On June 10, the National Assembly Standing Committee gave its opinion on the reception, explanation, and revision of the draft Law amending and supplementing a number of articles of the Law on Credit Institutions.
Reporting at the meeting, Governor of the State Bank of Vietnam (SBV) Nguyen Thi Hong provided information about the group of policies on transferring the authority to decide on special lending of the SBV, with an interest rate of 0%/year, without collateral (TSBD).
The main content is the source of money for special loans as well as the mechanism to control the decision to provide special loans of the State Bank with an interest rate of 0%/year, without collateral.
Explaining this content, the Government said that the special lending is done by the SBV from the central bank's functional funding source for money issuance, not using state budget funding.
Therefore, the fact that the State Bank lends with a special interest rate of 0% per year does not lead to the risk of the state budget having to cover interest rates.
However, taking into account the opinions of National Assembly deputies, the Government directed the host agency to continue reviewing and coordinating with relevant agencies to review regulations on handling special loans from the State Bank according to regulations on the State Bank's financial regime.
According to Governor Nguyen Thi Hong, the special lending of the SBV only applies to 2 cases:
First, credit institutions (CIs) are allowed to withdraw money in large numbers (to pay depositors).
Second, to implement the recovery plan, the compulsory transfer plan of credit institutions is subject to special control and only applies after implementing the commercial measures of the State Bank such as refinancing and open market operations.
Thus, the special lending activity of the SBV is a necessary activity, preventing the phenomenon of mass withdrawals at TCTDs as well as limiting the risk of spreading to other TCTDs or to support the recovery plan, the compulsory transfer plan to restructure TCTDs under special control.
Special lending activities aim to ensure the safety of the credit institution system, security, order, and social safety, not to create a competitive advantage for credit institutions that are specially borrowed from the State Bank.
Clause 3, Article 194 of the Law on Credit institutions 2024 has assigned the Governor of the State Bank to specify in detail the special lending.
Implementing this regulation, the Governor of the State Bank issued Circular No. 37/2024/TT-NHNN dated June 30, 2024 to specify in detail the special lending; in which, specifically stipulate the purpose, amount, duration, collateral, collateral conditions, loan repayment, and responsibilities of related parties.
However, taking into account the opinions of National Assembly deputies, after the draft Law is issued, the SBV will study, review, and amend Circular No. 37/2024/TT-NHNN related to criteria and conditions for special lending with an interest rate of 0%/year, without collateral.
Regulate the purpose of borrowing, the responsibility of borrower units and the responsibility of the SBV when lending, control cash flow to avoid risks, avoid policy abuse, reduce the internal restructuring momentum of banks.
Increase transparency in lending procedures and order and strengthen control, prevent and limit possible losses, avoid ethical risks, policy risks and side effects, ensure market confidence and fairness.
