HCMC – Vietnam’s legislature has passed an amendment to the Law on Credit Institutions, granting the State Bank of Vietnam (SBV) the authority to issue special zero-interest loans without collateral.
The resolution on an amendment to the Law on Credit Institutions was approved at the National Assembly (NA) sitting this morning, June 27, with nearly 93% of lawmakers present voting in favor. It will take effect on October 15.
The revised law delegates the authority to approve special loans, which are offered at zero interest and without collateral, from the prime minister to the central bank.
SBV Governor Nguyen Thi Hong explained that the Government had revised the regulation to ensure that special loans from the State budget are only granted when a credit institution faces liquidity difficulties or is undergoing mandatory recovery or transfer, with the aim of safeguarding system stability and protecting depositors’ interests.
Regarding the seizure of collateral assets, NA deputies proposed adding a coordination mechanism between communal-level People’s Committees and police to better protect the legitimate interests of those subject to asset seizures, while also maintaining two key provisions from Resolution 42 on the pilot handling of bad debts by banks.
Hong said that the law only provides for the involvement of communal-level People’s Committees and police in the asset seizure process, aligning with the ongoing administrative reorganization and the two-level local government structure.
Under the amended Law on Credit Institutions, debt trading and settlement entities are authorized to seize collateral assets linked to non-performing loans.
This can only be carried out if the credit institution has a prior agreement with the borrower. The collateral must not be under dispute in a case that has been accepted but not yet resolved, or is currently being handled by the court.
To prevent abuse of the asset seizure authority, the law stipulates that credit institutions must not employ any measures that violate legal prohibitions or contravene social ethics during the process.
Additionally, the collateral assets must meet conditions set forth by the Government.
The SBV, in coordination with relevant agencies, will study the conditions for collateral assets linked to non-performing loans that credit institutions are authorized to seize, in an effort to concretize the policy of promoting private sector development as outlined in Resolution 68.
