In the dynamic world of business, enterprises often require financial assistance to fuel growth and expansion. One common method is borrowing money by collateralizing assets. However, this process comes with its intricacies and challenges. In this discussion, we will explore various solutions designed to support enterprises in navigating the complexities of borrowing money against collateral, thus ensuring their financial well-being and strategic development.
Question:
As a transportation business, trucks comprise a significant portion of our assets. Previously, we were able to use these assets as collateral for bank loans for our business operations, and the trucks continued to operate. Recently, we received new information from the police stating that vehicles on the road must carry original documents and do not accept photocopies or confirmations from banks. Given this reality, our business faces the following challenges: If we use the collateral documents to secure funding for our operations, we face fines and the potential impounding of our trucks by traffic police, causing difficulties. On the other hand, if our business ensures that the trucks have all the required documents for road travel, sourcing operational funds becomes more challenging. Therefore, our business would like to inquire if there are any solutions offered by the authorities to support our operations.
Answer:
In accordance with Clause 2, Article 58, Chapter V of the Road Traffic Law dated November 13, 2008, it provides:
“2. When operating a vehicle, the driver shall carry the following papers:
a) Vehicle registration paper;
b) Driver license, for motor vehicle operators defined in Article 59 of this Law;
c) Technical safety and environmental protection inspection certificate, for motor vehicles prescribed in Article 55 of this Law;
d) Motor vehicle owner civil liability insurance certificate.”
Decree No. 11/2012/NĐ-CP dated February 22, 2012, of the Government amending and supplementing several provisions of Decree No. 163/2006/NĐ-CP dated December 29, 2006, of the Government on secured transactions, introduces Article 20a as follows:
“Article 20a. Custody of Collateral Documents
In cases where the collateral is aircraft, ships, or vehicles as defined in Article 7a of this Decree, the pledging party shall retain the original Certificate of Aircraft Ownership, Vietnamese Registration Certificate for ships, or the vehicle registration certificate during the effective term of the collateral agreement.”
On May 24, 2017, the State Bank of Vietnam issued Circular No. 3851/NHNN-PC regarding customers pledging vehicles as collateral, which states: “Based on the aforementioned regulations and the practical scenario of pledged vehicles at banks, which has been reported by the Ministry of Public Security, the State Bank of Vietnam recommends that credit institutions and branches of foreign banks rigorously adhere to the provision that the pledging party retains the original Vehicle Registration Certificate within the effective term of the collateral agreement as specified in Decree No. 163/2006/NĐ-CP.”
Conclude:
Thus, the inspection and penalties conducted by law enforcement agencies are aligned with legal provisions. However, in the current practical context, a substantial number of vehicles on the road in Ho Chi Minh City employ photocopies of the Vehicle Registration Certificate validated by banks. The enforcement of penalties may provoke societal tensions and potentially lead to conflicts between law enforcement personnel and road users. The Traffic Police Department of District 1 and District 3 in Ho Chi Minh City have proposed and recommended to the leadership of the Traffic Police Department, the Ministry of Public Security, and relevant authorities. The proposal is currently awaiting directives regarding the potential authorization for drivers to utilize photocopies of the Vehicle Registration Certificate, substantiated by bank confirmations, when participating in road traffic.
Conclusion
In conclusion, understanding the available solutions for enterprises seeking financial support through asset collateralization is vital for making informed decisions and managing financial stability. Whether it’s leveraging government programs, seeking support from financial institutions, or exploring alternative financing options, enterprises have a range of avenues to explore. These solutions not only provide much-needed capital but also contribute to the growth and resilience of businesses in an ever-evolving economic landscape.
HMLF is always available to offer assistance in understanding the procedures with authorities.
Head office: 14th floor, HM Town building, 412 Nguyen Thi Minh Khai, Ward 05, District 3, Ho Chi Minh City.
Phone number: +84 937215585
Website: hmlf.vn Email: miller@hmlf.vn
