Need to clarify criteria and control mechanism for special loans with 0% interest rate

Delegate Nguyen Thi Suu ( Hue City Delegation) speaks at the discussion *. Photo: VPQH*

At the meeting, the regulation on the State Bank deciding to provide special loans to credit institutions with an interest rate of 0%/year was of interest and discussion to National Assembly delegates.

Delegate Nguyen Thi Suu (Hue City Delegation) said that, regarding loan conditions, the automatic application of 0% interest rate to all previous special loans could change the old contract, affecting the obligations of the parties, especially the previous contract that agreed on a different interest rate. The delegate said that if the 0% interest rate is abused, it could easily cause damage to the State Bank's revenue, creating an unfavorable precedent for the state budget.

“There should be regulations, principles, and conditions for the extension level. For example, only consider extensions for credit institutions that are undergoing approved restructuring, to avoid abuse and prolonging weak situations.

Therefore, for special loans of credit institutions decided by the Prime Minister before this Law takes effect, the parties shall continue to implement according to the special loan decision of the Prime Minister and the signed special loan contract.

For special loans of credit institutions that have been decided by the State Bank before the effective date of this law, it is recommended that the special loan contract be in accordance with financial principles. The State Bank shall base on the proposal of the credit institution and the actual situation to adjust the special loan in accordance with the provisions of this law and the guidance of the State Bank. This will be more comprehensive," said delegate Nguyen Thi Suu.

Delegate Tran Thi Thu Dong (Bac Lieu delegation) discusses. *Photo: Office of the National Assembly*

Delegate Tran Thi Thu Dong (Bac Lieu Delegation) said that this regulation has the advantage of allowing the State Bank to make quick decisions in situations of systemic risk or liquidity crisis.

However, according to delegate Thu Dong, this regulation has disadvantages, when lending without collateral with 0% interest rate, the risk issue has no control and transparency mechanism.

Therefore, the Bac Lieu delegation proposed to add a requirement for the State Bank to periodically report to the Government and the National Assembly on special loans, borrowers, amounts, terms, and results. “Clearly define the criteria for beneficiaries of special loans to avoid abuse to rescue weak credit institutions that do not meet the conditions,” the delegate said.

Also concerned about this issue, delegate Tran Van Tien (Vinh Phuc delegation) also requested clarification of the criteria for consideration of extension, the State Bank should have a document with specific regulations and instructions on cases considered for extension and should send it along with the draft Law dossier for National Assembly delegates to study and discuss.

Delegate Nguyen Hai Nam (Hue City Delegation). *Photo: Office of the National Assembly*

According to delegate Nguyen Hai Nam (Hue City Delegation), it is necessary to be more specific about loans with 0% interest rate without collateral. Accordingly, there needs to be clear criteria on conditions, specific procedures, and the scale of this loan limit, because this loan is not small, it is necessary to ensure the financial balance of the State Bank. When lending, it also narrows the space for monetary policy, causing a certain impact on the development capital needs of the economy.

“The draft Law has decentralization and delegation of authority to the Governor of the State Bank. But lending has credit risks. So whether rights come with responsibilities or not, and whether the responsibilities belong to individuals, organizations, or collectives, the law has not yet stated,” the delegate raised the issue. Delegate Nam also said that how the debts after the Law takes effect and the debts before the Law takes effect need to be more clearly defined.

State Bank Governor Nguyen Thi Hong spoke to receive and clarify opinions of National Assembly deputies. *Photo: VPQH*

Speaking to receive and clarify the opinions of National Assembly deputies, State Bank Governor Nguyen Thi Hong said that the regulations before the amendment of the Law on Credit Institutions 2024 stated that special lending is implemented according to the State Bank's regulations on whether there is collateral or not, interest rate or no interest rate. However, the 2024 Law has set out the authority to grant special loans without collateral, with 0% interest rate under the Prime Minister's decision-making authority.

On the same day, the National Assembly discussed in the hall the draft Resolution of the National Assembly on piloting the People's Procuracy in initiating civil lawsuits to protect the civil rights of vulnerable groups or to protect public interests.

Source: https://hanoimoi.vn/can-ro-tieu-chi-va-co-che-kiem-soat-cho-vay-dac-biet-voi-lai-suat-0-703883.html