A customer borrows at a bank in Hà Nội. The VCCI suggested implementing stricter regulations on conditions and procedures for granting credit to customers related to shareholders. Photo nld.com.vn

HÀ NỘI — Though the reduction of the ownership ratio for individual and institutional investors at credit institutions can help prevent market manipulation and cross-ownership, it might not be suitable at this time if ratified, according to the Vietnam Chamber of Commerce and Industry (VCCI).

This is one of the VCCI’s comments on the draft of the revised Law on Credit Institutions after consulting firms and experts. The draft law was submitted to the National Assembly for consideration at last month’s meeting and is now awaiting approval.

According to the draft law, regarding the ownership rate limit at credit institutions, Article 54 of the draft proposes to reduce the maximum ownership rate at a credit institution compared to the current regulations. Accordingly, individual investors will be allowed to hold a maximum of 3 per cent of the shares of a credit institution, down from the current 5 per cent. Institutional investors will be limited to a maximum stake of 10 per cent, instead of the current 15 per cent. The maximum stake held by a group of shareholders will fall to 15 per cent from the current 20 per cent.

It is said that the proposal for lowering the bank ownership ratio is aimed at preventing market manipulation and cross-ownership, thereby improving transparency, reducing conflicts of interest, and increasing the safety of the banking system.

However, the VCCI believes it is not appropriate under the current market conditions.

The proposed changes in the ownership ratio have raised concerns in the banking system, as they fear they may hamper economic growth.

According to the VCCI, in fact, the current limits on bank ownership in Việt Nam are relatively low compared to other countries. However, banks frequently grant credit facilities to groups of related customers, posing high risks to the entire system.

The VCCI explained that the issue is not the high percentages of shares held by some shareholders, but rather the potential conflicts of interest. This may lead to credit being granted to customers having connections with major shareholders, rather than being based on standard principles, which could pose risks to the safety of the banking system.

Instead of reducing the percentages of share ownership at banks, the VCCI suggested implementing stricter regulations on conditions and procedures for granting credit to customers related to shareholders.  VNS