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Official Gazette

Thursday, January 20, 2022

Central bank proposes changes to bank guarantees for future houses

Updated: 08:08’ - 03/01/2022
Commercial banks under special control could be allowed to provide guarantees for future houses if they are not prohibited from doing so.

This is one of the changes in bank guarantees for future houses proposed by the State Bank of Vietnam (SBV) in a draft circular revising Circular 07 of 2015 and Circular 13 of 2017.

Customers seek information about a future housing project in Ho Chi Minh City__Photo: sggp.org.vn

As per the draft, commercial banks would be permitted to provide guarantees for future houses if being licensed to provide bank guarantees and not prohibited from providing guarantees for future houses during the period of application of special control or early intervention measures under the Law on Credit Institutions.

The list of commercial banks qualified for providing guarantees for future houses in each period would be publicized by the SBV on its website.

As for future housing guarantee contracts signed between commercial banks and housing project owners, the draft circular stipulates that such contracts must comply with Article 56 of the Law on Real Estate Business and clearly provides that commercial banks’ guarantee obligation toward house buyers would arise only after the buyers receive guarantee undertaking letters issued by commercial banks.

A guarantee undertaking letter would specify that the commercial bank only provides guarantee for the advanced amount paid by the buyer to the project owner after the latter receives the letter.

The amount of guarantee for a future housing project would be at most equal to the advanced amount the project owner is allowed to receive from buyers under Article 57 of the Law on Real Estate Business, plus other amounts payable by the project owner to buyers under signed house purchase and lease contracts in case the project owner fails to hand over houses to buyers according to the committed schedule.

In case a commercial bank and a project owner terminate their contract on guarantee for contract future houses ahead of schedule, the commercial bank must make a public announcement on its website and notify thereof in writing to the provincial-level housing management agency of the locality where the transaction is conducted.

As per foreign exchange management, the draft circular makes it clear that the issuance of guarantees in foreign currencies by credit institutions and foreign bank branches must conform with the scope of their licensed foreign exchange operation in the domestic and international markets.

When providing guarantees, credit institutions and foreign bank branches must comply with the Law on Credit Institutions and the SBV’s instructions on cases ineligible for grant of credit and restrictions and limits on grant of credit.

For the sake of convenience, the draft circular says that the guarantees may take the form of electronic or paper documents as agreed by involved parties. But in any case, the parties must ensure security and safety for data messages and relevant information according to the Law on E-Transactions and related regulations.- (VLLF)
 

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