Transitional regulations contribute to stabilizing and developing the banking system.

*The Law on Credit Institutions 2024, which comes into effect, is expected to help the banking system operate more safely and stably. Photo: ITN*

More complete regulations

First , credit institutions, foreign bank branches, and foreign representative offices that have been established and operated under licenses issued by the State Bank of Vietnam (SBV) before the Law on Credit Institutions (amended) takes effect do not have to apply for re-issuance of licenses according to the provisions of this law. In case of license amendments or supplements, they must comply with the provisions of the law.

For contracts, other transactions, and agreements signed before the effective date of the law, credit institutions, foreign bank branches, and customers may continue to perform according to the signed contracts, other transactions, and agreements until their expiration. Amendments, supplements, and extensions of contracts, other transactions, and agreements may only be made if the contents of the amendments, supplements, and extensions are in accordance with the provisions of the law, except for cases of restructuring the debt repayment period of contracts, other transactions, and credit agreements, which are implemented in accordance with the provisions of the law on banking.

For contracts, other transactions, and agreements with indefinite terms whose contents are inconsistent with the provisions of the Law and which are signed before the effective date of the Law, credit institutions, foreign bank branches, and customers may continue to perform them until June 30, 2025. After this date, credit institutions, foreign bank branches, and customers must terminate or amend and supplement other contracts, transactions, and security agreements in accordance with the provisions of the Law.

Credit institutions under special control that have outstanding special loans from the State Bank up to the effective date of this Law and have not yet had an approved restructuring plan shall continue to implement the signed special loan contract and shall be considered for extension of the special loan in accordance with the regulations of the Governor of the State Bank. For types of promissory notes and treasury bills that have been issued and have outstanding balances up to the effective date of this Law, credit institutions, foreign bank branches and purchasers of promissory notes and treasury bills shall continue to implement the agreed contents until the promissory notes and treasury bills are fully paid.

Regarding the collateral of bad debt, which is a real estate project that has been seized according to the provisions of Resolution No. 42/2017/QH14 on piloting the handling of bad debts of credit institutions or is undergoing transfer procedures according to the provisions of Resolution No. 42 before the effective date of this Law but has not been completely handled by the effective date of this Law, Resolution No. 42 shall continue to be applied from January 1, 2024 until the handling is complete. The accrued interest recorded on the bad debt of the credit institution that has not been divested according to the regulations, the difference between the book value of the debt being recorded in the balance sheet and the selling price of the bad debt and the specific provision amount set aside for this debt being allocated according to the provisions of Resolution 42 shall continue to be implemented according to the provisions of Resolution 42 from January 1, 2024 until the end of August 14, 2027.

Managers, executives and other positions of credit institutions and foreign bank branches elected or appointed before the effective date of this Law who do not meet the requirements in Articles 41, 42 and 43 of this Law shall continue to hold their positions until the end of their term or the end of the term of election or appointment. The Board of Directors of a credit institution elected before the effective date of this Law who do not meet the requirements in Article 69 of this Law shall continue to operate until the end of the Board of Directors' term.

Shareholders owning shares exceeding the prescribed limit are not allowed to increase their shares.

From the effective date of the Law, shareholders and related persons owning shares exceeding the prescribed share ownership ratio shall continue to maintain their shares but shall not increase their shares until they comply with the provisions on share ownership ratio as prescribed by the Law, except in the case of receiving dividends in the form of shares. The maximum share ownership ratio of a major shareholder, a shareholder and related persons at a commercial bank performing defense service tasks exceeding the share ownership ratio prescribed in this Law before the effective date of the Law shall continue to maintain the share ownership ratio in accordance with the provisions of the Law on Credit Institutions 2010. Credit institutions implementing a restructuring plan decided by a competent authority before the effective date of this Law shall continue to implement the plan that has been decided until the plan is completed, except in the case specified in Clause 9 of this Article (credit institutions under special control).

For microfinance programs and projects of socio- political organizations and non-governmental organizations that are being implemented before the effective date of this Law, they do not need to adjust their organization and operations according to the provisions of this Law, but must comply with the provisions of the Government. Credit institutions and foreign bank branches that have been licensed to perform factoring and letter of credit services before the effective date of this Law may perform the services specified in a number of Clauses and Points in Articles 107, 114, 115, 119, 120 and Article 124 of this Law without having to amend or supplement their Licenses.

In addition, credit institutions, foreign bank branches, debt management and asset exploitation companies of credit institutions, asset management companies of Vietnamese credit institutions established and operating under the provisions of the law on credit institutions that are allowed to transfer all or part of a real estate project that has been accepted as collateral before the effective date of the Law to recover debts are not required to apply the provisions on conditions for real estate business entities for the real estate project transferor of the law on real estate business but must meet the following conditions: The transferred real estate project must meet the conditions prescribed in the Law on Real Estate Business 2023 and must have a decision on land allocation or land lease from a competent state agency. In addition, the project transferee must meet the conditions prescribed in the Law on Real Estate Business 2023.

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