Proposal to "legalize" the provisions on seizure of secured assets in Resolution 42

ANTD.VN - The State Bank announced to collect opinions on the proposal to draft a Law amending and supplementing a number of articles of the Law on Credit Institutions to legalize a number of contents of Resolution No. 42/2014/QH14 on piloting bad debt of credit institutions.

Accordingly, the State Bank of Vietnam proposed to continue legalizing the provisions in Resolution 42, including provisions on: the right to seize secured assets; provisions on the attachment of secured assets of the party subject to enforcement; and provisions on the return of secured assets as evidence in criminal cases and supplementary provisions on the return of secured assets as exhibits and means of administrative violations.

The legalization of these regulations is carried out in the form of the Law amending and supplementing a number of articles of the Law on Credit Institutions.

Continue to allow banks to seize collateral

Regarding the legalization of regulations on the right to seize collateral, the State Bank believes that this is to resolve difficulties for credit institutions, debt trading and handling organizations in the process of handling collateral and bad debt, in order to ensure a balance between the rights of creditors and the legitimate rights of the guarantor.

Handling these problems arises from the case where the person holding the property does not hand over the property, the organization that buys and sells, handles the debt, the credit institution must file a lawsuit and wait for the enforcement of the judgment or decision of the Court.

At the same time, the new law only recognizes the right to request the Court to resolve the case where the person holding the property does not hand over the property for the secured party to handle the secured property, without directly regulating the secured party's right to seize the secured property.

The lack of this regulation has caused great difficulties for the right to handle secured assets of debt trading and handling organizations and credit institutions because debt trading and handling organizations as well as credit institutions cannot carry out the seizure if the property owners do not agree, deliberately oppose, or even create other disputes related to secured assets to prolong the time to handle secured assets.

This negatively affects the results of bad debt handling, makes it difficult to unblock capital sources for the banking system, affects the safety and soundness of the banking system, and limits customers' access to credit...

In reality, the process of filing a lawsuit, participating in litigation and enforcing judgments according to regulations for each case often takes many years, in a context where banks have to set aside risk reserves, stop collecting interest while still having to pay daily capital mobilization costs.

This creates great risks, especially for credit institutions with a high proportion of retail loans, aiming to stimulate demand, because they have to handle many small-value bad debts, geographically dispersed...

The State Bank proposes to soon legalize regulations on seizure of secured assets in Resolution 42.

Faced with the above problems, the State Bank of Vietnam proposed to add Article 198a after Article 198 of the Law on Credit Institutions in the direction of allowing credit institutions and debt trading and settlement organizations to have the right to seize collateral.

The seizure of collateral shall only be carried out in cases where the security contract has an agreement that the guarantor agrees to allow the secured party the right to seize the collateral of the bad debt when the collateral must be handled according to the provisions of law.

Regulations on the seizure of collateral must comply with the scope, limits, and conditions of seizure. At the same time, it is necessary to stipulate the order and procedures for seizure, fairness, publicity, transparency, and ensuring the legitimate rights and interests of the obligated party, credit institutions, and related parties.

Regulations on seizure and return of secured assets

Regarding the attachment of collateral of the party subject to enforcement, the State Bank said that currently, Article 90 of the Law on Civil Judgment Enforcement (as amended and supplemented) stipulates that the civil judgment enforcement agency has the right to attach collateral or mortgaged assets in cases where the judgment debtor has no other collateral to enforce the judgment or has insufficient collateral if the value of such collateral is greater than the secured obligation and the cost of enforcement.

The State Bank believes that this regulation greatly affects the creditor's rights of the secured party, increasing bad debt of the credit institution system, especially in cases where collateral formed from loan capital is the main source to repay the credit institution.

Therefore, the State Bank of Vietnam proposes to continue to legalize the provisions in Resolution 42, which stipulates that the collateral of the bad debt of the party subject to enforcement of the judgment that is securing the debt repayment obligation at a credit institution, foreign bank branch, debt trading and handling organization shall not be seized to perform other obligations according to the provisions of the law on civil judgment enforcement, except in cases of enforcement of judgments and decisions on alimony, compensation for damage to life and health, or in cases where there is written consent from the credit institution, foreign bank branch, debt trading and handling organization.

In addition, the State Bank also proposed to legalize regulations on the return of collateral as evidence in criminal cases and supplement regulations on the return of collateral as evidence and means of administrative violations.

Specifically, the regulation stipulates that after completing the procedure for determining evidence and finding that it does not affect the handling of the case, the prosecuting agency is responsible for returning the evidence in the criminal case which is the collateral of the bad debt at the request of the secured party which is a credit institution, foreign bank branch, or bad debt trading and handling organization.

The competent authority is also responsible for returning the exhibits and means of administrative violation that are collateral for bad debt to the secured party, which is a credit institution, foreign bank branch, debt trading and settlement organization, upon request of these entities.

According to the State Bank of Vietnam, the above regulations have been applied on a pilot basis (from August 15, 2017 to December 31, 2024) under Resolution 42 and have proven to be effective in practice. Therefore, the drafting agency proposed to legalize these regulations at the time the National Assembly holds its 9th session (May 2025).

Source: https://www.anninhthudo.vn/de-nghi-luat-hoa-quy-dinh-thu-giu-tai-san-bao-dam-tai-nghi-quyet-42-post605029.antd