According to Resolution 36/ND-CP of the Government of Vietnam's session on special topics regarding legal development in April 2017, the Government of Vietnam agreed on the necessity and urgency of promptly promulgating a specialized legal framework to restructure system of financially weak credit institutions associated with settlement of bad debts, as well as on the promulgation of the Law on Planning.
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No mandatory purchase of zero-value assets with weak banks
Regarding the draft Law on restructuring credit institutions and handling bad debts, the Government of Vietnam fundamentally agrees with the content of the draft regulations on restructuring weak credit institutions and handling bad debts as presented by the State Bank of Vietnam. The State Bank of Vietnam is to revise and complete the draft Resolution of the National Assembly on handling bad debts and the draft law amending and supplementing a number of articles of the Law on Credit Institutions and other related laws. Some specific issues are directed as follows:
- Scope of the Resolution on handling bad debts: the handling of bad debts and collateral of bad debts; allows the Debt and Asset Trading Corporation (DATC) and other enterprises with debt trading functions to equally participate in the process of handling bad debts.
- Mandatory transfer measures: The State does not apply the mandatory purchase of zero-value assets. In cases where credit institutions are under special control after implementing a recovery plan and cannot recover, priority should be given to transferring to new investors or to credit institutions with good financial capacity. Individuals and organizations causing bad debts and capital, asset losses... of the credit institution must still bear responsibility and obligations for the consequences they cause. The Government of Vietnam decides on the mandatory transfer of credit institutions under special control. If transfer is not possible and bankruptcy cannot be declared, activities will be gradually narrowed to handle, dissolve, and terminate operations.
- Specific regulations on the right to seize collateral of bad debts of credit institutions, foreign bank branches, and the Vietnam Asset Management Company (VAMC) to ensure the legitimate creditor rights of credit institutions, foreign bank branches, and VAMC.
- Tax and fee mechanisms in handling collateral of bad debts of credit institutions, foreign bank branches, VAMC, DATC...: provisions for exemption from enforcement fees; exemption from taxes and fees regarding asset transfer during the consolidation, merger, sale of all capital contributions, shares of credit institutions under special control, and mechanisms to prioritize the payment of secured party's debts before tax obligations of the secured party to support the handling of bad debts of credit institutions, foreign bank branches, VAMC...
- Authority in restructuring credit institutions under special control: clearly defining the authority of the Government of Vietnam, the Prime Minister of the Government of Vietnam, and the State Bank in restructuring credit institutions under special control, with the Government of Vietnam deciding on the bankruptcy plan, mandatory transfer plan of credit institutions under special control;
- Immunity for participants implementing the restructuring plan of credit institutions under special control: strictly regulated to grant immunity only for the "results" of the implementation of the restructuring plan of credit institutions under special control when the restructuring plan does not achieve the objective due to objective reasons and these individuals have fulfilled their responsibilities. In cases of law violations, punitive measures will still be applied as per current law.
- Full provision on resources used in the process of restructuring weak credit institutions and handling bad debts, including the use of other lawful resources as prescribed by law. If using state resources, including cases of refinancing loans, special loans with interest rates lower than normal refinancing loan rates, the specific cases must be clarified and approved by the Government of Vietnam and the Prime Minister of the Government of Vietnam.
- Accrued interest allocation applies only to accrued interest that must be reversed recorded up to December 31, 2016, according to the restructuring plan approved by the Prime Minister of the Government of Vietnam.
Issuance of the list of laws with provisions on planning that need amendment and supplementation
The Planning Law project aims to make fundamental changes in the work of planning and managing the planning system; planning the development space, creating development momentum across the entire national territory. The Government of Vietnam agrees with the proposal to the National Assembly to issue with the Planning Law an appendix listing the laws with provisions on planning that need amendment, supplementation to ensure synchronization with the Planning Law;
More details can be found in Resolution 36/NQ-CP issued on April 15, 2017.
