You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

March 28, 2025

Vietnam’s New Regulations on Bank Guarantees Set to Take Effect

Subscribe to Updates

On October 25, 2024, the State Bank of Vietnam (SBV) issued Circular No. 49/2024/TT-NHNN (“Circular 49”) amending and supplementing certain provisions of Circular No. 11/2022/TT-NHNN dated September 30, 2022, on bank guarantees (“Circular 11”). However, shortly thereafter, the SBV replaced both Circular 11 and Circular 49 with Circular No. 61/2024/TT-NHNN (“Circular 61”) dated December 31, 2024, which incorporates most of the updates from Circular 49 while introducing further amendments to bank guarantee regulations to align with the 2024 Law on Credit Institutions and 2023 Law on Real Estate Business. Circular 61 has an effective date of April 1, 2025.

Below, we highlight some new regulations on bank guarantees under Circular 61, including those that were adopted from Circular 49.

Updated Definitions

Circular 61 broadens the definition of “customer” in bank guarantee relationships, introducing the possibility of a fourth party. Traditionally, a customer would request a credit institution to guarantee its obligations. Under the revised framework, a customer may also request the credit institution to issue a guarantee for another party, such as a parent company requesting a guarantee for its subsidiary. This change establishes a broader scope of parties involved in a bank guarantee relationship, which now includes the customer, the guarantor, the guaranteed party, and the beneficiary.

Circular 61 also updates the definitions of “bank guarantee”, “cross-guarantee”, and “guaranteed party” to align with the term “bank guarantee” as defined in the 2024 Law on Credit Institutions. This includes requirements on mandatory debt acknowledgement.

Bank Guarantees for Sale of Off-Plan Housing

Circular 61, in alignment with Circular 49, the Law on Credit Institutions, and the Law on Real Estate Business, allows foreign bank branches and commercial banks (the “Guarantor”) to guarantee off-plan housing with a detailed procedure.

The guarantee agreement between the Guarantor and the real estate project investor will be effective from the time of signing until the guarantee obligations for all guarantee letters issued to the home purchasers are terminated in accordance with applicable law (e.g., when the real estate project investor fulfills its commitment to hand over the property as stipulated in the off-plan housing purchase/rent-to-own contract), and all obligations of the real estate project investor to the Guarantor under the guarantee agreement have been fully satisfied, unless the parties mutually agree to terminate the guarantee agreement prior to its expiration.

Guarantee agreements that were signed and became effective prior to the effective date of Circular 61 (April 1, 2025) will remain in effect and continue to be implemented in accordance with the terms of the agreements, provided they comply with the applicable legal regulations in force at the time of signing, until the guarantee obligation is fulfilled. However, any amendments or additions to these agreements may only be made if the revised or supplementary content complies with the provisions of Circular 61.

Electronic Guarantee Activities

Circular 61 amends and supplements the minimum requirements for credit institutions and foreign bank branches when developing measures, forms, and technologies to implement electronic guarantee operations. These requirements include, among others, applying appropriate electronic transaction confirmation methods for customers when conducting electronic transactions during the electronic guarantee process; ensuring proper storage and preservation of documents, information, and customer identification data throughout the electronic guarantee process; and clearly defining the specific roles and responsibilities of individuals and departments involved in building, setting up, and operating the information system for credit assessment and decision-making in the electronic guarantee process.

Other New Points

Credit institutions and foreign bank branches are allowed to agree with related parties to use a foreign language for guarantee transactions conducted through the SWIFT system.

Credit institutions and foreign bank branches are required to publicly disclose their guarantee fees.

A foreign bank branch is prohibited from issuing a guarantee in foreign currency for a non-resident institutional client unless the beneficiary is a resident.

