Special loan with 0% interest rate: Transferring the "decision" power to the State Bank and lessons from the incident at SCB

State Bank Governor Nguyen Thi Hong presented at the meeting of the National Assembly Standing Committee on April 24.

Adjusting the authority to decide on special loans with 0% interest rate/year from the Prime Minister to the State Bank

On the morning of April 24, the Government submitted to the National Assembly Standing Committee for comments on the draft Law amending and supplementing a number of articles of the Law on Credit Institutions (CIs).

One of the new contents included in the draft law is the decentralization of authority to decide on special loans for loans with 0% interest rate/year, without collateral, from the Prime Minister to the State Bank of Vietnam (SBV).

The review report of the Economic and Financial Committee stated that the majority of opinions from the Standing Committee of the Economic and Financial Committee, the Standing Committee of the Law and Justice Committee, the Standing Committee of the Culture and Social Affairs Committee, and the Standing Committee of the People's Aspirations and Supervision Committee agreed to adjust the authority to decide on special lending for loans with an interest rate of 0%/year and loans without collateral from the Prime Minister to the State Bank.

This decentralization will link the decision on special lending with the responsibility of inspection and supervision of credit institutions and the monetary policy management of the State Bank. At the same time, it will shorten the processing and decision-making time, ensuring quick and timely handling in situations requiring immediate intervention to ensure the safety of the credit institution system. The decentralization provisions as in the draft Law are also consistent with the policy of strong decentralization and delegation of power in state management, consistent with the direction of the Government and recommendations in the Appraisal Report of the Ministry of Justice.

However, the Standing Committee of the Economic and Financial Committee believes that the regulation of 0% interest rate/year applied to all special loans of the State Bank in the draft Law is different from the current regulations, therefore, it is necessary to assess the specific impact, and consider setting the same interest rate while each credit institution has a different situation and issues that need to be handled.

There are opinions that the regulation of special loan interest rate of 0%/year for all loans is not appropriate, it is proposed to keep it as prescribed by current law and regulate in the direction that the State Bank decides to grant special loans for loans with collateral , without collateral for credit institutions; the interest rate (the lowest interest rate is 0%/year), the collateral of special loans from the State Bank according to the regulations of the Governor of the State Bank.

At the same time, to ensure strictness and avoid arbitrary application, the Standing Committee of the Economic and Financial Committee proposed that along with decentralizing the authority to decide on special loans without collateral and with an interest rate of 0%/year, the Government should be assigned to specify in detail the criteria and conditions for special loans and have measures to strengthen control, prevent and limit possible losses.

Some opinions of the Standing Committee of the Economic and Financial Committee said that special loans with an interest rate of 0%/year, without collateral indirectly using State resources, have risks of not being able to recover the loan, affect economic stability, monetary security and involve many ministries and branches, therefore, it is necessary to have coordination and participation of opinions of relevant agencies such as the Ministry of Finance and the Ministry of Public Security. Some opinions suggested that it is necessary to consider using this resource as using the State budget to have a way to control and supervise implementation.

Lessons from SCB's mass withdrawal incident

Speaking at the working session of the National Assembly Standing Committee today, Governor Nguyen Thi Hong further explained the reason for adding the above content to the draft revised Law on Credit Institutions. That stems from the fact that the processing of loans with SCB is very slow because it has to comply with administrative procedures, while in the market, people are withdrawing money in a very stressful manner, requiring "immediate" intervention.

The Governor also affirmed that special loans with 0% interest rate only apply to cases under special control or mass withdrawals. For credit institutions operating normally when encountering problems and when early intervention is required, the State Bank will still provide recapitalization loans according to normal regulations and these are interest-bearing loans.

The reason for applying 0% interest rate to special loans, the Governor gave an example from the 4 previous zero-dong banks in the restructuring project, all of which brought the special loan interest rate to 0%. The special loan currently applied to SCB is an interest-bearing loan and the interest cost that SCB has to "bear" for the loan is very large (50,000 - 60,000 billion VND). For a struggling bank like SCB, having to pay interest on loans to maintain the system's operations is a problem.

In the SCB restructuring project being submitted to the Politburo, the State Bank also proposed to reduce the special loan interest rate to 0% because the bank is unable to pay the interest on the special loan.

Regarding the proposal of some delegates about assessing how much special loans are expected to be granted in the coming time, the Governor said that it is very difficult. In fact, in the US, there are banks that have made 52 consecutive quarters of profit, but when the time comes for mass withdrawals, they immediately fall into a difficult situation.

In his concluding remarks, Vice Chairman of the National Assembly Vu Hong Thanh said that the National Assembly Standing Committee agreed with the Prime Minister's policy of decentralizing authority to the State Bank for special loans with an interest rate of 0% for 1 year without collateral. This policy aims to shorten the time for decision-making and ensure quick and timely handling in situations requiring immediate intervention to ensure the safety of the credit institution system.

However, to implement this decentralization policy, the Vice President proposed to assess the technical impact, including the regulation of a special lending interest rate of 0% per year for all loans, to avoid the risk of not being able to recover loans, affecting economic stability and monetary security. At the same time, he proposed to study the option of assigning the Government to regulate the details, criteria and conditions for special loans and have measures to strengthen control, prevent and limit possible losses.

Regarding the transitional provisions, there are opinions suggesting the conformity of this transitional provision with the provisions on retroactive effect of legal documents in the Law on Promulgation of Legal Documents 2025. Some opinions say that all restructuring plans for weak credit institutions are reported to competent authorities for comments before implementation. Therefore, in case there is a change in the plan reported to competent authorities, it is necessary to report back to competent authorities to ensure political basis.

Regarding this issue, Vice Chairman of the National Assembly Vu Hong Thanh requested the drafting agency to review and fully and comprehensively identify transitional cases to ensure the stability of the legal system, avoiding creating legal gaps or legal conflicts. Carefully evaluate the transitional regulations for credit institutions with special loans that were decided by the State Bank before the effective date of the law and now return to 0%. It is necessary to clarify the necessity, impact and resources for implementation when adjusting the interest rate to 0% in relation to the current situation and the restructuring plan of credit institutions that have been reported to competent authorities for comments.

Source: https://baodautu.vn/cho-vay-dac-biet-lai-suat-0-chuyen-quyen-quyet-sang-nhnn-va-bai-hoc-tu-su-co-tai-scb-d273116.html