The Law on Credit Institutions 2024 (LCI 2024) introduces significant changes affecting Vietnam's banking sector, building on previous amendments. One of the key updates is the introduction of security agent operations, though the law lacks clarity on the nature and functions of security agents. Additionally, the classification of letters of credit has shifted, now recognized as a form of credit extension rather than a payment service. The law also expands the criteria for early intervention in credit institutions, lowering thresholds for intervention based on financial performance and solvency. Institutions must now prepare and approve a remedy plan for potential early intervention, even if they are not currently facing issues. Special control measures have been refined, targeting institutions that fail to comply with remedy plans or show signs of financial distress. Furthermore, LCI 2024 codifies provisions related to bad debt handling, with notable changes in asset seizure and prioritization of court fees. Transition provisions ensure existing institutions can continue operations without needing to reapply for licenses, while allowing certain contracts to remain valid until mid-2025.
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