Handling cross-ownership, manipulation, and domination of credit institutions

On the morning of January 18, 2024, continuing the 5th Extraordinary Session of the 15th National Assembly, the National Assembly voted to pass the Law on Credit Institutions (amended).

Reporting on the reception, explanation and revision of the draft law, Chairman of the Economic Committee Vu Hong Thanh said that this is a law project with many in-depth contents, having a direct impact on financial and monetary policies. currency, macroeconomic stability, the adoption and completion of the draft law were carried out carefully and cautiously, in accordance with guidelines, policies and the 2013 Constitution.

Up to now, the draft law has fully met the proposed requirements, ensuring the safety, health, transparency, stability and sustainability of the banking system and credit institutions, developing in accordance with the principles of socialist-oriented market principles and popular international practices and standards, improving competitiveness and continuing to promote its role as an important capital channel for the economy.

Delegates clicked to pass the Law on Credit Organizations (amended).
Delegates pressed the button to pass the Law on Credit Institutions (amended).

Regarding a number of regulations related to handling cross-ownership, manipulation, and domination of credit institutions (in Clause 24, Article 4, Article 63, Article 136), Mr. Vu Hong Thanh said, there are suggestions to regulate Identify related persons appropriate to the type of people’s credit fund.

Receiving comments from National Assembly delegates, the draft Law stipulates that the scope of related people for people’s credit funds is narrower than other types of credit institutions and is shown in Point h, Clause 24, Article 4 of the draft Law.

There are opinions that the measures to reduce the share ownership ratio and credit limit have not solved the problem of cross-ownership, manipulation, and domination as in recent times. The important thing is to monitor the reality. exam.

Regarding insurance agency activities of credit institutions, the Law supplements regulations on prohibited acts as follows: Credit institutions, foreign bank branches, managers, executives, employees of Credit institutions and foreign bank branches associate the sale of optional insurance products with the provision of banking products and services in all forms. Assign the Governor of the State Bank to regulate the scope of insurance agency activities of credit institutions to suit the nature and activities of the banking sector.

The National Assembly Standing Committee agreed with the opinions of National Assembly delegates, in addition to stipulating the reduction of share ownership ratio, credit limit and a number of regulations in organization, administration, and management, The draft Law has added regulations on providing and publicly disclosing information (Article 49), in which shareholders owning 01% or more of the charter capital of a credit institution must provide information. , credit institutions must publicly disclose information about these shareholders to ensure transparency.

The National Assembly Standing Committee proposed that the Government direct the State Bank to improve the effectiveness of coordination with relevant ministries and branches, and at the same time have solutions to increase the effectiveness of inspection, supervision, and supervision. ensuring the highest limitation of cross-ownership, manipulation, and domination of credit institutions.

Regarding insurance agency activities of credit institutions (in Article 5, Article 113), there are suggestions to study and legislate to have sanctions to prevent and strictly handle violations by employees. Inadequate consultation from credit institutions causes some customers to confuse insurance products and banking products or request to buy insurance attached to loans when they need to borrow capital from the bank. Some opinions suggest that commercial banks should not be allowed to cooperate in selling insurance; Prohibit cross-selling of life insurance.

Mr. Thanh said that receiving comments from National Assembly delegates, the National Assembly Standing Committee revised the draft Law in the direction of adding regulations on prohibited acts as follows: Credit institutions, foreign bank branches In addition, managers, executives, and employees of credit institutions and foreign bank branches associate the sale of optional insurance products with the provision of banking products and services in any form.

At the same time, assign the Governor of the State Bank to regulate the scope of insurance agency activities of credit institutions to suit the nature and activities of the banking sector.

Regarding measures to support credit institutions in early intervention, there are opinions that suggest careful consideration of points a and b, Clause 2, Article 159 of the draft Law, which stipulates that credit institutions must clearly explain the amount of risk provisions. has not yet been appropriated, and the amount of interest receivable that must be divested has not been allocated in the financial statements, including the financial statements publicly listed in the draft Law.

According to the Standing Committee of the National Assembly, Article 154 of the draft Law stipulates the disclosure of financial reports according to the provisions of law, except in cases where credit institutions are under special control.

Therefore, based on the Government’s proposal, the National Assembly Standing Committee accepted the opinions of National Assembly delegates in the direction of regulations on unallocated risk provisions and unallocated interest receivables. as in Points a and b, Clause 2, Article 159 of the draft Law.

The National Assembly Standing Committee requests that the Government during the implementation of the Law direct the State Bank to take responsibility and have appropriate solutions to clearly understand the financial situation of these credit institutions when applied. Use support mechanisms to ensure the safety of the credit institution system.

Regarding the handling of bad debts and collateral (in Chapter concluded before the effective date of this Law.

Receiving comments from National Assembly delegates, the National Assembly Standing Committee revised regulations on transfer of all or part of real estate projects as collateral to recover debt in Clause 3, Article 200 and on transfer of all or part of real estate projects received as security assets before the effective date of this Law to recover debts in Clause 15, Article 210 of the draft Law.

The draft Law, after being received and revised, includes 15 chapters and 210 articles. The Law takes effect from July 1, 2024, except for the provisions in Clause 2 of this Article. Clause 3, Article 200 and Clause 15, Article 210 of this Law take effect from January 1, 2025.

The National Assembly Standing Committee agreed with the proposal of the Drafting Agency; Request the Government to urgently develop and promulgate guiding documents, ensuring that they take effect concurrently with the Law.

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