SBV authorised to grant zero-interest, collateral-free special loans

SBV authorised to grant zero-interest, collateral-free special loans

Special loans from the State budget should only be provided when credit institutions face liquidity difficulties or to facilitate compulsory recovery and transfers. These measures aim to ensure the safety of the banking system and protect depositors’ rights.

SBV's headquarters in Hà Nội. — Photo vnba.org.vn

Starting October 15, the State Bank of Vietnam (SBV) will be granted the authority to approve special loans with zero annual interest and no collateral requirements.

This new authority is part of the draft law amending and supplementing several articles of the Law on Credit Institutions, which was passed by the National Assembly during its 9th session on Friday, with 435 out of 443 delegates voting in favour. The law will take effect on October 15.

Currently, the authority to approve special loans with a zero annual interest rate or without collateral rests with the Prime Minister.

Before the National Assembly’s vote, State Bank Governor Nguyễn Thị Hồng said that special loans from the State budget should only be provided when credit institutions face liquidity difficulties or to facilitate compulsory recovery and transfers. These measures aim to ensure the safety of the banking system and protect depositors’ rights.

The amended Law on Credit Institutions grants debt trading and handling units the right to seize collateral on bad debts, but only with prior agreement from the borrower. The law also specifies that seized collateral must not be disputed property involved in ongoing or unresolved court cases.

To prevent abuse of this right, credit institutions are prohibited from taking measures that violate the law or social ethics during the process. Additionally, all collateral seizures must comply with conditions set forth by the Government.

Governor Hồng said that following the National Assembly’s approval of the law, the Government will instruct the State Bank to work closely with relevant agencies to review, evaluate and propose detailed measures for implementing and enforcing the law, ensuring consistency and effectiveness.

Key issues to be addressed include the State Bank’s inspection, supervision and monitoring mechanisms for the seizure of collateral assets related to bad debts, as well as defining the responsibilities of credit institutions, foreign bank branches, debt trading and handling organisations and other involved parties in the collateral seizure process.

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