HoREA fears that legal loopholes could give banks the green light to do real estate business

11/12/2023 08:41 Nhat Linh Print article

ANTD.VN - HoREA expressed concern that the draft Law on Credit Institutions (amended) will "give the green light" to the situation where banks compete to expand their branch networks and warehouse facilities to do real estate business.

The Ho Chi Minh City Real Estate Association has just issued a document commenting on the draft Law on Credit Institutions (amended), including recommendations related to real estate business activities of credit institutions.

Accordingly, HoREA said that Clause 2, Article 90 of the Law on Credit Institutions 2010 and Clause 2, Article 98 of the Draft Law on Credit Institutions both stipulate that "credit institutions are not allowed to conduct any business activities other than banking activities and other business activities stated in the License granted to the credit institution by the State Bank".

However, Article 138 of the Draft Amended Law still states some exceptions such as: banks are allowed to purchase and invest in real estate as business headquarters and warehouses; and are also allowed to lease out part of the unused area.

According to HoREA, this regulation has "given the green light" to the situation of banks engaging in real estate business. Specifically, this regulation has led to a situation where credit institutions tend to expand their network of branches, working locations, warehouses, especially building magnificent office buildings to both serve as headquarters and rent out premises.

Việc các ngân hàng xây các tòa nhà vừa làm trụ sở, vừa cho thuê khá phổ biến

It is quite common for banks to build buildings that are both headquarters and for rent.

In addition, the regulation allowing real estate holding due to debt settlement is also a loophole for banks doing real estate business, according to HoREA.

Specifically, the Law on Credit Institutions 2010 allows banks to hold real estate related to debt settlement for a period of 3 years before having to sell, transfer or buy back. HoREA believes that this regulation has created room for credit institutions to conduct real estate business activities no different from those of a real estate enterprise.

It is worth mentioning that the Draft Law on Credit Institutions now increases the permitted period of holding real estate due to debt settlement to 5 years. According to HoREA, this will further open the way for real estate business activities.

With the above arguments, HoREA recommends that the State Bank needs to strictly manage the situation of banks expanding their networks, headquarters, branches, and warehouses to do real estate business.

At the same time, the time limit for holding real estate should be regulated as in the old law, which is 3 years, instead of 5 years as in the draft Law.

The Association also proposed to add a regulation that the ceiling rate of real estate business revenue should not exceed about 15% of the total revenue of the credit institution.

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