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CAN BANKS IN VIETNAM ISSUE STANDBY L/Cs?

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Thu Cam's query on standby L/Cs

Dear Mr. Duc,

Relating to Standby LC, you mean that banks in Vietnam can not issue this kind of LC or they can but rarely issue it. In one case, one customer asks us to issue a Standby LC, for a loan of this customer at another bank, IFO this bank. All are in Vietnam. I am not sure that Standby LC used is reasonable or not. And I wonder that we can issue standby LC or just can issue a bank guarantee. Are there any rules issued by State Bank of Vietnam related to this? I have collected opinions from friends working at many banks, some says can, some says can not. What is your opinion?

Thanks a lot for your attention to my matter.

Rgds,
Tran Thi Thu Cam
CUB-Chu Lai Br
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Mr. Old Man's response

Dear Thu Cam,

Banks in Vietnam can issue guarantees subject to URDG (Uniform Rules for Demand Guarantee) or subject to the law of S.R Vietnam (Regulations on Banking Guarantees promulgated in accordance with the SBV's Governor's Decision No. 26/QD-NHNN dated 26/6/2006).

If the guarantee is issued in favour of a foreign beneficiary it can be subject to either of the above governing laws.

If the guarantee is issued in favour of a domestic party it should be subject to the law of Vietnam.

Can banks in Vietnam issue standby L/Cs?

Yes. Banks in VN can issue commercial L/Cs so they can also issue standby L/Cs. The reason is that a standby L/C is just a special type of LC. Moreover, there is no rule prohibiting banks in VN from issuing standby L/Cs.

Hoping it is helpful.

Best regards,
Nguyen Huu Duc …

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