You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

June 26, 2024

Vietnam’s New Law on Credit Institutions Introduces Key Changes to Banking Operations

Subscribe to Updates

Vietnam’s new Law on Credit Institutions No. 32/2024/QH15, passed by the National Assembly on January 18, 2024 (“New LCI”), will take effect on July 1, 2024 (except for some clauses regarding the transfer of collateral, which will take delayed effect on January 1, 2025). The New LCI will replace the current Law on Credit Institutions issued in 2010 and amended in 2017, and aims to strengthen banking operations and enhance transparency in this sector.

Some key changes to banking operations introduced by the New LCI are set out below.

Lowering Credit Limits

Article 136 of the New LCI stipulates a gradual reduction of credit limits available to bank clients, to help credit institutions diversify their credit portfolios and minimize overdue risks. There are more stringent requirements for certain persons related to the bank (e.g., managers, auditors, and shareholders) and exemptions for special cases (e.g., approval by the prime minister, entrusted loans).

Specifically, the total balance of credit extended by commercial banks, cooperative banks, foreign bank branches, people’s credit funds, and microfinance institutions to a single client or to a client and related persons of that client will be reduced in stages from the current 15% of the credit institution’s equity capital (vốn tự có) for a single client and 25% for a client and related persons, to 10% for a single client and 15% for a client and related persons by 2029.

For non-bank credit institutions (i.e., general and specialized finance companies), the total balance of credit extended to a single client must not exceed 15% (down from 25%) of its equity capital, and the total balance of credit extended to a single client and related persons must not exceed 25% (down from 50%) of its equity capital.

It is worth noting that the above credit limits do not apply to (1) cases of entrusted loans for which the entrusted credit institution or foreign bank branch does not bear risk, (2) cases where the borrower is another credit institution or foreign bank branch, or (3) cases where the prime minister approves a higher credit limit.

Restricting Bancassurance Activities

Article 15.5 of the New LCI strictly prohibits credit institutions, foreign bank branches, and their managers, executives, and employees from combining the purchase of non-obligatory insurance products with the provision of banking products and services in any form.

This is a new regulation in the New LCI that emphasizes the commitment of the State Bank of Vietnam (SBV) in addressing the past problem of clients being forced to purchase insurance in order to be granted loans, thereby building client trust in both the banking and insurance sectors.

Recognizing Security Agent Services

Article 114.2(dd) of the New LCI explicitly regulates a new service to be provided by commercial banks, which is the provision of third-party security agent services to lenders who are international financial institutions, domestic and foreign credit institutions, and foreign bank branches.

This addresses a past issue in which local commercial banks were not allowed to be independent security agents, but would have to be a lender in a syndicated loan to act as a security agent for the other lenders, which could expose the bank to more risk. Under the New LCI, the local bank is no longer required to be a co-lender in a syndicated loan to act as the security agent for foreign lenders.

Further details on how banks can provide such security agent services may be provided by the SBV in the future.

Disposal of Real Estate Collateral

To facilitate debt recovery, Article 200 of the New LCI grants credit institutions, foreign bank branches, debt management companies, and asset management companies the right to transfer all or part of real estate projects that are secured assets to recover debts in accordance with the provisions of the Law on Real Estate Business and other relevant laws, without applying the conditions normally applicable to the transferor.

This regulation is expected to pave the way for banks to have more options to dispose of large projects mired in legal problems, thereby helping both the bank and the real estate enterprises to generate cash flow and reduce debt—this is especially true for banks with high real estate lending rates.

However, this regulation will only apply from January 1, 2025.

Outlook

Given the stringent requirements, the New LCI is anticipated to have a profound impact on banking operations in Vietnam, and will require changes from credit institutions to ensure their compliance status.

In addition, as the New LCI will take effect soon, a decree guiding the New LCI in detail should be in the final stages of adoption. Therefore, stakeholders are encouraged to stay informed and updated on further legal developments.

