Despite the Credit Institutions Law 2024 explicitly prohibiting banks from forcing customers to buy insurance when applying for loans, many customers still find themselves pressured into purchasing policies to secure funding.

After the 7th session of the 15th National Assembly, constituents raised concerns to the State Bank of Vietnam (SBV), stating that despite legal prohibitions, banks continue to tie loan disbursement to the purchase of insurance products, including life, health, and fire insurance, causing frustration among the public.

To safeguard citizens' rights, constituents urged the SBV to enhance its oversight and penalize such practices, enabling easier access to loans without additional conditions.

The SBV responded by affirming that existing regulations explicitly forbid banks from coercing customers into signing insurance contracts. According to Article 9, Clause 5 of the Insurance Business Law 2022, it is illegal to "threaten or coerce individuals to enter into insurance contracts."

Similarly, Article 15, Clause 5 of the Credit Institutions Law 2024 states that credit institutions, including foreign bank branches, managers, executives, and staff, are prohibited from linking non-mandatory insurance products with banking services under any circumstances.

The SBV noted that the Ministry of Finance oversees state management of insurance activities. Regarding banks acting as insurance agents, the Credit Institutions Law 2024 also includes relevant provisions.

In response, the SBV has consistently issued directives, warnings, and guidance to financial institutions about compliance. Banks are instructed to adhere strictly to legal provisions, ensuring no association between the sale of non-mandatory insurance products and loan services. The SBV also emphasized the need for internal controls, audits, and proactive measures to prevent, identify, and address any violations within their insurance agency activities. Furthermore, they are urged to closely monitor branches with low rates of insurance renewals after the first year.

To strengthen compliance, the SBV organized a virtual conference on insurance agency activities, guiding commercial banks to ensure safety and legality while minimizing risks associated with these services. Additionally, the SBV incorporated insurance business activities into its 2023 inspection plan for several commercial banks.

Provincial SBV branches have been tasked with intensifying inspections and monitoring the insurance activities of local credit institutions, enforcing strict penalties on those found violating the regulations on insurance operations.

According to the Ministry of Finance, the total insurance premium revenue (including life and non-life insurance) in the first nine months of 2024 was 165.5 trillion VND, a 0.41% decrease compared to the same period last year. Non-life insurance revenue saw an increase of nearly 12.8%, reaching 58.54 trillion VND, while life insurance revenue declined by 6.4% to 106.98 trillion VND.

Tuan Nguyen