Non-performing loans are putting significant pressure on the banking system
On the morning of May 20th, the National Assembly listened to the presentation and reviewed the draft Law amending and supplementing a number of articles of the Law on Credit Institutions.
In her presentation, Governor of the State Bank Nguyen Thi Hong stated that despite control measures, non-performing loans in the credit system remain high and are on the rise.
Governor of the State Bank Nguyen Thi Hong. Photo: Nhu Y
The Government believes that it is necessary to legalize the regulations in Resolution 42, which is an experimental solution to handle non-performing loans, to ensure the stability and harmony of the legal system.
The Governor also added that the bill proposes to transfer the authority to decide on special lending at an interest rate of 0%/year, without collateral, from the Prime Minister to the State Bank.
According to Ms. Hong, the goal of this proposal is to shorten the process, ensure a quick response in emergencies, increase the initiative of the State Bank, and ensure the security of the credit institution system.
Clarifying criteria and conditions for special lending
In his review, Chairman of the Committee for Economic and Financial Affairs Phan Van Mai emphasized the necessity of issuing the law to ensure transparency, objectivity, constitutionality, and feasibility in the operations of credit institutions.
Regarding the legalization of the three policies in Resolution 42 on handling bad debts, Mr. Mai agreed with the Government’s explanation but also warned of the risk of credit institutions taking advantage of the right to seize secured assets to loosen lending conditions , leading to improper credit extensions.
Chairman of the Committee for Economic and Financial Affairs Phan Van Mai. Photo: Nhu Y
Accordingly, the reviewing agency proposed to stipulate clearly the conditions for seizing secured assets, the supportive role of the People’s Committee and the commune-level police in maintaining security and order during the seizure process, as well as the rights and legitimate interests of the parties involved.
Regarding the mechanism of special lending at an interest rate of 0% without collateral, the reviewing agency agreed with the proposal to transfer the decision-making authority from the Prime Minister to the State Bank of Vietnam.
However, the Committee for Economic and Financial Affairs requested a clear definition of lending criteria, conditions, procedures, and control mechanisms to prevent risks and losses. At the same time, relevant regulations should be amended to align with the new authority of the State Bank.
On the sequestration of assets used as collateral in enforcement cases, the reviewing agency agreed on the need for specific regulations to avoid affecting the rights of third parties. The coordination mechanism between the enforcement agency and the credit institution also needs to be detailed by the Government.
Regarding the return of secured assets that are exhibits or objects of administrative violations, the reviewing agency requested a thorough review to avoid legal conflicts, especially in cases where the assets are of significant value or related to multiple security obligations.
If necessary, the reviewing agency suggested that the Government and the Supreme People’s Court should provide specific guidance.
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