What are regulations on guarantee issued to customers that are non-residents in Vietnam?
What are regulations on guarantee issued to customers that are non-residents in Vietnam? When shall a commercial bank be considered to be capable of giving off-plan housing guarantee in Vietnam? When shall a commercial bank consider giving guarantee to the investor in Vietnam?
Thank you!
What are regulations on guarantee issued to customers that are non-residents in Vietnam?
Pursuant to Article 12 of the Circular 11/2022/TT-NHNN (takes effect from 01/04/2023) stipulating guarantee issued to customers that are non-residents in Vietnam as follows:
1. Credit institutions and FBBs may only provide guarantee for organizations that are non-residents and must meet one of the following requirements (the customer that is a foreign credit institution shall not be required to meet these requirements):
a) The customer is an enterprise that is established and operating in a foreign country with capital contributed from Vietnamese enterprises in the form of investments prescribed in Points a, c Clause 1 Article 52 of the Investment Law or in other investment form prescribed in Point dd Clause 1 Article 52 of the Investment Law;
b) The customer has fully made a deposit equivalent to 100% of the guarantee value or has ensured 100% of the guarantee value by the customer’s assets, including the customer’s deposits at the credit institution or FBB issuing the guarantee, and deposit certificates issued by the same;
c) The obligee is a resident.
2. FBBs shall not be allowed to provide guarantee in foreign currency for organizations that are non-residents, unless the guarantee is provided on the basis of the counter guarantee of a foreign credit institution or guarantee confirmation in respect of guaranteed obligations of a foreign credit institution to the obligee that is a resident.
3. When giving guarantee in foreign currency to customers that are non-residents, credit institutions and FBBs shall:
a) comply with regulations of law regarding guidelines for foreign exchange management in overseas lending and collection of debts from provision of guarantee to non-residents;
b) has established procedures for credit risk assessment and management, including risks from provision of guarantee to non-residents.
4. In addition to the provisions of this Article, other contents about the provision of guarantee for customers that are non-residents shall comply with relevant provisions of this Circular.
When shall a commercial bank be considered to be capable of giving off-plan housing guarantee in Vietnam?
Pursuant to Clause 1 and 2, Article 13 of the Circular 11/2022/TT-NHNN (takes effect from 01/04/2023) stipulating as follows:
1. A commercial bank is considered to be capable of giving off-plan housing guarantee if:
a) Its license for establishment and operation, or the document stating amendments to this license includes bank guarantee operations;
b) It is not prohibited, restricted, or suspended from provision of off-plan housing guarantee.
2. The SBV shall publish the list of commercial banks capable of giving off-plan housing guarantee in each period on its web portal.
When shall a commercial bank consider giving guarantee to the investor in Vietnam?
Pursuant to Clause 3, Article 13 of the Circular 11/2022/TT-NHNN (takes effect from 01/04/2023) stipulating as follows:
3. The commercial bank shall consider giving guarantee to the investor if:
a) The investor has satisfied all of requirements in Article 11 of this Circular (except the cases where a commercial bank issues guarantee for the investor on the basis of a counter guarantee);
b) The investor's project has satisfied all of requirements for off-plan property to be put on the market as prescribed in Article 55 of the Law on Real Estate Business and relevant laws.
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