Proposal to legalize a series of regulations on handling bad debts
The draft Law amending and supplementing a number of articles of the Law on Credit Institutions (CIs) that has just been submitted by the State Bank to the Government has officially proposed legalizing a series of regulations on bad debt handling that were implemented under Resolution 42/2017/QH14 in the pilot phase.
Accordingly, the draft law includes provisions on:
The right to detain collateral of credit institutions, sales organizations, and debt settlement;
Regulations on seizure of property guaranteed by the right party to enforce the judgment;
Supplement a mechanism for returning assets as evidence in criminal cases or exhibits and means of administrative violations.
These are contents that have helped the banking industry shorten the time to handle bad debts and increase the ability to recover capital, but are now no longer valid because Resolution 42 has expired.
Handling bad debts requires a stable legal framework
The SBV affirmed that including these contents in the law is necessary to create a synchronous and unified legal framework, helping credit institutions to exercise their guaranteed rights to handle assets more effectively and transparently.
In addition, the bill also requires ensuring a balance of legitimate benefits between credit institutions and borrowers, avoiding creating dis symmetry in rights between lenders and borrowers.
According to the assessment from the State Bank, the bad debt situation tends to increase, while the debt trading market has not developed, many unresolved legal problems are hindering credit institutions in handling ineffective loans.
The legalization of "ripe, clear, and effectively proven in practice" contents is also in line with the direction in Conclusion 19-KL/TW of the Politburo on the orientation of the law-making program.
Towards a thorough handling of long-standing bad debts
According to Resolution No. 158/2024/QH15, the National Assembly has required drastic implementation of the project to restructure the credit institution system for the period 2021-2025, emphasizing the role of handling bad debts.
In the document submitted to the Government, the SBV said that the legalization of these regulations aims to overcome long-standing bottlenecks, help the banking system improve safety and health levels and create conditions for capital clearance for the economy.
The draft law has been completed under the direction of the Government and the Government Standing Committee, and is expected to be submitted to the National Assembly for consideration at the 9th Session (May 2025).
