HANOI NATIONAL UNIVERSITY
FACULTY OF LAW
NGUYEN THI THU HUONG
LAW ON HANDLING OVERDUE DEBT IN LENDING ACTIVITIES OF COMMERCIAL BANKS IN VIETNAM
Major : Economic Law
Code : 60 38 50
MASTER'S THESIS SUMMARY IN LAW
Hanoi – 2012
Project completed
at Faculty of Law - Hanoi National University
Scientific supervisor : Dr. Nguyen Thi Lan Huong
Objection 1 :
Objection 2 :
The thesis was defended at the Thesis Evaluation Council, meeting at the Faculty of Law - Vietnam National University, Hanoi.
At ..... o'clock ....., on ..... day ..... month ..... year 2012
The thesis can be found at
Documentation Center of Faculty of Law - Hanoi National University Documentation Center - Library of Hanoi National University
INDEX
Content | Page | |
Cover page | ||
Promise | ||
Thanks | ||
Index | ||
List of abbreviations | ||
INTRODUCTION | 1 | |
Chapter 1: THEORETICAL ISSUES ON HANDLING OVERDUE DEBT AND LAW ON HANDLING OVERDUE DEBT IN LENDING ACTIVITIES OF COMMERCIAL BANKS | 6 | |
1.1. | Theoretical issues on overdue debt and lending activities of commercial banks | 6 |
1.1.1. | Concept of lending and lending activities of commercial banks | 6 |
1.1.2. | The concept of overdue debt in lending activities of commercial banks | 10 |
1.1.3. | Causes of overdue debt | 15 |
1.1.3.1. | Overdue debt due to objective reasons | 15 |
1.1.3.2. | Overdue debt due to subjective reasons | 18 |
1.1.4. | Classification of overdue debt in lending activities of commercial banks | 20 |
1.1.5. | The impact of overdue debt on lending activities of commercial banks | 22 |
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Classification and Handling of Overdue Debt -
Law on bank lending activities and environmental issues - 5 -
Law on bank lending activities and environmental issues - 6 -
Solutions to Improve Credit Risk Management Capacity, Specialize Bad Debt Handling Activities -
Law on Handling Assets Formed from Loan Capital
1.1.6. Principles for handling overdue debt 24
1.1.7. Measures to handle overdue debt in lending activities of 27 commercial banks
1.2. Overview of the law on handling overdue debt 30
Chapter 2: LEGAL STATUS ON HANDLING OVERDUE DEBT IN LENDING ACTIVITIES OF COMMERCIAL BANKS IN VIETNAM
2.1. Basis for determining overdue debt in lending activities of 34 commercial banks in Vietnam
2.2. Management and limitation of overdue debt in lending activities of 38 commercial banks in Vietnam
2.3. Measures to handle overdue debt in lending activities of commercial banks 44
2.4. Procedures for handling overdue debts in lending activities of 46 commercial banks
2.4.1. Handling overdue debt in some cases 46
2.4.2. Steps in handling secured assets 54
2.5. Purchase of overdue debts of commercial banks by debt trading company 58
2.6. Management and supervision of overdue debt handling by the State Bank 65
2.7. Some issues arising from the practical application of the law on handling overdue debts in commercial bank lending activities
2.8. Experience of some countries in handling overdue debt in lending activities of commercial banks and lessons learned for the country
Vietnam
Chapter 3: SOME RECOMMENDATIONS ON RESTRICTING AND HANDLING 82 OVERDUE DEBT IN COMMERCIAL BANK LENDING ACTIVITIES
3.1. Overdue debt situation in lending activities of 82 commercial banks in Vietnam
3.2. Orientation to improve the law on handling overdue debt in lending activities of commercial banks in Vietnam
3.3. Some solutions to improve the efficiency of handling overdue debts in lending activities of Vietnamese commercial banks
3.3.1. Follow the correct credit procedures when lending 86
3.3.2. Check and supervise loan customers, monitor possible risks 86 for loans
3.3.3. Amendment of regulations on debt classification 86
3.3.4. Overdue debt interest rate 87
3.3.5. About the loan extension period 88
3.3.6. On the statute of limitations for filing a lawsuit 88
3.3.7. Amendment of legal provisions on loan guarantees 89
3.3.8. Building and perfecting the debt trading market 90
3.3.9. Perfecting the law on debt management and asset exploitation companies under commercial banks
3.3.10. Additional regulations on measures to handle overdue debts 93
3.3.11. Regulations on compulsory credit insurance obligations 93
GENERAL CONCLUSION 96
REFERENCES 99
LIST OF ABBREVIATIONS
AMC Asset Management and Debt Management Company under commercial bank
Export Credit Insurance Export Credit Insurance
CIC Credit Information Center