Related Professionals

Practices

Banking and Finance

Location

RELATED INSIGHTS​ 

January 9, 2026
On January 7, 2026, the Central Bank of Myanmar (CBM) announced a further relaxation of foreign exchange regulations through Notification No. 2/2026, with an effective date of January 1, 2026. This notification reduces the mandatory conversion requirement for exporters’ earnings in foreign currency into Myanmar kyat (MMK). Under the new notification, exporters are required to convert only 15 percent of their foreign currency export earnings into MMK at official CBM reference exchange rates, down from the previous required minimum conversion level of 25 percent. The adjustment provides exporters with more flexibility to manage foreign currency, improving liquidity for international transactions and reducing cash flow pressure. However, companies must still comply with the foreign currency conversion procedures and timelines set out in the CBM’s Notification No. 12/2022.
Read More
January 6, 2026
Among the eight implementing decrees issued on December 18, 2025, to provide the legal framework for Vietnam’s new International Financial Centers (IFC), Decree No. 323/2025/ND‑CP serves the core function of officially establishing the IFC as a unified entity in two locations—Ho Chi Minh City and Da Nang—and setting out a plan for its development and governance. The key contents of the decree are summarized below. Location and Focus of IFCs The Vietnam International Financial Center in Ho Chi Minh City (VIFC‑HCMC) and the Vietnam International Financial Center in Da Nang (VIFC‑DN) are designed to attract capital, fintech, and international market participants under a dedicated regulatory framework. The IFCs will host functional zones for financial trading, banking, securities and commodities exchanges, offices, dispute resolution (via specialized court and international arbitration center), and related activities as set by the executive authority of each IFC. VIFC-HCMC, with a total area of 898 hectares in central Ho Chi Minh City, is oriented to develop a comprehensive and diverse financial ecosystem, providing traditional and specialized financial services, and leveraging synergies between financial services such as capital mobilization, investment, payment services, issuance and trading of financial products, asset management, fintech, and green financial services. VIFC-DN, with a total area of 300 hectares, is oriented to develop as a modern IFC, closely integrated with the innovation ecosystem, digital technology, and sustainable finance. VIFC-DN will establish a controlled testing platform for new financial models, taking the lead in the deployment and scaling of digital-asset products, digital payments, and specialized trading platforms and exchanges, while promoting supply chain finance, third-party services, and non-bank financial intermediaries to complement and support the traditional financial market, developing specialized, flexible, and innovative financial products. Near‑Term Priorities and Review Timeline In 2026, the government will prioritize completing the essential infrastructure and ensuring adequate
Read More
January 5, 2026
Resolution No. 222/2025/QH15 dated June 27, 2025, of the National Assembly of Vietnam (the “IFC Resolution” – see our previous article) set out the foundational legal framework for the establishment and development of Vietnam’s first-ever International Financial Centers (IFC). In furtherance of this framework, on December 18, 2025, the government of Vietnam issued eight implementing decrees to provide detailed regulatory guidance and to operationalize the IFC Resolution in practice. The Eight Implementing Decrees: An Integrated Regulatory Ecosystem The new decrees governing the IFC include the following: Decree No. 323/2025/ND-CP on the establishment of the IFC. Decree No. 324/2025/ND-CP on financial policies applicable within the IFC. Decree No. 325/2025/ND-CP on labor, employment, and social security within the IFC. Decree No. 326/2025/ND-CP on land and environmental matters within the IFC. Decree No. 327/2025/ND-CP on entry, exit, and residence of foreign nationals in the IFC. Decree No. 328/2025/ND-CP on the International Arbitration Center of the IFC. Decree No. 329/2025/ND-CP on banking licensing, foreign exchange management, and anti-money laundering and combating the financing of terrorism (AML/CFT) within the IFC. Decree No. 330/2025/ND-CP on the establishment and operation of commodity exchanges within the IFC. Taken as a whole, these eight decrees translate the IFC Resolution into a coherent and fully operational legal regime governing the establishment, organization, and functioning of Vietnam’s IFC. Collectively, they demonstrate that Vietnam’s IFC framework is best understood not as a collection of isolated incentives, but as a deliberately designed and integrated regulatory system. The Legal Architecture of the IFC: Four Interlocking Pillars Read together, the decrees seem to be designed to address four core regulatory questions from the outset: (i) what the IFC is, from a legal and institutional perspective; (ii) who may participate in the IFC and what activities are permitted; (iii) how people, capital, and projects operate
Read More
December 26, 2025
The Bank of Thailand (BOT) has released the Guidelines for Digital Fraud Management, which took effect on December 17, 2025, incorporating certain amendments to the draft guidelines issued in March 2025. These official guidelines aim for end-to-end digital fraud prevention, with a particular focus on mule accounts, to enhance trust and security in Thailand’s financial system. The guidelines apply to “financial service providers,” including: Financial institutions and special financial institutions under the Financial Institution Business Act; and Operators of Inter-institutional Fund Transfer System e-money services and e-fund transfer services under the Payment Systems Act. Besides commercial banks and e-money operators that offer fund-transfer services, other providers may adopt requirements based on risk proportionality and baseline standards set out in the guidelines (for instance, an e-money operator that does not offer e-fund transfer services could consider implementing a fraud monitoring and detection system according to the risk level of its service). The guidelines establish the following key requirements: Policy and oversight. Directors and senior executives of financial service providers must adopt appropriate “end-to-end” fraud management policies and KPIs to manage digital fraud, covering prevention, monitoring, detection, management, resolution, and support for affected customers. The fraud management policy must be regularly reviewed, and whenever there is a situation or change that significantly affects the efficiency of the fraud management. Any significant update to the policy must first be approved by the board of the financial service provider. The BOT also encourages providers to collaborate in establishing industry standards aligned with applicable laws and regulations to ensure consistency and best practices across the sector. Fraud management processes. Financial service providers must establish a clear framework for managing digital fraud throughout the customer lifecycle—from customer onboarding to service termination—covering at least the following processes: Know your customer (KYC) and customer due diligence (CDD):
Read More