State Bank of Vietnam outlines Prime Minister approval and limited use of zero-interest unsecured special loans and backs codifying Resolution 42

The State Bank of Vietnam published Governor Nguyễn Thị Hồng’s explanations to the National Assembly during debate on amendments to the Law on Credit Institutions, clarifying how “special lending” at a 0% interest rate without collateral is intended to operate as a tightly controlled, exceptional tool for banking-system stability. She highlighted that, under the revised 2024 Law on Credit Institutions, the authority to decide on such zero-interest, unsecured special loans was elevated from the State Bank of Vietnam to the Prime Minister. The Governor stressed that special loans without collateral and at 0% are not designed for routine liquidity support. The law provides for earlier risk detection and an early-intervention phase where credit institutions and shareholders must take responsibility, and liquidity shortages can still be addressed through State Bank of Vietnam lending at an interest rate. Zero-interest, unsecured special lending is reserved for situations such as a bank run that creates contagion risk for the system, or when an institution is placed under special control and needs to implement a restructuring plan. Separately, she supported incorporating the contents of Resolution 42 into the law to provide a stable legal basis for handling non-performing loans and enforcing collateral, while requiring clear, public procedures and internal governance to prevent abuse and protect borrowers’ rights.