Vietnam passes amended credit institution law with cross ownership adjustments

The National Assembly, Vietnam’s highest legislative body, passed the amended Law on Credit Institutions Thursday with 91.28% of votes in favor.

The law with 15 chapters and 210 articles was approved at the closing session of the National Assembly's fifth extraordinary meeting. The law, taking effect July 1 this year, is expected to have direct positive impacts on the macroeconomy as well as monetary and fiscal policies.

However, clause 15 of Article 210 regarding the use of land lots in full or in part as collateral for loans will only take effect January 1, 2025.

Cross ownership

Regarding the ineffectiveness of the limit placed on share ownership and credit growth, Vu Hong Thanh, head of the National Assembly’s Economic Committee, said the key solution was to ensure proper implementation of the law.

Article 49 of the amended law requires credit institutions to publicly disclose information about stakeholders with at least 1% stake.

About early intervention at credit institutions, sub-clauses a and b of clause 2, Article 159 stipulate that financial statements must feature explanation of risk provisions and receivable interests. Article 161 requires the State Bank of Vietnam to issue documents for ending early interventions.

Foreign banks can’t sell insurance

The new law dealing with the operation of insurance agencies under credit institutions forbids branches of foreign banks and credit institutions and its staff from selling optional insurance packages attached to banking services.

It reqquires the Governor of the State Bank of Vietnam to issue detailed regulations on the operation of insurance agencies under credit institutions.