Regulations for early intervention in weak credit institutions.

According to the Law on Credit Institutions, those that receive early intervention (when accumulated losses exceed 50% of charter capital) will be supported by various measures.

The Law on Credit Institutions (amended) has just been officially signed by National Assembly Chairman Vuong Dinh Hue.

According to the law, credit institutions are allowed early intervention (when accumulated losses exceed 50% of charter capital) and are supported by several measures such as: changing the method of calculating risk provisions to a maximum of the difference between revenue and expenses in the year of the credit institution. At the same time, they must provide a detailed explanation of the actual provision amount and the difference from this maximum amount in their financial statements.

The leaders of struggling banks must take responsibility for the consequences and mitigate moral hazard risks in the banking system, without using government or other bank resources to resolve the difficulties. The State Bank of Vietnam will continue to ensure the prevention of mass deposit withdrawals.

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Banks could face a fine of 500 million VND if they force customers to buy insurance.(Dan Tri Newspaper) - Banks that link non-mandatory insurance products to the provision of banking products and services in any form may be fined from 400 million VND to 500 million VND.

Timely intervention for children with language disorders.Many children with speech delays are diagnosed early, but parents only take them for examination when someone reminds them, causing the children to miss the "golden opportunity" for intervention, affecting their learning and social integration.

The State Bank of Vietnam will intervene early when credit institutions experience mass withdrawals of funds.

Regarding cross-ownership and controlling stakes in credit institutions, this has been a highly debated issue recently. To mitigate this situation, the amended Law on Credit Institutions includes provisions to reduce the shareholding ratio of major shareholders; and to reduce the credit limit for a single customer and related parties compared to the provisions in the 2010 Law on Credit Institutions.

Specifically, the new ownership limits at a bank are as follows: individuals can own a maximum of 5% of the charter capital (unchanged); organizations 10%; shareholders and related parties 15%; major shareholders and related parties are not allowed to own more than 5% of other credit institutions.

The new regulations on credit limit restrictions will reduce credit limits for customers and related parties. However, the change will be implemented gradually over a period of 5 years.

Regarding the handling of collateral (effective from January 1, 2025), credit institutions have the right to transfer part or all of the collateral, which is a real estate project, to recover the debt.

This regulation is expected to provide banks with more options for handling large projects where a small portion is subject to legal obstacles, thereby helping to unblock the cash flow of real estate businesses and reduce bad debts for banks, especially listed banks with a high proportion of real estate loans.

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Early intervention to limit withdrawals, as in the SCB case.

Banks officially have additional tools to handle bad debts.From October 15th onwards, credit institutions and debt trading and resolution organizations have the right to seize collateral assets of non-performing loans in certain cases, as stipulated in the Law amending and supplementing a number of articles of the Law on Credit Institutions.

Numerous changes in the amended Law on Credit Institutions: A "red" warning for delinquent debtors.The amended Law on Credit Institutions, expected to be passed by the National Assembly next week, will serve as a warning to delinquent debtors, helping the banking sector to quickly return 1 trillion VND of "dead capital" back into the economy.

However, the law passed this time did not mention the right of credit institutions to seize collateral.

ANH PHUONG

Source: https://www.sggp.org.vn/quy-dinh-can-thiep-som-cac-to-chuc-tin-dung-yeu-kem-post725760.html