National Assembly deputies worry about 0% interest rate lending policy being abused, State Bank Governor speaks up

This draft law adds the authority to decide on special loans of the State Bank of Vietnam (SBV). Accordingly, SBV can decide on special loans with or without collateral to credit institutions.

Collateral for special loans from the State Bank as prescribed by the Governor of the State Bank. The special loan interest rate of the State Bank is 0%/year.

The authority to decide on special loans with an interest rate of 0%/year and unsecured loans according to current law belongs to the Prime Minister .

Commenting on this content, delegate Nguyen Huu Thong ( Binh Thuan ) assessed that the regulation on lending at a special interest rate of 0%/year is a strong support policy for credit institutions in particularly difficult situations, aiming to maintain the safety of the financial and banking system.

However, if not attached to specific application conditions, it could lead to policy abuse, create risks, distort the competitive environment among credit institutions and increase pressure on the national budget. "This regulation is likely to contradict market principles, affecting the efficiency of using State resources if there is no control mechanism," said Mr. Thong.

Delegate Nguyen Huu Thong. (Photo: National Assembly Media).

Therefore, delegate Thong proposed to specifically stipulate that the 0% interest rate only applies to credit institutions under special control, mandatory restructuring or having a systemic impact on national financial stability. At the same time, it is necessary to supplement the mechanism for monitoring, publicizing and evaluating the effectiveness of the use of this special loan source.

Regarding the right to seize secured assets, the draft law stipulates that in case the guarantor does not cooperate or is not present as notified by the credit institution, foreign bank branch, debt trading and settlement organization, the representative of the People's Committee at the commune level where the secured assets are seized must participate in witnessing and signing the minutes of seizure of secured assets.

According to delegate Thong, this provision is not consistent with the Law on Organization of Local Government, because the Law does not assign this responsibility to the commune level and commune-level officials do not have the authority to enforce civil law. Therefore, this provision may lead to legal risks in practical implementation.

“I propose that the seizure of secured assets should only be allowed in cases where the guarantor has a clear agreement in the contract, the assets are not in dispute and are within the scope of legal seizure. At the same time, it is necessary to specify the monitoring mechanism and the right to appeal of the guarantor,” said delegate Thong.

Sharing the same view, delegate Pham Van Hoa (Dong Thap) supported that loans must have collateral. In any case of an incident, if the customer is not eligible to pay interest and capital to the bank, the property will be foreclosed.

Delegate Pham Van Hoa. (Photo: National Assembly Media).

“I also suggest that credit officers who commit negative acts must be strictly handled according to regulations. Recently, there have been many cases where the value of collateral and mortgaged assets was only 1 billion VND, but bank and credit institution officers lent up to 1.5 billion VND. When problems arose, the auction of the assets only recovered 1 billion VND. Therefore, the responsibilities of credit institutions and bank officers must be strictly regulated,” said delegate Hoa.

Regarding the authority to provide special loans with 0% interest and no collateral, delegates agreed that the draft law would delegate this authority from the Prime Minister to the Governor of the State Bank to ensure the goal of decentralization and delegation of power. At that time, the State Bank will be fully responsible for providing loans without collateral and with 0% interest.

"Special loans are only available in special cases"

Governor of the State Bank of Vietnam Nguyen Thi Hong affirmed the above when responding to delegates' opinions on the special 0% interest rate lending policy.

Ms. Hong affirmed: Special loans with 0% interest rate, no collateral are only applied in special, urgent cases, affecting the liquidity of the entire credit system. Therefore, not necessarily credit institutions under special control but also credit institutions at risk, assessed as having risks can also apply for this loan.

“ The Law on Credit Institutions 2024 has introduced many regulations for early and remote detection. Any credit institutions with problems that are put into early intervention mode, if there is a lack of liquidity, can borrow from the State Bank but must pay interest, not “getting a loan with 0% interest rate right away ”, Ms. Hong informed.

Governor of the State Bank of Vietnam Nguyen Thi Hong.

The Governor clarified: The lending of special loans (not subject to 0% interest rate loans, no special assets) only applies to the situation of mass withdrawals, because mass withdrawals can spread throughout the system. And when credit institutions have developed a plan, the State Bank will lend.

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

The Law on Credit Institutions 2024 places this approval authority on the Prime Minister. However, in practice, with the constant changes in the system of credit institutions both in the world and in Vietnam, the presiding agency realizes that with the development of technology, issues related to liquidity and withdrawal of money by people, people do not only go to the bank but can withdraw money at home through electronic means. Therefore, it is necessary to have a mechanism to quickly handle the issues, the drafting agency proposed to amend this regulation along with the legalization of Resolution 42/2017 on piloting the handling of bad debts of credit institutions.

PHAM DUY

Source: https://vtcnews.vn/dbqh-lo-chinh-sach-cho-vay-lai-suat-0-bi-lam-dung-thong-doc-nhnn-len-tieng-ar945886.html