Since 1 July 2024, the Law on Credit Institutions 2024 (Law No. 32/2024/QH15, passed by the National Assembly on 18 January 2024) has replaced the 2010 Law on Credit Institutions, creating a new legal framework for all banking activity in Vietnam. For borrowing businesses, the new law changes not only how banks lend but also adds new shields protecting borrowers.
This article summarizes the 8 most important changes in the Law on Credit Institutions 2024 (including amendments under Law No. 96/2025/QH15, effective 15 October 2025) that every business borrowing from banks should know.
1. Ban on “bundled” sales: no forced insurance with loans
This is the change businesses care about most. Clause 5, Article 15 of the Law on Credit Institutions 2024 strictly prohibits credit institutions, foreign bank branches, their managers, executives and employees from tying the sale of non-compulsory insurance products to the provision of banking products and services in any form.
In practice, a bank may not force — or subtly pressure — a business to buy life insurance or non-compulsory loan insurance as a condition for disbursement. Businesses facing this situation may refuse and report it to the State Bank of Vietnam.
2. Ownership transparency: shareholders from 1% of charter capital must disclose
Clause 2, Article 49 requires any shareholder owning 1% or more of a credit institution’s charter capital to provide the institution with: full name, personal identification number, information on related persons, and the number and ratio of shares held by themselves and their related persons.
The rule targets cross-ownership and “backyard” lending — banks favoring affiliated businesses. For independent borrowers, this is good news: the credit market becomes more transparent and fair.
3. Tighter lending to related persons
The 2024 Law tightens rules on cases where credit may not be extended (Article 134) and credit extension limits (Article 135) for customers and related persons of credit institutions. Businesses with ownership or management ties to a bank should review their position: existing and planned borrowings may face stricter constraints than before.
4. Banks may seize collateral of bad debts without suing
Article 198a (added by Law No. 96/2025/QH15, effective 15 October 2025) allows credit institutions, foreign bank branches and debt-trading organizations to seize collateral securing bad debts when all conditions are met: a collateral-disposal event under Article 299 of the Civil Code has occurred; the security contract contains a seizure agreement; the security interest is effective against third parties; the asset is not under dispute, distraint or interim urgent measures; and information has been publicized (at least 15 days before seizure for real estate).
Note: this right applies only to bad debts and only when the conditions are satisfied — not every overdue loan allows the bank to seize assets on its own. Businesses should read the collateral-disposal clauses of their credit contracts carefully before signing.
5. Early intervention and compulsory transfer of weak credit institutions
Chapter IX (Articles 156–161) provides for early intervention: the State Bank of Vietnam may decide on early intervention when a credit institution falls into distress, together with a compulsory transfer mechanism. For businesses depositing or borrowing at a weak bank, this framework protects their interests better than the old regime, under which resolving weak banks was protracted and opaque.
6. Faster bad-debt resolution: transfer of real-estate projects used as collateral
Clause 3, Article 200 allows credit institutions to transfer all or part of a real-estate project used as collateral to recover debts under the Law on Real Estate Business, without applying the law’s developer-eligibility conditions to the transferring party. This writes into statute a mechanism previously found in Resolution 42/2017/QH14, helping collateral of defaulting businesses be resolved conclusively instead of hanging for years.
7. Legal framework for digital banking and electronic transactions
The 2024 Law adds provisions on technology application and adaptation to electronic transactions in credit-institution operations — from electronic customer identification to online credit contracts. Businesses borrowing through digital channels should note the legal validity of electronic contracts and information-security obligations.
8. Stronger protection of borrowers’ rights
Running through the new law is stronger publicity and transparency duties of credit institutions toward customers: disclosing interest rates, fees and lending conditions; prohibiting unfair competition and competition-restricting conduct harming the lawful rights of organizations and individuals (Article 15). Businesses should ask banks for full rate sheets, fee schedules and contract terms in writing before signing.
Frequently asked questions
Q: The bank requires buying insurance before lending — what should the business do?
A: Since 1 July 2024, tying non-compulsory insurance sales to loans is prohibited (Clause 5, Article 15). The business may refuse and may report the conduct to the State Bank of Vietnam.
Q: When does the new collateral-seizure rule apply?
A: From 15 October 2025, under Article 198a added by Law No. 96/2025/QH15, and only for bad debts meeting all statutory conditions.
Q: A business is borrowing from a weak bank — is it affected?
A: The early-intervention and compulsory-transfer mechanism (Chapter IX) is designed to protect depositors and borrowers. Businesses should follow State Bank of Vietnam announcements and stay in contact with the bank.
Does your business need a review of its credit contracts or help negotiating new loan terms under the Law on Credit Institutions 2024? Contact us for advice.
This article was prepared by the FLAW AI Legal Council. Its content is pending QA Council review before submission for approval; the information is for reference only and does not replace legal advice for your specific case.
