The National Assembly passed the amended Law on Credit Institutions on June 27th with nearly 93% approval. The law will take effect on 15/10.

A key change in the amended law shifts the authority to decide on special 0% interest loans without collateral from the prime minister to the State Bank of Vietnam.

Before the vote, State Bank Governor Nguyen Thi Hong explained that the government adjusted this provision to ensure special loans from the state budget are only used when credit institutions face liquidity difficulties or for mandated restructuring or transfers to ensure system safety and depositors' rights.

Regarding the seizure of collateral, National Assembly representatives suggested adding a cooperation mechanism between communal People's Committees and communal police to protect the legal interests of those whose assets are seized. This aligns with two provisions of Resolution 42 on piloting the handling of bad debts at banks.

Governor Nguyen Thi Hong clarified that the law only stipulates the involvement of communal People's Committees and police in the seizure process. This is consistent with the two-tier administrative structure.

Under the amended Law on Credit Institutions, entities involved in debt trading and resolution can seize collateral for bad debts, but only with prior agreement from the borrower. The seized collateral cannot be under dispute in a pending or ongoing court case.

To prevent abuse, the law prohibits credit institutions from using illegal or unethical methods during seizure. The collateral must also meet government-specified conditions.

The State Bank, along with relevant agencies, will study the conditions for collateral seizure by credit institutions to support private sector development, as outlined in Resolution 68.

Anh Minh