Implementation of provision of and repayment of mortgage loan of credit institutions in Vietnam

Implementation of provision of and repayment of mortgage loan of credit institutions in Vietnam (Internet image)

Articles 18 and 19 of Circular 17/2011/TT-NHNN stipulate the implementation of provision of and repayment of mortgage loan of credit institutions in Vietnam as follows:

1. Carrying out the provision of mortgage loan

- The provision of mortgage loan to credit institutions shall be performed at the Banking Operation Department of the State Bank.

The Banking Operation Department of the State Bank shall, basing on the ratified file of approval to mortgage loan, carry out the procedures of receiving mortgage asset, signing credit contract with the said credit institution and transfer the loan amount to the deposit account of that credit institution opened at the State Bank.

- Where it is necessary, the Governor of the State Bank may authorize the Manager of State Bank branches in provinces, cities under the Central Government’s management to perform the mortgage lending to credit institution whose head office is located in the local area. Process of mortgage lending at the State Bank branches in provinces, cities shall be the same to that at the Banking Operation Department of the State Bank

2. Repayment of mortgage loan

- Upon the maturity of the debt, credit institutions shall make payment for both principal and interest of the mortgage loan to the State Bank and take back the valuable papers.

 Where, at the maturity of the loan principal and interest, any credit institution fails to make payment and its loan is not rescheduled by the State Bank, then the State Bank shall take some measures for compulsory collection of loan principal and interest as follows:

+ To deduct from the deposit account of that credit institution at the State Bank for debt collection;

+ To collect loan principal and interest from other sources (if any) of that credit institution.

- In case after making deduction from the deposit account for collection of loan principal and interest and debt collection from other sources of the credit institution, it is not sufficient to collect the full debt, the State Bank shall classify the outstanding debt as overdue and apply overdue interest rate. The State Bank shall continue to deduct from the credit institution’s deposit account for debt collection or may sell or make payment with the issuer of the mortgaged valuable papers in the monetary market for collecting the overdue loan principal and interest of the borrowing credit institution.

Thuy Tram

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