The 2024 Law on Credit institutions on the handling of non-performing loans and collateral of non-performing loans

Abstract

Non-performing loan (NPL) and the handling of NPL are objective phenomena that naturally developed together with credit-granting activities of credit institutions and can affect lenders, customers, and the whole society. In reality, the scale of NPL increased abnormally, while the legal provisions on the handling of NPL are still rudimentary and have not met the requirements of the more and more complex reality. Therefore, the law needs to change to effectively regulate NPL handling activities of credit institutions. This paper comments on the legal provisions on NPL handling as provided in the Law on Credit Institutions No. 24/2024/QH15 of 2024 (hereinafter referred to as the 2024 Law on Credit Institutions) by comparing the 2024 Law on Credit Institutions and Resolution No. 42/2017/QH14 dated 21 June 2017 of the National Assembly on pilot NPL handling of credit institutions. Thereby, the article highlights the theoretical basis for assessment and the implementation of provisions on NPL handling; basic content on NPL handling as provided in the 2024 Law on Credit Institutions; five general comments on these provisions; and six detailed comments on the 2024 Law on Credit Institutions.