Banking and Court cooperate to remove obstacles in handling credit disputes

(Chinhphu.vn) - The handling of bad debts and disputes related to credit institutions (CIs) has achieved many positive results. However, the number of lawsuits is increasing, leading to many legal problems that need to be resolved, requiring increased coordination between the banking sector, the courts and relevant agencies, in order to remove difficulties for CIs, while protecting the transparency and stability of the financial system.

Workshop "Improving the effectiveness of resolving cases related to credit institutions at People's Courts" - Photo: VGP/HT

Credit growth, disputes also increase

Speaking at the workshop "Improving the effectiveness of resolving cases related to credit institutions at the People's Court" held on July 18 in Nha Trang City, Mr. Pham Toan Vuong, Chairman of the Council of the Vietnam Banks Association (VBA), emphasized that the handling of bad debts in recent years has achieved substantial results, contributing to the health of credit institutions. Thanks to that, the banking system is more stable, reducing risk pressure.

In parallel, from 2020 to present, the scale of credit institutions' operations has increased sharply, leading to an increasing number of disputes. HHNH said that credit institutions have reported many difficulties in the process of court settlement of cases.

Specifically, the issue of case resolution time and the process of accepting lawsuits is still slow at some banks.

Credit institutions reflect on the number of cases that are concentrated in the Court where the credit institution is headquartered, the Court where the credit institution's branch is located (the Court does not agree to accept the case, or accepts the case but still transfers it to the Court where the defendant is headquartered/resides, works...).

Credit institutions also reported a number of cases related to property disputes involving land use rights being mortgaged at credit institutions, but the credit institutions did not receive notice from the Court to participate in the proceedings in the case.

Regarding on-site review and appraisal of collateral assets, credit institutions reported that the parties did not cooperate, resisted, caused disturbances, closed down, left, or were absent; there were no regulations on on-site review and appraisal costs; disputes involving many mortgaged assets being land use rights with large areas and unclear boundaries made on-site appraisal, actual measurement, and determination of dispute locations difficult.

Credit institutions reported difficulties with regulations on protection of bona fide third parties; disputes over secured assets of households using land.

Regarding the return and handling of evidence in criminal cases, it reflects that the assets have been legally transacted with credit institutions (a bona fide third party) but have still been declared invalid or cancelled. The secured assets are "frozen" while the litigation process can last for many years, making it impossible for credit institutions to process and recover the debt.

"In the above-mentioned problems, some of the causes come from the credit institutions, some of them are due to the viewpoints on the application of legal regulations, and the way of evaluating evidence of the litigants. Therefore, the prosecuting agencies need to have guidelines to uniformly apply the above-mentioned situations so that the Courts at all levels can apply them to resolve practical situations that arise," Mr. Pham Toan Vuong emphasized.

Mr. Pham Toan Vuong, Chairman of the Council of Vietnam Banks Association, spoke at the conference - Photo: VGP/HT

Outstanding legal issues to be resolved

Regarding the law, Ms. Vu Ngoc Lan, Deputy Director of the Legal Department (SBV), pointed out three prominent groups of issues.

Ms. Vu Ngoc Lan, Deputy Director of the Legal Department of the State Bank of Vietnam - Photo: VGP/HT

First, regarding the lending interest rate when handling mortgaged assets, some first-instance and appellate judgments rejected the request for credit institutions to calculate interest on outstanding debts, despite valid contractual agreements and documents. The State Bank cited the Law on Credit Institutions, guiding documents, and Resolution 01/2019/NQ-HDTP, emphasizing that the court needs to apply the correct regulations to protect the right to recover debts. In fact, the Supreme People's Court has appealed for review, annulled the first-instance and appellate judgments, and requested a retrial.

Second, on the agreed interest rate. According to the State Bank, the interest rate between credit institutions and customers is based on the supply and demand of capital in the market, so customers must pay the principal, interest and late payment interest if they violate the law. When adjudicating, the court needs to apply the Law on Credit Institutions and related documents, instead of using the interest rate limit in the Civil Code, to ensure the rights of all parties.

Third, regarding the court not calculating interest after the date of initiating a criminal case. The State Bank believes that it is necessary to determine the damage to the credit institution up to the time of the first instance trial, because the bank still has to pay capital costs and has not yet recovered the debt. Resolution 03/2020/NQ-HDTP also stipulates that damages must be fully and promptly compensated, in accordance with this proposal.

In particular, with the "third party in good faith" provision, the State Bank noted that many credit institutions lost their security rights due to mortgage transactions being invalidated because the land use right certificates were canceled or forged. While banks fully implemented the appraisal process and were not at fault, they still faced great legal risks. Banks requested the Supreme People's Court to provide additional guidance to ensure the right to handle assets if the transaction is legal.

Many banks also reported court rulings requiring them to return the guarantee amount paid to the beneficiary, even though the unconditional guarantee letter met the regulations. According to the Law on Credit Institutions and the State Bank Circular, credit institutions are obliged to pay when the documents are valid, without requiring additional conditions.

The representative of the Legal Department of the State Bank of Vietnam proposed that the Supreme People's Court issue clear instructions on law application, promote training for judges, and create an inter-sectoral exchange mechanism with the Procuracy, enforcement agencies and the State Bank of Vietnam to shorten the trial and enforcement time.

Specific proposals include: Allowing credit institutions to seize and auction secured assets when the judgment comes into effect; issuing regulations on handling cases where the parties do not cooperate; applying simplified procedures to disputes that meet the criteria; building a database of disputed assets; and providing unified guidance on handling evidence in criminal cases, so that legal assets can be returned to banks as soon as possible.

Ms. Nguyen Thi Phuong, Head of the Banking Legal Club under the State Bank of Vietnam, made a recommendation - Photo: VGP/HT

Ms. Nguyen Thi Phuong, Head of the Banking Law Club under the HHNH, suggested: There should be a document from the Supreme People's Court requiring the Courts at all levels to handle the consequences in accordance with legal regulations when declaring a contract invalid. At the same time, the Court should fully acknowledge the legal basis and opinions of the parties involved in the dispute.

The Association recommends that the Supreme People's Court provide clear guidance on the right of credit institutions to seize and sell secured assets immediately after the judgment comes into effect. At the same time, coordinate in building a database on the status of disputed assets, ensuring transparency and convenience in the enforcement process.

The Supreme People's Court is requested to issue a resolution guiding the application of simplified procedures for disputes over the obligation to deliver secured assets, the right to dispose of secured assets, or unsecured credit contracts when meeting specific criteria. In addition, there should be guidance for the Regional Court to be able to transfer cases to other regions to merge or separate cases, as well as clearly define the jurisdiction to resolve...

Mr. Nguyen Van Tien, Deputy Chief Justice of the Supreme People's Court, commented that credit disputes are complicated, not only about debt but also related to common property, inheritance, and many other legal relationships. Moreover, the core issue often lies in the secured property, requiring precise handling to reduce risks. Mr. Tien emphasized the importance of signing in practice a three-party credit contract: borrower, guarantor and bank, which needs to be transparent and strictly complied with.

Delegates agreed that it is necessary to continue close coordination between the banking sector, the courts and relevant agencies to remove difficulties and ensure the legitimate rights of credit institutions, while protecting the transparency and stability of the financial system.

Huy Thang

Source: https://baochinhphu.vn/nganh-ngan-hang-va-toa-an-phoi-hop-go-vuong-trong-xu-ly-tranh-chap-tin-dung-102250718114514473.htm