DATC Company buys and sells debts and outstanding assets of enterprises
Enterprise
Bank
State Bank of Vietnam
Commercial Bank Commercial Bank
Central Bank Central Bank
NQH Overdue Debt
Credit institutions
INTRODUCTION
1. Reason for choosing the topic
The Law on Banking has an important position in the field of economic law and is an indispensable part of the market economy. The Law on Credit Institutions 2010 was passed by the 12th National Assembly of the Socialist Republic of Vietnam at the 7th session on June 16, 2010, effective from January 1, 2010. The promulgation of the Law on Credit Institutions 2010 is the result of a collective of intellectuals, absorbing practical lessons and good experiences from countries in the region and around the world.
We know that banking business carries many potential risks, risks can always occur at any time. Accepting risks in business is an inevitable rule of merchants since ancient times, this is a parallel rule "the higher the profit, the higher the risk". In a market economy, risks in business are inevitable, from the perspective of a business organization, commercial banks are also affected and influenced by the primary environment and the secondary environment. The relationship between these two environments revolves around the core "Opportunities and challenges for economic organizations" or environmental risks. In a global competitive environment, the trend of regional consolidation is increasingly developing, opportunities will appear, which is an opportunity for banks to grow. However, there are also coexisting huge risks from the economic, social, political, legal and competitive environment that greatly affect the business activities of banks, especially risks in banking business activities that have chain reactions, spread and increasingly have complex manifestations. Risks in banking business activities in general and credit risks in particular are a potential category, it can occur at any time and distort and upset the results of banking business activities. Therefore, the legal system on banking, especially the issue of handling NQH in banking business activities, plays an important role and is a concern.
The top priority is not only in theory but also given special attention in the practical activities of commercial banks.
Lending activities always have potential risks because this is a factor associated with business activities in general. Among these risks, credit risk is the most serious, because if the bank cannot control it, it will lead to unpredictable consequences, which is the collapse of the entire banking system, affecting the entire economy. Therefore, here the author only studies and analyzes the legal regulations on NQH to deeply understand this situation. From there, it is possible to propose some remedial measures to make the commercial banking system operate more healthily and effectively, contributing to economic growth and development in the current economic integration conditions.
The author chose this topic to study with the desire to systematically study the provisions of the banking law, especially on the practice of handling NQH at Vietnamese commercial banks, thereby drawing out the positive aspects as well as the limitations and at the same time being able to make proposals and recommendations to improve the current legal regulations. In the conditions of developing the country's economy and in parallel with the integration into the international economy, especially when we have joined the World Trade Organization WTO, the issue of continuing to improve the business environment and legal regulations is a very important issue. Researching this issue will contribute to achieving the above goal.
2. Research status and theoretical and practical significance of the topic
Currently in our country, there are many research projects such as ministerial and departmental level topics and functional agencies have organized seminars to mention or study some aspects of the law on resolving NQH as well as the situation of handling and resolving the above debts, each scientist has a different approach to this topic. For example, the article "Discussion on solutions to handle bad debts in the Vietnamese commercial banking system" by Dr. Le Quoc Ly, Ministry of Planning and Investment. "Resolving bad debts and preventing bad debts from arising" by Tran Dinh Dinh, Deputy General Director of the Bank for Agriculture and Rural Development