Related Professionals

Practices

Banking and Finance

Location

RELATED INSIGHTS​ 

July 14, 2023
On July 13, 2023, the Central Bank of Myanmar (CBM) lowered the percentage of export income in foreign currency that must be converted into Myanmar kyat (MMK) within one day of receipt. The changes are contained in CBM Notification No. 15/2023, which took effect immediately. The notification specifies that only 50 percent of export income in foreign currency must be converted into MMK at official CBM rates within one day, in accordance with Myanmar’s requirement to convert foreign currency transfers and balances. The remaining 50 percent of the export earnings must be converted into MMK if the exporter does not use it within 30 days. The 50 percent requirement is a relaxation from the previous rules in CBM Notification No. 36/2022, under which 65 percent of income received from exportation needed to be converted into MMK within one day. Therefore, the new requirement grants a certain amount of flexibility to exporters in Myanmar regarding the currency conversion requirement. For more details on these foreign exchange developments, or on any aspect of financial regulations in Myanmar, please contact Tilleke & Gibbins at [email protected].
Read More
July 14, 2023
The Bank of Thailand (BOT) has issued new notifications amending regulations for payment businesses that fall under the Payment Systems Act B.E. 2560 (2017) to promote transparency and good governance in the payment industry. Notification No. SorKorChor 2/2566 (“Notification 2”) increases the required qualifications for applicants seeking a license to provide payment services designated as being under the BOT’s supervision, and Notification No. SorKorChor 4/2566 (“Notification 4”) stipulates additional duties and exemptions for certain types of business operators. The notifications were published in the Government Gazette on July 7, 2023, and came into effect the following day. Additional Qualifications Notification 2 expands the list of prohibited characteristics for business operators applying for a license or registration to engage in a designated payment service, and their directors. For example, applicants must not have been ordered to suspend or cease their operations, and their registration or license to engage in financial business or operate a designated payment system or service must not have been revoked. The notification defines “financial business” as including financial institutions, credit card business, personal loan business, securities business, and so on. In addition, applicants’ directors and management must not have prohibited characteristics, such as being involved in the management of a financial business or designated payment system or service that was ordered to suspend or cease its operations. The applicable registration or license also must not have been revoked. Reporting Requirements During the application process, Notification 2 requires applicants to disclose information on shareholders and related parties (including spouses) who hold an aggregate 10 percent or more of the total paid-up shares. Notification 4 imposes this same reporting duty regarding shareholders and related parties but applies it to licensed operators in an ongoing manner. Existing payment service operators must make their first report of this information to
Read More
June 2, 2023
In April 2022, Myanmar’s State Administration Council established the Foreign Exchange Supervisory Committee (FESC) to approve foreign currency conversion, make exemptions to foreign exchange restrictions, and permit overseas foreign currency transfers. Because of the FESC’s establishment and related regulatory changes, companies that would like to transfer funds out of Myanmar for capital reduction, share capital for liquidated companies, share transfers, or share dividends must abide by the FESC’s requirements, which vary depending on the type of company. The Myanmar Investment Commission (MIC) has announced that companies permitted by or endorsed under the Myanmar Investment Law must submit various supporting documents when applying to transfer foreign currency internationally. These documents, which must be addressed to the MIC chairman, include the following: Prescribed form for transfer of foreign currency; Application letter giving a specific reason for the transfer; Original board of directors’ resolution; Audited financial statements for the relevant financial year; Up-to-date bank statement of the company; Tax assessment confirmation letter for the relevant financial year; Tax clearance certificate for the relevant financial year, in the case of liquidated companies; and Copy of the updated quarterly performance report using the form prescribed by the MIC. If the transferor cannot submit the documents in person, the required documents need to be accompanied by a power-of-attorney or appointment-of-representative letter. Though the FESC has not announced its own documentation requirements, experience shows that MIC companies must submit an application to the MIC Investment Monitoring Division before submitting their offshore remittance application to the FESC. Once the MIC has received a complete application, it will request a recommendation from the Central Bank of Myanmar (CBM). With this recommendation in hand, the Investment Monitoring Department will then seek FESC approval internally. Aside from MIC companies, DICA companies (i.e., companies that do not require approval from the
Read More
May 16, 2023
On April 25, 2023, Myanmar’s Ministry of Planning and Finance issued a standard operating procedure (SOP) requiring entities and individuals remitting foreign currency equivalent to more than USD 10,000 out of Myanmar to clear their tax payments prior to the remittance. The SOP took effect on May 1, 2023. This is the latest development since Myanmar began imposing restrictions in April 2022 on the remittance of foreign currency out of the country, implemented by the Central Bank of Myanmar and the Foreign Currency Supervisory Committee. The SOP requires the remitters described above to obtain certain documents evidencing payment of all requisite taxes and duties, and to submit them to their licensed authorized dealer (AD) bank as part of the remittance process. The documents required as evidence differ depending on the purpose of the remittance. The SOP details three main categories, as summarized below. Payments for Interest, Royalties, Trademarks, Copyrights, or Services A remitter of foreign currency for payment of interest, royalties, trademarks, copyrights, or services, must first apply to the Internal Revenue Department (IRD) for evidence that all applicable withholding tax has been paid. In addition, if the country to which the payments are being remitted is party to an avoidance of double taxation agreement with Myanmar, evidence of the recipient’s tax residency must also be submitted to the AD bank. Payments for Goods A remitter of foreign currency to pay for goods must submit the necessary IRD forms along with evidence that corporate income tax and other applicable taxes have been paid. Evidence may include a tax clearance certificate for the fiscal year, the company name, the taxpayer name, and the taxpayer identification number (TIN). Salary Payments A person remitting, in foreign currency, salary earned in Myanmar must submit the required form showing that they paid income tax
Read More