HoREA said that Clause 2, Article 90 of the Law on Credit Institutions 2010 and Clause 2, Article 98 of the Draft Law on Credit Institutions both stipulate that credit institutions are not allowed to conduct any business activities other than banking activities and other business activities stated in the License granted to the credit institution by the State Bank.
Article 138 of the Draft Law on Credit Institutions on Real Estate Business stipulates that Credit institutions are not allowed to conduct real estate business, except in the following cases: Purchasing, investing in, or owning real estate to use as a business headquarters, workplace, or warehouse facility directly serving the credit institution's business activities; Leasing a part of the credit institution's business headquarters that has not been fully used; Holding real estate due to debt settlement.
Within 5 years from the date of the decision to handle the secured property being real estate, the credit institution must sell, transfer or repurchase this real estate to ensure the investment ratio in fixed assets and the purpose of using the fixed assets as prescribed in Clause 3, Article 143 of this Law", in Clause 3, Article 138 of the Draft Law on Credit Institutions, there is 1 change which is the regulation "within 5 years from the date of the decision to handle the secured property being real estate, the credit institution must sell, transfer or repurchase this real estate" instead of only "within 3 years" as prescribed in Clause 3, Article 132 of the Law on Credit Institutions 2010.
The Association found that Clause 2, Article 90 of the Law on Credit Institutions 2010 and Clause 2, Article 98 of the Draft Law on Credit Institutions both stipulate that "credit institutions are not allowed to conduct any business activities other than banking activities" and Article 132 of the Law on Credit Institutions 2010 and Article 138 of the Draft Law on Credit Institutions both stipulate that "credit institutions are not allowed to do real estate business".
However, due to the following provisions in Clause 2, Article 90 of the Law on Credit Institutions 2010 and Clause 2, Article 98 of the Draft Law on Credit Institutions, credit institutions are allowed to conduct “other business activities stated in the License granted to the credit institution by the State Bank” and due to the following provisions on “exceptional” cases permitted to “conduct real estate business activities” in Article 132 of the Law on Credit Institutions 2010 and Article 138 of the Draft Law on Credit Institutions, it has led to the reality that almost all credit institutions have “other business activities”, mainly “real estate business activities” based on the following “green light” regulations:
Firstly, the regulation allowing “purchase, investment, and ownership of real estate for use as business headquarters and workplaces” and being allowed to “lease a part of the business headquarters owned by the credit institution that has not been fully utilized” has led to a situation where credit institutions tend to expand their network of branches, workplaces, warehouses, especially building “magnificent” office buildings to both serve as headquarters and have a “not small” part of “the business headquarters owned by the credit institution that has not been fully utilized” to do real estate leasing business.
Second, with the regulation allowing "holding real estate due to debt settlement", which according to the Law on Credit Institutions 2010, credit institutions are only allowed to hold "within 03 years" from the date of the decision to settle the secured property as real estate, then credit institutions "must sell, transfer or buy back this real estate", it has created "room" for credit institutions to carry out "real estate business activities" no different from the activities of a professional real estate business enterprise.
Now, the Draft Law on Credit Institutions increases the permitted period of "holding real estate due to debt settlement" to 5 years, which opens up more opportunities for "real estate business activities", so it is more reasonable to retain the regulation that only allows credit institutions to "hold real estate due to debt settlement within 3 years" from the date of the decision to handle the secured assets being real estate.
Third, the Association finds that the provisions "giving the green light" to allow credit institutions to conduct "real estate business activities" according to the above provisions are not consistent with the spirit of the provisions "credit institutions are not allowed to conduct any business activities other than banking activities" and "credit institutions are not allowed to conduct real estate business" in Clause 2, Article 98 and Article 138 of the Draft Law on Credit Institutions, so it is necessary to amend and supplement to strictly regulate the cases in which credit institutions are allowed to "conduct other business activities" or "real estate business activities" and it is necessary to consider regulating the ceiling rate of "real estate business revenue not exceeding ...% of the credit institution's revenue" (can be considered not exceeding about 15% of the credit institution's revenue).
Fourth, in order to implement the above proposals, the Association finds that the "leading" role of the State Bank is very important, because according to Clause 1, Article 2 of the Law on the State Bank of Vietnam 2010, the State Bank is both a "ministerial-level agency of the Government" and the "Central Bank" of our country, and Clause 3, Article 90 of the Law on Credit Institutions 2010 and Clause 3, Article 98 of the Draft Law on Credit Institutions both stipulate that "3. Banking activities of credit institutions prescribed in this Law shall be carried out under the guidance of the State Bank".
The Association proposes to amend and supplement Clause 2, Article 98 of the Draft Law on Credit Institutions, as follows: “2. Credit institutions are not allowed to conduct any business activities other than banking activities, except for other business activities stated in the License granted to the credit institution by the State Bank”.
At the same time, the Association recommends that the State Bank closely consider allowing the implementation of "other business activities stated in the License granted by the State Bank to credit institutions", especially "office leasing real estate business activities" depending on the capacity of each credit institution.
The Association proposes to amend and supplement Article 138 of the Draft Law on Credit Institutions, as follows: “Credit institutions are not allowed to do real estate business, except in the following cases:
1. Purchase, invest in, and own real estate to use as business headquarters, workplaces, or warehouses directly serving the business operations of credit institutions;
2. Leasing a part of the business headquarters owned by the credit institution that is not fully used;
3. Holding real estate due to debt settlement. Within 05-03 years from the date of the decision to settle the secured property being real estate, the credit institution must sell, transfer or repurchase this real estate to ensure the investment ratio in fixed assets and the purpose of using fixed assets as prescribed in Clause 3, Article 143 of this Law;
4. Real estate business revenue does not exceed …% of the credit institution's revenue".
At the same time, the Association proposed that the State Bank consider strictly managing credit institutions' "expansion of their network of headquarters, branches, and warehouses" to expand "real estate business activities".
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