Only in very special, urgent cases are 0% interest loans offered.

State Bank Governor Nguyen Thi Hong affirmed that special loans with 0% interest rate/year and no collateral are only applied in special and urgent cases that affect the liquidity of the entire credit system.

Governor of the State Bank of Vietnam Nguyen Thi Hong spoke to explain and clarify a number of issues raised by National Assembly deputies. (Photo: BUI GIANG)

On the morning of May 29, after a discussion session in the hall on the draft Law amending and supplementing a number of articles of the Law on Credit Institutions, Governor of the State Bank of Vietnam Nguyen Thi Hong gave a speech explaining and clarifying a series of issues raised by National Assembly deputies.

Including transferring the authority to approve special loans, interest rate 0%/year, no collateral from the Prime Minister , decentralizing to the State Bank; mechanism, subjects accessing special loans, time of application and control of these subjects.

Regarding the content of adjusting the authority for special loans, Ms. Hong said that the Law on Credit Institutions 2010 stipulates: Lending in special cases is implemented according to regulations, the State Bank is allowed to decide on approving the loan interest rate, whether or not there is collateral. By the Law on Credit Institutions 2024, this approval authority will be transferred to the Prime Minister.

However, in practice, with the constant fluctuations of the credit institution system both in the world and in Vietnam, the presiding agency realizes that with the development of technology, issues related to liquidity and withdrawal of people, people do not only go to the bank but can withdraw money at home through electronic means. Therefore, there needs to be a mechanism to quickly handle the issues.

The drafting agency proposed to amend this regulation along with legalizing Resolution 42/2017 on piloting bad debt settlement of credit institutions.

Regarding the timing of applying special loans with 0% interest rate and no collateral, the Governor of the State Bank emphasized: "0% loans are not regular and continuous but are very special cases."

“The 2024 Law has many regulations for early and remote detection. Any credit institutions with problems will be put into early intervention. If there is a lack of liquidity, they can borrow from the State Bank but must pay interest, it is not “0% interest right away”, Ms. Hong affirmed.

View of the meeting. (Photo: BUI GIANG)

According to the Governor, special loans are only applicable to mass withdrawals, because mass withdrawals can spread throughout the system. And when credit institutions have developed a plan, the State Bank will only lend.

When lending special loans (not eligible for 0% interest loans, no collateral), current regulations always require collateral first, and only apply when there is a commitment to have collateral.

“Not all special loans are unsecured. These credit institutions are already in a difficult situation, so they are offering 0% loans to help them overcome their difficulties soon,” said Ms. Hong.

Regarding collateral, the Governor said that credit institutions mainly operate in lending, collateral is mainly receivables, the records of those collaterals are seized by credit institutions, a lot of loans.

For example, in 2022, the banking system experienced a mass withdrawal of money at a number of banks. The State Bank had to work day and night to review the loan records of credit institutions to obtain collateral for assets such as credit institutions investing in valuable papers such as bonds, stocks, etc. The State Bank had to use that as collateral.

Regarding the condition of applying 0% interest rate, Ms. Hong stated that when credit institutions fall into a very difficult situation, special loans with 0% interest rate are to ensure system safety. In the recent 0 VND bank restructuring project, the State Bank applied special loans, most of which were 0% interest rate loans.

Regarding the quantity, standards, and conditions for special loans, 0% interest rate, and no collateral, the State Bank leader said that it is not only credit institutions under special control that are eligible for loans, but also credit institutions at risk and assessed to be at risk.

Source: https://baotuyenquang.com.vn/chi-truong-hop-rat-dac-biet-khan-cap-moi-cho-vay-lai-suat-0!-212723.html