The government wants a flexible roadmap to 'tighten' lending to customer groups

The Government proposes to give the Governor the authority to decide on special loans with 0% interest rate to banks that are under restructuring plans.

This content is mentioned in the Resolution announced by the Government Office on January 5.

With the draft revised Law on Credit Institutions being finalized, the Government said it agrees with many proposals of the State Bank, such as early intervention criteria, special control, handling of real estate collateral... However, the Government also suggested amendments to some other specific contents.

Accordingly, the Government gives opinions on the authority to regulate debt classification, risk handling and decide on special loans for banks with an interest rate of 0% per year.

Regarding the special zero-interest loans under the restructuring plan, in the latest draft, the State Bank proposed that the Prime Minister decide. However, the Government believes that this authority should be assigned to the Governor because this is a specialized issue under the State Bank's field.

In the draft in April, the State Bank proposed "special loans" for banks that need early intervention, with an interest rate of 0% per year. If necessary to ensure system safety, the State Bank will designate the Deposit Insurance of Vietnam, the Cooperative Bank of Vietnam or some other credit institutions to provide special loans with an interest rate of 0%.

Meanwhile, according to current regulations, only "specially controlled" credit institutions can access this "special loan", but the loan interest rate is not clearly specified.

Transaction at a commercial bank. Photo: Thanh Tung — Transaction at a commercial bank. Photo: *Thanh Tung*

In addition, regarding the decision on credit limit for one customer and one customer and related persons, the Government also proposed amendments to ensure flexibility in credit management and administration. The specific roadmap for applying the "ceiling" lending levels should be implemented according to Government regulations.

Previously, the State Bank of Vietnam proposed a roadmap to reduce lending limits for one and a group of customers by 2028. Specifically, the credit limit will be gradually reduced to 10% of equity for one customer and 15% of equity for customers and related parties within 5 years. This rate for non-bank credit institutions is 15% and 25%, respectively.

This regulation aims to limit the concentration of capital in backyard businesses while the legitimate needs of people and other businesses are not met.

In addition, Government members also proposed that the State Bank fully absorb and ensure regulations on handling collateral assets that are feasible real estate projects, facilitating capital mobilization for enterprises and credit activities of banks.

The Government assigned the State Bank to continue studying the draft Law on Credit Institutions (amended). The explanatory contents need to be analyzed in depth, convincing, and remove difficulties in the practical operations of credit institutions as well as prevent cross-ownership, abuse of policies for corruption, negativity, and ensure monetary security...

Deputy Prime Minister Le Minh Khai directed the revision and completion of this Law project. In addition, the Governor of the State Bank, authorized by the Prime Minister, signed on behalf of the Government the document of the Government's opinion and sent it to the National Assembly Standing Committee and the National Assembly's Economic Committee.

Quynh Trang

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