The State Bank of Vietnam (SBV) has just issued Circular No. 11/2022/TT-NHNN (“Circular 11”) regulating bank guarantees, replacing Circular No. 07/2015/TT-NHNN and Circular No. 13/2017/TT-NHNN with many important adjustments and supplements for businesses in the bank guarantee that will take effect from April 1, 2023.

Additional conditions for commercial bank guarantee

Circular 11 states that a commercial bank that is capable of guaranteeing off-plan housing is not restricted, suspended, or controlled, instead of just not being banned from guaranteeing like the former regulations.

Circumstances that enterprises are not guaranteed

Notably, from 1 April 2022, if the enterprise requests to guarantee the payment obligation of the issued bonds for the purpose of (i) restructuring its own debts; (ii) contributing capital, buying shares in other enterprises; and (iii) increasing the size of operating capital, credit institutions and foreign bank branches will not provide guarantees for these cases.

Supplementing a circumstance that allows related parties of the guaranty relationship to agree on a guarantee fee

According to the former regulations, only the new customer can agree on the guarantee fee with the credit institutions, foreign bank branches, however, from 1 April 2022, the parties involved in the guarantee relationship will also be the party that can agree on this fee with the creditor. This regulation helps protect the interests of related parties in setting the guarantee fee in accordance with their related rights and obligations.

Implementing a mechanism for bank guarantee on electronic devices

Adding a form of guarantee application will definitely help businesses save time, travel costs and optimize the use of technology in banking, from the second quarter of 2023, businesses can carry out the application procedure. issue of guarantee through electronic means, or simply called an electronic guarantee. Accordingly, Circular 11 has dedicated a whole provision on electronic guarantee activities, as well as the responsibility to ensure security and safety when using this form of guarantee.

Moreover, the electronic guarantee is also limited to VND4 billion for individual customers and VND45 billion for institutional customers for each guarantee commitment issued. Businesses wishing to issue guarantees with a large fee should pay attention to this limit in order to choose an appropriate form of guarantee.