The Governor talked about a bank that suffered a mass withdrawal, causing the State Bank to work day and night to handle the situation.

"In fact, there was a case where a bank suffered a massive withdrawal of money, forcing the State Bank to work day and night to review the bank's collateral records," said State Bank Governor Nguyen Thi Hong.

On the morning of May 29, the National Assembly continued to discuss in the hall the draft Law on Credit Institutions (amended), in which the two main contents are the authority to grant special loans to credit institutions (CIs) that have caused mass withdrawals, and the legalization of regulations in Resolution 42 of the National Assembly on handling bad debts.

Prevent "abuse" of 0% interest rate loans

Regarding the content of adjusting the authority for special loans, 0% interest rate/year and no collateral required for credit institutions (CIs) that suffered massive withdrawals, before the Law on CIs 2024, it is stipulated that special loans are under the authority of the State Bank (SBV).

However, the 2024 amended law has stipulated that the authority for special lending belongs to the Prime Minister .

In this revised draft, the drafting committee proposed to assign special lending authority to the State Bank.

In the report clarifying the opinions of the National Assembly deputies, Governor of the State Bank of Vietnam Nguyen Thi Hong said that in reality, with the constant changes in the system of credit institutions and the rapid development of technology, people not only go to banks but can withdraw money by electronic means. Therefore, in order to have a quick response, the drafting committee proposed to assign special lending authority to the State Bank.

According to the Governor, special lending does not occur regularly and continuously, but only in very special cases. In fact, banks can still detect early and remotely cases of mass withdrawals.

In response to concerns from some National Assembly deputies about the possibility of abusing the special lending mechanism, specifically the application of 0% interest rate/year and no collateral for credit institutions (CIs) is not really necessary, the Governor of the State Bank affirmed: "During the operation process, if a CI encounters liquidity difficulties, the State Bank will still provide loans to support. However, this is an interest-bearing loan, not applying 0% interest rate/year as feared."

“Special lending only occurs in cases of mass withdrawals. This is a big problem, if not responded to promptly, it will affect the system. When considering special lending, the State Bank always requires credit institutions to have collateral first. If a credit institution falls into a very difficult situation and no longer has collateral, the State Bank will lend without collateral,” the Governor added.

Governor of the State Bank of Vietnam Nguyen Thi Hong. Photo: QH.

Regarding the National Assembly delegate’s suggestion to clarify what collateral assets are, the Governor said that credit institutions are intermediaries in capital mobilization and lending, so when lending, they must always have credit records, including collateral mortgage contracts to secure the loan. These records are considered collateral assets when credit institutions borrow specifically from the State Bank. In addition, bank bonds are also considered a type of collateral for special loans.

"In fact, there was a case where a bank suffered a massive withdrawal of money, causing the State Bank to work day and night to review the bank's collateral records," said Governor Nguyen Thi Hong.

According to the Governor, the 0%/year interest rate for special loans is only for the sole purpose of ensuring system safety. In the restructuring project of the 3 “zero dong” banks (OceanBank, GPBank, CB), the 0%/year interest rate solution is also applied; otherwise, these banks, which are already in difficulty, will fall into even more difficulty.

Regarding the delegates' opinions on the quantity, standards, and special lending conditions, the head of the banking industry said that in reality, mass withdrawals do not only happen to weak banks. Even in the US, there have been banks that have had mass withdrawals despite their good operations.

“Mass withdrawals do not only come from subjective factors of the bank. It can come from objective factors, even just because of rumors or a technological incident, so the State Bank needs to respond very quickly to these cases,” Governor Nguyen Thi Hong emphasized.

Avoid abuse of power in seizing collateral

In addition to the provisions on special loans, the draft law also codifies the contents of Resolution 42 of the National Assembly on bad debt settlement, which empowers credit institutions and debt trading organizations to seize collateral.

According to the Governor, the legalization of Resolution 42 is to protect the legitimate rights and interests of lenders, which is also to protect depositors, because loans from banks are essentially people's deposits.

In addition, ensuring property rights and contract enforcement rights is also consistent with the spirit of Resolution 68.

After the Law on Credit Institutions 2024 took effect, there were many opinions in the Government 's meetings with businesses and credit institutions that Resolution 42 should be legalized. Accordingly, if bad debt is handled, it will help unblock the flow of blocked capital, helping the flow of capital to circulate to more borrowers.

“With rising bad debts, it will be difficult for credit institutions to reduce lending rates because they have to increase risk provisions. If bad debts are handled, credit institutions can continue to reduce interest rates for businesses and people,” the Governor said.

In response to the opinions of delegates that it is necessary to clarify the procedures, regulations, and powers of credit institutions in seizing collateral, avoiding abuse of power, especially avoiding pushing people (owners of collateral) into a situation of having no place to live, the Governor affirmed that the State Bank will have specific instructions requiring credit institutions to have a synchronous procedure, so that the handling and seizing of collateral must be carried out in a transparent and legal manner, in order to ensure a balance of rights and legitimate interests of all parties.

Vietnamnet.vn

Source: https://vietnamnet.vn/thong-doc-viec-cho-vay-dac-biet-chi-dien-ra-voi-truong-hop-rut-tien-hang-loat-2405930.html