Dr. Can Van Luc: Not legalizing regulations on bad debt handling will cause capital congestion for the economy.

The Law on Credit Institutions (CIs) amended in 2024, which officially came into effect on July 1, 2024, has made adjustments to resolve difficulties and obstacles in the legal regulations of the banking system. However, one of the things that Dr. Can Van Luc regrets is that the Law on Credit Institutions 2024 has not codified some provisions in Resolution 42/2017/QH14 such as the right to seize collateral, affecting the ability of CIs to handle bad debts. Therefore, the Prime Minister has assigned the State Bank to urgently prepare a dossier and submit it to the National Assembly to complete the codification of the contents omitted in Resolution 42.

According to Dr. Can Van Luc, this amendment to the Law on Credit Institutions aims to fill legal gaps, clearly define unclear points; ensure consistency and uniformity between related Laws. And more importantly, it is to remove obstacles and barriers, unblock resources, improve efficiency and quality of laws and in line with the direction of the General Secretary, the National Assembly, and the Prime Minister: "Creating development, but still controlling risks, fighting waste, especially in the fields of land, real estate, access to capital, law enforcement..." Especially in the context of increasing bad debt; high risks of trade and technology wars, greatly affecting the economy , businesses and the financial and monetary markets of Vietnam.

In addition, the completion of the legal corridor also contributes significantly to the completion and improvement of institutional quality and law enforcement, which is inherently a "bottleneck of bottlenecks", a huge obstacle to rapid, sustainable and inclusive socio-economic development.

In fact, bad debt is a matter of great concern, the bad debt ratio tends to increase and will be very dangerous for the economy. When businesses have bad debt, banks cannot lend, credit capital will be blocked. The legalization of regulations on bad debt handling is completely consistent with international practice, the lender has the right to take the initiative in debt collection, confiscating collateral if the borrower is slow.

Dr. Can Van Luc made 7 recommendations for the Draft Law on Amended Credit Institutions

The draft revised Law on Credit Institutions 2024 has added 3 Articles 198a, b and c on the right to seize secured assets; Seize assets of the party subject to enforcement of judgments that are being used as collateral for bad debts; Return of secured assets that are evidence in criminal cases, exhibits, and means of administrative violations in administrative violations. These 3 articles were originally stipulated in Resolution 42/2017, but when Resolution 42 expires, the Law on Credit Institutions 2024 does not stipulate them.

These changes will resolve problems in the process of handling collateral and bad debt, while harmonizing the protection of creditor rights of credit institutions with the enforcement of judgments and decisions of competent authorities. These changes will speed up the handling of bad debt and reduce the operating costs of credit institutions. Thereby, supporting the reduction of interest rates as well as increasing the ability to supply capital to the economy. At the same time, increasing the responsibility of borrowers.

Source: https://thoibaonganhang.vn/tscan-van-luc-khong-luat-hoa-quy-dinh-ve-xu-ly-no-xau-se-gay-ach-tac-von-cho-nen-kinh-te-163018.html