On Sep. 24, VIE CB proposed amendments to bank guarantees rules.
VIE CB proposed amendingCircular 11/2022/TT-NHNN regulating bank guarantees, due to changes in Real estate business law 2023, and Law on credit institutions 2024.
Ensures legal alignment with updated regulations affecting bank guarantees.
Follows VIE CB Sep. 2022 issued new regulations on bank guarantees, see #150316.
Overview of Proposal
Revises definition of bank guarantees to include various guarantee forms e.g. counter-guarantees, confirmation guarantees, guarantees for future housing purchases.
Clarifies role of party providing the counter-guarantee, their financial responsibilities.
Expands the conditions for banks to issue guarantees for real estate projects, ensuring that developers meet financial obligations if housing is not delivered on time.
Allows use of electronic signatures when applying for, signing guarantee agreements.
Simplifies process for banks and foreign branches to issue guarantees for real estate developers, with clearer financial obligations for developers in future housing projects.
Removes requirement for VIE CB to publicly list banks capable of issuing guarantees.
Effectiveness
The consultation period is not mentioned.
Oct. 2024 Promulgation
On Oct. 25, 2024, VIE CB issued circular 49/2024/TT-NHNN on regulating bank guarantees, to implement the proposals above with effect from Oct. 12, 2024.
Document dated Oct. 25, 2024, received from VIE CB Nov. 4, summarized on Nov. 6.
Nov. 2024 Further Amendments
On Nov. 7, 2024, VIE GVT updated Cir 11/2022/TT-NHNN, amended by Cir 49/2024/TT-NHNN, governing banking guarantees provided by credit institutions, foreign bank branches, covering financial obligations such as real estate guarantees.
Institutions are allowed to provide electronic guarantees with stringent security measures to ensure compliance with anti-money laundering laws and data integrity.
Foreign currency guarantees are restricted to compliant cases; prohibit guarantees for corporate bond payments for debt restructuring, equity investments, capital increases.
Specific rules are introduced for guarantees related to future housing projects, ensuring compliance with real estate laws and proper communication with buyers.
Institutions must establish internal rules, conduct risk assessments, ensure compliance, follow detailed documentation and process requirements for guarantees.
Rights and obligations are outlined for guarantors, guaranteed parties, and confirming guarantors, including cases of denial or enforcement of guarantees.
Electronic guarantees have customer-based limits; dispute resolution mechanisms allow parties to choose domestic or international arbitration or courts.
Also imposes compliance obligations related to anti-money laundering laws.
Institutions must maintain transparency by reporting guarantee rules to VIE CB.
Regulators
VIE CB; VIE GVT
Entity Types
Bank; MSB
Reference
Dec 36/VBHN-NHNN, 11/7/2024; Cir 49/2024/TT-NHNN, 10/25/2024; CP 9/24/2024
