Vietnam proposes law amendments to boost bad debt handling

The State Bank of Vietnam (SBV) released a draft law amending the Law on Credit Institutions to improve bad debt management and strengthen banking system safety. The draft incorporates provisions from Resolution No. 42/2017/QH14, which expired at the end of 2024, removing obstacles in handling non-performing loans and collateral from real estate projects. The SBV will gain authority to approve special zero-interest loans, a decision currently reserved for the Prime Minister, to ensure timely and effective credit support. Rising bad debts, influenced by slow market recoveries and expired regulations, are pressuring Vietnam’s banking sector amid ambitious 2025 economic targets. The amendments aim to unblock capital, support business credit access, and align Vietnam’s laws with international treaties.