Government discusses institutional breakthrough to handle weak banks

Prime Minister Nguyen Xuan Phuc said that perfecting regulations and developing separate laws on restructuring credit institutions and handling bad debts is very necessary and urgent.

On April 11, at the Government headquarters, Prime Minister Nguyen Xuan Phuc chaired a Government meeting on law-making, discussing the draft Law on Supporting the Restructuring of Credit Institutions and Handling Bad Debts and the proposed plan to amend and supplement laws related to the Law on Planning.

Prime Minister Nguyen Xuan Phuc chairs a Government meeting on law-making. - Photo: VGP/Nhat Bac

According to the report of the State Bank of Vietnam (SBV), after 4 years of implementing the Project on restructuring the system of credit institutions (CIs) in the period of 2011-2015 (issued with Decision No. 254/QD-TTg dated March 1, 2012), up to now, the restructuring of the CI system has basically achieved certain results.

Weak credit institutions have been identified and restructured, preventing uncontrolled credit institution collapse, ensuring the stability and safety of the credit institution system, and ensuring the safety of State and people's assets; credit institutions have actively improved asset quality, controlled credit quality and handled bad debts, especially efforts to handle bad debts themselves.

The summary process shows that the main cause of the shortcomings and limitations that still exist in the process of restructuring the banking system is due to the weak legal framework, mechanisms and policies on handling weak credit institutions and incomplete handling of bad debts.

Specifically, the regulations on the authority of the Government and the State Bank when dealing with weak credit institutions are still inadequate. The process of recovering and restructuring weak credit institutions is still extremely difficult due to the lack of a legal basis to apply solutions appropriate to the current situation of weak credit institutions; there is a lack of effective financial support solutions to recover weak credit institutions.

Legal regulations on handling secured assets to recover debt still have many shortcomings that limit the progress and effectiveness of debt handling such as problems with asset seizure, rights to receive secured assets such as land use rights, assets attached to land; enforcement fees, and seizure of secured assets...

“Most legal problems are related to regulations in the Laws, so to thoroughly handle these shortcomings, difficulties and problems, it is necessary to issue a separate Law to handle difficulties and problems in the process of restructuring the weak credit institution system and handling bad debts,” said the State Bank of Vietnam.

According to the State Bank, the issuance of separate laws on restructuring credit institutions and handling bad debts is an urgent requirement to create a legal framework for handling weak credit institutions and bad debts, and institutionalize the policies of the Party and State.

The promulgation of the Law on restructuring credit institutions and handling bad debts is also an urgent practical requirement to effectively and feasibly implement the restructuring of credit institutions associated with handling bad debts, contributing to creating a foundation for the sustainable, safe and effective development of the credit institution system, protecting the legitimate rights and interests of depositors.

Governor of the State Bank of Vietnam Le Minh Hung speaks at the meeting. - Photo: VGP/Nhat Bac

After listening to the opinions of Government members, representatives of National Assembly Committees, and the National Financial Supervision Committee, concluding on this content, Prime Minister Nguyen Xuan Phuc said that completing regulations on this issue is very necessary and urgent, and if delayed, it will affect the process of socio-economic management.

The Prime Minister agreed with the plan to draft two documents to submit to the National Assembly, including a draft Resolution of the National Assembly on handling bad debts and a draft law amending many laws (the Law on Credit Institutions and related laws). These two documents must be submitted at the same time.

Amending 32 laws related to the Law on Planning at the same time

Regarding the proposed amendments and supplements to the laws related to the Law on Planning, the Ministry of Planning and Investment said that after reviewing, there are up to 44 related laws, of which 12 are in the process of being amended. Of the remaining 32 laws, 28 laws have some articles amended and 4 laws (Law on Water Resources, Law on Land, Law on Construction and Law on Urban Planning) need more amendments.

According to option 1, the Ministry of Planning and Investment proposes to amend 28 laws first, and the remaining 4 laws to be amended later. According to option 2, it is necessary to delay the time to amend 32 laws at the same time.

Concluding this issue, Prime Minister Nguyen Xuan Phuc proposed option 2, according to which when submitting the Planning Law at the upcoming National Assembly session, it will be proposed to include a list of 32 laws that need to be amended in the appendix, then include the content of amending these 32 laws in the upcoming law and ordinance building program.

“Implementing option 2 is to have time for thorough research, but must ensure completion before the Law on Planning comes into effect and the amendment process must be strict, democratic and public,” the Prime Minister requested.

The Prime Minister stated that at the session starting on May 22, the National Assembly will consider and discuss many reports and bills. Therefore, the Prime Minister assigned the Government Office and ministries to closely coordinate in preparing relevant reports and submissions without delay.

According to baochinhphu.vn