On September 30, 2022, the State Bank of Vietnam ("SBV") issued Circular No. 11/2022/TT-NHNN ("Circular 11") regulating the bank guarantee to replace Circular No. 07/2015/TT-NHNN dated 25/06/2015 and Circular No. 13/2017/TT-NHNN dated September 29, 2017 amending and supplementing a number of articles of Circular No. 07/2015/TT-NHNN (hereinafter generally referred to as "Circular 07"). Circular 11 basically inherited the contents specified in Circular 07, in which, mainly amending and supplementing regulations related to guarantees of houses to be formed in the future.
There are some outstanding amendments and supplementations in Circular 11 on this issue:
Supplementation on the contents of guaranteed contracts for house formed in the future
Under Article 13.5 of Circular 11, in addition to the contents of guarantee issuance agreement, the guarantee contract for houses to be formed in the future must also include the following contents:
- The commercial bank is obliged to issue a letter of guarantee to the buyer(s) upon the receipt of the house lease/purchase contract sent by the investor before the house’s handover due date limit according to the commitments specified in the house lease/purchase contract;
- The commercial bank and the investor shall specifically agree on whether the commercial bank or investor is obliged to send a letter of guarantee to the buyer(s) after its issuance;
- Financial obligations of the investor;
- The buyers’ dossier to be sent to a commercial bank requesting the fulfillment of the guaranteed obligations must be accompanied with a letter of guarantee issued by the commercial bank to the buyers.
Amendments on the validity of the letter of guarantee (guarantee commitment)
Circular 07 stipulates that the validity of the guarantee commitment (letter of guarantee) begins from the date of issuance and expires after at least 30 days from the house’s handover due date specified in the lease/purchase contract.
However, Circular 11 has added an exception that the guarantee obligation termination is equal to the termination of the validity of the guarantee commitment (letter of guarantee). In case of premature termination of guarantee contract for houses to be formed in the future, the letters of guarantee previously issued to the buyers still remain effective until the guarantee obligation is terminated.
Simplification on the guarantee procedures for houses to be formed in the future
Unlike Circular 07, which detailed full steps to guarantee houses to be formed in the future, accompanied with separate deadlines for each step and specific responsibilities of the parties to the guarantee contract, Circular 11 although remain such guarantee order, but stipulated towards letting the parties free on agreement. Here, Circular 11 only stipulated the framework sequences, general rights and obligations of the parties as a basis for implementation, eliminated all deadlines for each step, instead giving relevant parties the right to request the obligors for fulfillment.
In addition to the amendments and supplementations related to guarantee for houses to be formed in the future, Circular 11 also had a number of important new contents such as:
- Allow electronic guarantee activities (Article 9);
- Forbid the credit organizations and foreign bank branches to guarantee the bond payment obligations of issuing enterprises for the purpose of: restructuring the debts of the issuing enterprises; contribute capital, buy shares in other enterprises and increase the scale of operating capital (Article 11). This content is supplemented in accordance with the regulations on private bond issuance that have been updated by the ATA here.
For other contents of Circular 11, please see details in the official document.
Circular 11 shall take effect from 01/04/2023.
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