What are contents of the Circular 21 of the State Bank of Vietnam on letter of credit operations and other related business activities in Vietnam?
What are contents of the Circular 21/2024/TT-NHNN of the State Bank of Vietnam on letter of credit operations and other related business activities in Vietnam?
What are contents of the Circular 21/2024/TT-NHNN of the State Bank of Vietnam on letter of credit operations and other related business activities in Vietnam?
On June 28, 2024, the Governor of the State Bank of Vietnam issued Circular 21/2024/TT-NHNN which regulates letter of credit operations and other related business activities.
Under Article 2 of Circular 21/2024/TT-NHNN, the scope of application includes:
- Credit institutions, foreign bank branches conducting letter of credit operations and other related business activities, including:
+ Commercial banks
+ Cooperative banks
+ Foreign bank branches
- Individuals and organizations, both residents and non-residents, involved in letter of credit operations and other related business activities.
Circular 21/2024/TT-NHNN takes effect from July 1, 2024.
What are contents of the Circular 21 of the State Bank of Vietnam on letter of credit operations and other related business activities in Vietnam? - image from internet
What language is used in the credit agreement for letter of credit operations in Vietnam?
According to Article 7 of Circular 21/2024/TT-NHNN, the language usage is as follows:
Language usage:
1. The credit agreement for letter of credit operations must be drafted in Vietnamese, except in cases where there are foreign elements as stipulated in the Civil Law or when it is drafted through international communication networks. In the case of using a foreign language, upon request from the competent authority, the credit agreement must be translated into Vietnamese and confirmed by the authorized representative of the bank or notarized and attached with the foreign-language version.
2. For other documents in letter of credit operations (besides the credit agreement for letter of credit operations), banks may agree with the relevant parties to use a foreign language in accordance with international trade practices regarding letter of credit operations. In the case of using a foreign language, upon request from the competent authority, the documents must be translated into Vietnamese and confirmed by the authorized representative of the bank or notarized and attached with the foreign-language version.
According to the regulations, the language used in the credit agreement for letter of credit operations is Vietnamese, except in cases where there are foreign elements or when it is drafted through international communication networks.
What rights and obligations does a bank have when performing letter of credit operations in Vietnam?
Based on Article 19 of Circular 21/2024/TT-NHNN, the rights and obligations of a bank in issuing, confirming, negotiating payment, and refunding a letter of credit are as follows:
Rights and obligations of the bank in issuing, confirming, negotiating payment, and refunding a letter of credit:
1. The bank performing letter of credit operations has the right to:
a) Accept or reject the customer's request in carrying out letter of credit operations.
b) Request the customer and relevant parties to provide information, documents, and data related to customer evaluation and collateral (if any).
c) Demand the customer to fully repay the principal, interest, and fees as agreed upon.
d) Initiate legal proceedings in accordance with the law when the involved parties violate their committed obligations.
e) Other rights as agreed upon by the parties, in accordance with relevant laws and international trade practices regarding letter of credit operations.
As regulated above, the bank performing letter of credit operations has the following rights and obligations:
[1] Rights of the bank performing letter of credit operations:
- Accept or reject the customer's request in carrying out letter of credit operations.
- Request the customer and relevant parties to provide information, documents, and data related to customer evaluation and collateral (if any).
- Demand the customer to fully repay the principal, interest, and fees as agreed upon.
- Initiate legal proceedings in accordance with the law when the involved parties violate their committed obligations.
- Other rights as agreed upon by the parties, in accordance with relevant laws and international trade practices regarding letter of credit operations.
[2] Obligations of the bank performing letter of credit operations:
- Fulfill the commitments made to the customer.
- Other obligations as agreed upon by the parties, in accordance with the provisions.
