Banks warned of risks of accepting land as collateral
Banks warned of risks of accepting land as collateral
The State Bank of Vietnam (SBV) has warned commercial banks of the risks associated with accepting land-use rights certificates as collateral for loans.
According to the central bank, several commercial banks have complained that authorities had revoked land-use rights certificates being used as collateral for loans at their banks, Nguoi Lao Dong newspaper reported.
The land-use rights certificates were revoked because their owners had violated the 2013 Land Law, or the certificates had been granted using procedures that were not in line with the law.
The revocations have affected the banks’ rights to settle mortgaged assets when their customers failed to repay loans.
Therefore, the SBV asked commercial banks to carefully review the relevant regulations on land use and management so as to revise their lending rules.
Banks must also minimize risks of accepting land-use rights certificates as collateral for loans, and ask their customers to commit to repaying loans in case their land-use rights certificates are revoked.
In addition, local governments must announce the revocation to land owners and publicize the information on their websites. Banks should regularly refer to this information to work out appropriate solutions.
