Legalize the right to seize assets, increase the right to decide on special loans

The draft Law amending and supplementing a number of articles of the Law on Credit Institutions has specified the provisions on the right to seize collateral of credit institutions, and at the same time adjusted the authority to decide on special loans with an interest rate of 0%/year, transferring from the Prime Minister to the State Bank.

Recently, the Economic and Financial Committee held its first plenary session to examine the Government's submission on the draft Law amending and supplementing a number of articles of the Law on Credit Institutions.

According to the State Bank of Vietnam, as of January 2025, the on-balance sheet bad debt ratio has increased to 4.3%. The Vietnam Banking Association said that the fact that Resolution 42/2017/QH14 has not been legalized has caused the bad debt handling process to stagnate, especially in issues such as seizure, attachment and return of collateral assets - especially when the assets are related to criminal cases.

Therefore, the draft Law proposes to legalize three key policies from Resolution 42: Right to seize secured assets, Regulations on attachment of secured assets, Return of secured assets as evidence in criminal cases; at the same time, supplement regulations related to assets as exhibits and means of administrative violations.

The State Bank affirmed that the legalization will create a unified legal corridor, helping credit institutions and debt settlement units exercise their legal rights in debt collection, thereby improving the ability to rotate capital and access credit at reasonable costs for people and businesses.

Deputy Governor Pham Quang Dung stated: before Resolution 42, only 23% of customers voluntarily paid their debts; after the resolution was applied, this rate increased to 89%. On average, the banking system handles VND5,800 billion of bad debt each month - an increase of VND2,280 billion compared to before. However, since the resolution expired, bad debt has increased sharply, causing difficulties in handling and increasing credit costs.

The Draft Law amending and supplementing a number of articles of the Law on Credit Institutions has specified regulations on the right to seize secured assets of credit institutions.

Mr. Nguyen Dinh Viet - Chairman of Son La Provincial People's Committee, member of the Economic and Financial Committee - agreed with the proposal to legalize the right to seize collateral, saying that this will raise borrowers' awareness of debt repayment.

The Economic and Financial Committee agrees with the need to promulgate laws to institutionalize the Party's policies, meet practical requirements, perfect the monetary and banking institutions, and create a transparent and equal investment and business environment.

However, many opinions suggested a full impact assessment, ensuring transparent and disciplined regulations, preventing abuse and protecting the legitimate rights of the parties. The Law and Justice Committee emphasized that the right to seize collateral is not an automatic right but must be clearly stated in the civil contract - in compliance with the principle of voluntary agreement.

The majority of opinions in the Law and Justice Committee agreed with the legalization of the right to seize collateral, but suggested more specific regulations to ensure transparency, publicity and the rights of the person subject to seizure. Some opinions expressed concern that this could administrativeize civil relations if there is no strict control mechanism, especially in cases not going through the court.

In addition, the draft Law also proposes to transfer the authority to decide on special loans (with 0% interest rate or no collateral) from the Prime Minister to the State Bank. This decentralization helps shorten procedures, improve processing efficiency, and ensure timely support for the credit system when necessary.

Mr. Nguyen Dinh Viet commented that this is reasonable because the State Bank is the agency that knows the situation of credit institutions best. The Law and Justice Committee also agreed, saying that this is consistent with the decentralization policy, contributing to increasing the initiative in managing monetary policy, especially in the context of a rapidly fluctuating and complex market.

Source: https://baodaknong.vn/luat-hoa-quyen-thu-giu-tai-san-tang-quyen-quyet-dinh-cho-vay-dac-biet-249963.html