Proposal to grant special loans to the State Bank without...

On the morning of May 20, Governor of the State Bank of Vietnam , Ms. Nguyen Thi Hong, on behalf of the Prime Minister, presented the draft Law amending and supplementing a number of articles of the Law on Credit Institutions.

Currently, the authority to decide on special loans with 0% interest rate/year and no collateral belongs to the Prime Minister . However, in this amendment, the drafting agency proposes to transfer this authority to the State Bank.

According to the proposal, credit institutions can borrow specially from the State Bank or other credit institutions in cases such as: paying deposits to depositors when there is a mass withdrawal; or implementing compulsory recovery and transfer plans.

The transfer of authority from the Prime Minister to the State Bank aims to decentralize and delegate more deeply, reduce intermediate steps, thereby shortening processing time and ensuring timely implementation, while maintaining security and safety for the credit institution system.

Chairman of the National Assembly's Economic and Financial Committee, Mr. Phan Van Mai, said the Committee basically agrees with adjusting the authority to decide on special loans as proposed.

However, the Committee recommends that the drafting agency carefully review current regulations on special loans; research and develop specific criteria and conditions for zero-interest loans and unsecured loans; and clearly and transparently stipulate lending procedures and processes, along with control measures to limit possible losses.

In addition, it is necessary to review and amend and supplement the provisions in the Law on Credit Institutions 2024 related to the authority to decide on special loans to be consistent with the decentralization to the State Bank, avoiding difficulties arising during the implementation process.

Governor of the State Bank Nguyen Thi Hong.

Another new point in the draft Law is allowing credit institutions and debt trading and settlement organizations to seize secured assets.

The draft stipulates that the seizure of secured assets is not a unilateral or unconditional seizure, but must comply with certain scope, limits and conditions. At the same time, the seizure process must ensure fairness, transparency and protect the legitimate rights of the obligated party, credit institutions and related parties.

Governor Nguyen Thi Hong emphasized that during the confiscation process, credit institutions must not use measures that violate the law or social ethics. The confiscation can only be authorized to the debt management and asset exploitation company of that credit institution. Banks subject to compulsory transfer are also authorized to seize collateral assets for credit institutions or debt management and asset exploitation companies.

The Economic and Financial Committee assessed that adding regulations on the right to seize collateral for bad debts is necessary, especially in the context of a high on-balance sheet bad debt ratio, reaching 4.75% by the end of July 2024, up from 4.55% at the end of 2023 and 2.03% at the end of 2022. By January 2025, this ratio will remain at 4.3%.

The Committee recommends that the Government review the conditions for exercising the right to seize collateral for bad debts, and clarify the roles and responsibilities of the People's Committees at the commune level and the police at the commune level in ensuring security, order and social safety during the process of seizing collateral; as well as clearly stipulate the authorization to seize assets.

Regarding the process and procedures for seizing and handling secured assets after seizure, the Committee proposed that the Government develop detailed regulations to ensure publicity, transparency, compliance with the law, and protection of the legitimate rights of the person whose assets are seized and related parties.

The draft law will be discussed by the National Assembly in groups this afternoon, discussed in the hall on May 29 and voted on on June 17.

Source: https://baodaknong.vn/de-xuat-cho-ngan-hang-nha-nuoc-vay-dac-biet-khong-can-tai-san-dam-bao-lai-suat-0-253104.html