Governor of State Bank clarifies the case of special 0% interest rate loans

(Dan Tri) - Lending without collateral and with 0% interest is not a regular, continuous practice but a very special case, according to State Bank Governor Nguyen Thi Hong.

On the morning of May 29, the National Assembly discussed the draft Law amending and supplementing a number of articles of the Law on Credit Institutions.

One of the contents that delegates are interested in is the proposal to transfer the authority to decide on special loans with 0% interest rate/year and special loans without collateral from the Prime Minister to the State Bank of Vietnam (SBV).

Need to specify specific conditions for special loans

Delegate Tran Thi Thu Dong ( Bac Lieu ) said that this option has the advantage of allowing the State Bank to make quick decisions, contributing to supporting credit institutions facing difficulties when borrowing 0%. However, this regulation has potential risks because the law does not have a control and transparency mechanism.

Ms. Dong proposed adding a requirement for the State Bank to periodically report to the Government and the National Assembly on special loans in terms of the amount and the borrowers. At the same time, there should be clear criteria for the beneficiaries of special loans to avoid abuse to rescue weak credit institutions.

Delegate Tran Thi Thu Dong speaks (Photo: National Assembly Media).

Regarding this issue, delegate Pham Van Hoa (Dong Thap) emphasized that if you borrow, you must repay and have collateral, regardless of the circumstances. According to Mr. Hoa, when an incident occurs and the customer is unable to pay the principal and interest, the bank has the right to foreclose on the property.

Given that in the past there have been cases where the loan amount was larger than the collateral, delegates suggested that it is necessary to clearly define the responsibilities of credit institutions.

Regarding the authority to grant special loans, Mr. Hoa agreed with the Government's proposal, however, he emphasized that this is a big issue so it is necessary to stipulate specific conditions for special loans.

Mr. Hoa raised the question: "A number of joint stock commercial banks are under special control, are they at risk of collapse?" The delegate emphasized that these entities should not rely on the State budget, and when they have money to spend, the State must spend money to save the system.

Delegate Nguyen Quang Huan (Binh Duong) agreed to give the State Bank the authority to decide on special loans with 0% interest rate/year, loans without collateral. However, Mr. Huan was concerned that special loans with 0% interest rate could lead to a request-grant mechanism.

According to Mr. Huan in the document explaining his opinion at the group, the State Bank said that after the law is promulgated, this agency will issue a circular and the Government will have an operating mechanism.

He said that this explanation has partly clarified, however, the delegate noted that the circular and regulations are both sub-law documents. To ensure transparency, he suggested that the Governor of the State Bank of Vietnam has the right to decide on special loans but must report to the Government at the nearest meeting.

"There needs to be some way to ensure control so that delegates can feel secure and regulations will be more transparent," said Mr. Huan.

Not a regular, ongoing job

Explaining the opinions raised by National Assembly deputies, Governor of the State Bank of Vietnam Nguyen Thi Hong said that lending without collateral and at 0% interest rate is not a regular, continuous practice but a very special case and the law has designed many regulations to detect this issue early and from afar.

According to Ms. Hong, there are only two cases of special lending: One is when a mass withdrawal occurs, and two is when the credit institution is under special control.

State Bank Governor Nguyen Thi Hong gives an explanatory speech (Photo: National Assembly Media).

During the early intervention process, she said that in case of liquidity loss, credit institutions can borrow from the State Bank with interest, not "0% interest loans right away".

"When considering special loans, the State Bank always requires banks to have collateral. Only when there are serious difficulties and there is no collateral left will they decide to lend without collateral," said Ms. Hong.

However, the Governor of the State Bank said that in practice, with the constant fluctuations of the credit institution system, both in the world and in Vietnam, and with the development of technology, issues related to liquidity for people to withdraw money can be at home, using electronic devices to withdraw money. Therefore, issues of quick handling need to be raised.

In the case of special loans when mass withdrawals occur, the Governor of the State Bank said that mass withdrawals will spread very widely, and if not promptly prevented, it will cause consequences for the system.

Ms. Hong said that for credit institutions, it is very difficult and when lending, especially, it is mainly to ensure the safety of the system. Therefore, the restructuring projects of "zero-dong" banks that have been forced to transfer are often solutions to bring interest rates to 0% because they have been very difficult and their operations are not profitable.

In the above case, Ms. Hong said that if lending interest rates are increased, banks will have more difficulties and may find it difficult to implement the restructuring project.

Citing a recent example in the US, where a bank had been operating continuously for 52 years with profits but still had a mass withdrawal incident, Ms. Hong said that mass withdrawal incidents do not only occur in weak banks.

According to Ms. Hong, many times mass withdrawal incidents do not originate from weaknesses in the management of a credit institution but from many objective factors, even rumors or objective information, technological incidents, data loss...

All of these can lead to mass withdrawals, so to ensure system safety, there must be a very quick handling plan to support, according to the Governor of the State Bank.

Source: https://dantri.com.vn/kinh-doanh/thong-doc-nhnn-noi-ro-ve-truong-hop-cho-vay-lai-suat-dac-biet-0-20250529105530877.htm