"Whistleblowing" on the State Bank's regulation due to its unlawful content

The head of the Legal Violation Document Inspection Department (Ministry of Justice) has issued a "whistleblowing" document on Circular No. 06/2023 of the State Bank due to its unlawful content

Circular No. 06/2023 of the Governor of the State Bank of Vietnam amends and supplements certain provisions of Circular No. 39/2016, regulating lending activities of credit institutions, branches of foreign banks for customers immediately upon issuance on June 28. It has faced numerous divergent opinions from the public, primarily coming from real estate associations and enterprises.

The head of the Legal Document Inspection Department (Ministry of Justice) stated that at point c, Clause 6, Article 1 of Circular No. 06, the State Bank of Vietnam (SBV) requires credit institutions to "take measures to freeze the disbursed loan amount at the lending credit institution as stipulated by law, the agreement of the parties in the loan agreement until the termination of the secured obligation."

However, the legal provisions regarding security measures stipulated in the Civil Code of 2015, Decree No. 21/2021 of the Government only regulate depositing money into a frozen account at a credit institution to ensure the performance of obligations in the case of a pledged fund. There is no provision for freezing the disbursed loan amount at the lending credit institution as stated in Circular No. 06.

Furthermore, Clause 2, Article 12 of Decree No. 101/2012 on non-cash payments specifies that a payment account can be partially or entirely frozen in three cases: when there is no decision or written request from the competent authority; when the payment service provider detects errors or mistakes in fund transfers; when there is a dispute among joint account holders.

The Legal Document Inspection Department asserts that the State Bank of Vietnam's regulation on freezing the disbursed loan amount at the lending credit institution to ensure the performance of obligations is not in line with the provisions of the Civil Code and Decree 101/2012. This regulation also limits the right to choose security measures in the civil relationship between the relevant parties.

Therefore, this agency recommends that the State Bank of Vietnam urgently address these legal violations and review the implementation of Circular No. 06 to take corrective actions for the consequences caused by the implementation of unlawful provisions (if any).

The State Bank of Vietnam should review and address the responsibility of the agencies and individuals who provided advice in drafting and issuing documents with unlawful content according to current regulations.

The Legal Document Inspection Department requests the State Bank of Vietnam to report on the results of implementing the above-mentioned issues, sending the report to the Ministry of Justice within 30 days from the date of receiving the document inspection conclusion in accordance with the Government's regulations.

For more information, please contact:

Hoang Pham (James) / Managing Partner at: [email protected]

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