Has the Law on Amendments to Credit Institutions Law been passed at the 5th extraordinary session of the 15th National Assembly in Vietnam?

Has the Law on Amendments to Credit Institutions Law been passed at the 5th extraordinary session of the 15th National Assembly in Vietnam?

At the 5th Extraordinary Session of the 15th National Assembly, the National Assembly discussed in the Hall the Law on Amendments to Credit Institutions Law project.

After listening to the Chairman of the National Assembly's Economic Committee present the Report explaining, absorbing and revising the draft Law on Amendments to Credit Institutions Law, the National Assembly voted to pass this Law.

The results of the electronic voting show that 450 delegates participated in voting in favor (accounting for 91.28%). Thus, with the majority of delegates participating in voting in favor, the National Assembly passed the Law on Amendments to Credit Institutions Law.

The Law on Amendments to Credit Institutions Law adopts the following regulations:

- Establishment, organization, operation, early intervention, special control, reorganization, dissolution and bankruptcy of credit institutions;

- Establishment, organization, operation, early intervention, dissolution, and termination of operations of foreign bank branches;

- Establishment and operation of representative offices in Vietnam of foreign credit institutions and other foreign organizations with banking activities;

- Settlement of bad debts, collateral for bad debts of credit institutions, foreign bank branches, organizations in which the State owns 100% charter capital with the function of buying, selling and handling debt.

Has the Law on Amendments to Credit Institutions Law been passed at the 5th extraordinary session of the 15th National Assembly in Vietnam? (Image from the Internet)

What is balance of credit extension for commercial bank customers in 2024 in Vietnam?

In Article 128 of the Law on Credit Institutions 2010 , amended by Clause 21, Article 1 of the Law on Credit Institutions Amendment 2017, there are regulations on credit extension limits as follows:

Credit extension limits

1. The total outstanding credit of a commercial bank, foreign bank branch, people's credit fund or microfinance institution extended to a single client must not exceed 15% of its own capital; the total outstanding credit of a commercial bank, foreign bank branch, people's credit fund or microfinance institution extended to a single client and affiliated persons must not exceed 25% of its own capital.

2. The total outstanding credit of a non-bank credit institution extended to a single client must not exceed 25% of its own capital; the total outstanding credit of a non-bank credit institution extended to a single client and affiliated persons must not exceed 50% of its own capital.

3. The total outstanding credit specified in Clauses 1 and 2 of this Article do not include loans sourced from capital entrusted by the Government, organizations and individuals or loans to borrowers being other credit institutions.

4. The balance of credit extension mentioned in Clause 2 of this Article includes the purchase of and investments in bonds issued by the clients and their related persons.

 

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Thus, the balance of credit extension for commercial bank customers must not exceed 15% of the commercial bank's equity capital in Vietnam.

Note: The balance of credit extension does not include loans from trust capital of the Government, organizations, individuals or cases where the borrower is another credit institution in Vietnam.

The above balance of credit extension includes the total purchase and investment in bonds issued by customers and related persons of that customer in Vietnam.

What is current interest rate of credit institutions in Vietnam?

According to Article 91 of the Law on Credit Institutions 2010, regulations on interests and charges in business activities of credit institutions are as follows:

Interests and charges in business activities of credit institutions

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2. Credit institutions and their clients may agree on interest rates and credit extension charges to be applied to their banking operations according to law.

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Pursuant to the provisions of Article 13 of Circular 39/2016/TT-NHNN amended by Clause 4, Article 1 of Circular 06/2023/TT-NHNN on loan interest rate as follows:

Loan interest rate

1. A credit institution and its customer shall agree on the interest rate depending on capital demands and supplies on the market, loan demands and creditworthiness of customers, unless otherwise stipulated by the State Bank's regulations on the maximum interest rate set forth in Clause 2 of this Article.

2. If the customer has been rated transparent and healthy in its financial status by the credit institution, the credit institution and the customer shall agree on the interest rate on short-term loan in VND which shall not exceed the maximum lending interest rate decided by SBV’s Governor over periods of time in order to meet certain demands for borrowed fund as follows:

a) Loans taken out to support the agricultural and rural development sector under the Government’s regulations on credit policies for agricultural and rural development;

 

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Thus, the current loan interest rates of credit institutions are not specifically regulated in Vietnam.

According to this Article, the loan interest rate is determined based on the agreement between the customer and the credit institution in Vietnam according to market capital supply and demand and customer's credit level, except in the case of

- The customer is assessed by the credit institution as having a transparent and healthy financial situation. The credit institution and the customer agree on the short-term loan interest rate in Vietnam Dong but does not exceed the maximum interest rate is decided by the Governor of the State Bank of Vietnam in each period for certain capital needs.

Best regards!