) The investor is obligated to:

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

(ii) In case the guarantor and the investor have agreed to terminate the guarantee issuance agreement before its expiry date, within the following working day, the investor shall post a notice on its website (if available) and send a written notice to the housing authority of province where the investor’s housing project is located about the termination of guarantee provided by the guarantor to the investor. The investor must stop providing the buyer with the invalid written commitment to issue letter of guarantee when the guarantee issuance agreement between the investor and the guarantor is null and void;

(iii) inform the guarantor of the accurate amount of advanced payments received from each buyer and any other amounts (if any) on the agreed-upon schedule according to the provisions of point c clause 7 of this Article.

10. A buyer is entitled to:

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

b) request the guarantor to fulfil guarantee obligations in respect of the investor’s financial obligation by submitting the letter of guarantee and relevant documents (if any).

11. In addition to the provisions in this Article, other contents concerning the off-plan housing guarantee shall comply with the corresponding provisions herein”.

4. Amendments to Article 17:

“Article 17. Authority to sign guarantee issuance agreement, guarantee commitment and written commitment to issue letter of guarantee

1. Guarantee issuance agreements, guarantee commitments or written commitments to issue letter of guarantee must be signed by the lawful representatives of credit institutions or FBBs in conformity with regulations of law and internal regulations of such credit institutions or FBBs.

2. Use of electronic signatures and authorization to sign guarantee issuance agreements, guarantee commitments and written commitments to issue letter of guarantee shall comply with regulations of relevant law”.

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

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

Article 3. Implementation

The Chief of Office, the Director of the Credit Department for Economic Sectors, heads of SBV’s affiliated units, credit institutions and FBBs shall organize the implementation of this Circular.

Article 4. Implementation clauses

1. This Circular comes into force from December 10, 2024.

2. For guarantee issuance agreements or guarantee commitments signed and taking effect before the effective date of this Circular, credit institutions, FBBs and customers may continue implementing the signed contents in conformity with regulations of law taking effect at the time when such guarantee issuance agreements or guarantee commitments are signed. Any amendment or modification to these documents must comply with the provisions of this Circular.