Can intellectual property be used to mortgage a bank loan?

Can intellectual property be used to mortgage a bank loan?

Inventions products with registered intellectual property can be considered as collateral for loans at credit institutions. However, the reality of operating in Vietnam and internationally shows that the mortgage of intellectual property rights in the system of credit institutions is still limited.

Through the Receiving and Responding System to businesses’ recommendations, the Club of the former members of the National Assembly proposes that the banking industry should have a policy of more care for non-state enterprises in borrowing capital for production business.

According to the club of former members of the National Assembly, banks should have a guarantee policy for businesses, including science and technology enterprises to borrow money, or use business assets (including assets). invention products, inventions have been registered with intellectual property as collateral for loans. Besides, the Government also needs to have preferential policies in borrowing capital for industries that need to be encouraged to develop.

Regarding this issue, the State Bank of Vietnam has the following opinions:

Regarding the recommendations of the club of former members of the National Assembly, the Governor of the State Bank of Vietnam (SBV) has absorbed them to improve the direction and administration of banking credit policy in the coming time, at the same time. There are also additional explanations to the Club of Former National Assembly deputies as follows:

In order to support non-state enterprises, including mainly small and medium enterprises (SMEs) in accessing capital, over the past time, the State Bank has implemented many solutions and policies to support solving difficulties, Increase access to bank credit, specifically:

- Issuing Decision 443 / QD-NHNN dated 16/3/2018 defining the banking sector's action plan to implement the Government's Resolution 98 / NQ-CP on private economic development, providing groups of tasks, solutions, implementation time roadmap associated with the administration of monetary policy, credit, and reform of administrative procedures synchronously in business support solutions.

- Implement effectively the action program of the banking sector to contribute to improving the business environment, enhancing national competitiveness, supporting and developing businesses in 2016-2017, with a vision to 2020, with specific solutions to support and remove difficulties for businesses, create favorable conditions for businesses (especially SMEs) to access credit capital.

- Direct the State Bank branches in provinces, cities and credit institutions to continue promoting the effective implementation of banking - business connection programs; closely combining with other policies and programs to support businesses in the area, creating favorable conditions for businesses to access capital.

- Actively coordinate with ministries and branches in advising the Government’s Prime Minister to promulgate many policies and credit programs to support capital for industries that need development encouragement, and at the same time directing credit institutions to actively implement specific credit programs and policies such as:

(i) Preferential policy of maximum short-term loan interest rate in VND for 5 priority sectors (agriculture, rural, SME, export, supporting industries, high-tech enterprises), now it is 6.5% / year;

(ii) The policy of lending without collateral up to 70% -80% to develop agricultural production under the integrated model, agriculture with high technology application according to Decree 55/2015 / ND-CP , Decree 116/2018 / ND-CP;

(iii) The loan program to encourage the development of clean agriculture, high-tech agriculture; with preferential lending interest rates 0.5% -1.5% lower than the same period normal loan rate;

(iv) Loan with interest rate support up to 100% for customers investing in machinery and equipment to reduce losses in agriculture according to Decision 68/2013 / QD-CP of the Prime Minister;

(v) Loan policy in the supporting industry sector is allowed to borrow up to 70% of investment capital in credit institutions on the basis of guarantees of the guarantee organizations;

(vi) Some preferential interest rate policies for SMEs operating in difficult economic areas.

- Direct credit institutions to pay more attention to SME customers, design and provide banking products and services that are more suitable for these types of businesses; administrative procedures reform, loan process reform in the direction of minimizing procedures and paperwork for businesses to shorten the time to process loans while ensuring principles of credit and loan safety.

Guarantee policy for SMEs loans

To support and develop SMEs, since 2001, the Government and the government’s Prime Minister have issued credit guarantee policies for SMEs through the local Credit Guarantee Fund and the Vietnam Development Bank (by the Ministry Finance presided).

Accordingly, the State Bank of Vietnam has also issued many documents guiding credit institutions to coordinate with the Credit Guarantee Fund and the Vietnam Development Bank in lending to SMEs with guarantees of these organizations.

To complete the legal corridor to support SMEs, on June 12, 2017, the Law on Support for SMEs was passed by the National Assembly and came into effect from January 1, 2018. The Government also issued Decree 34/2018 / ND-CP dated March 8, 2018 on the establishment, organization and operation of the Credit Guarantee Fund for SMEs (replacing Decision 58/2013 / QD- TTg dated October 15, 2013 by the Prime Minister).

In order to implement the Law on SME Support and perform assigned tasks, the State Bank issued Circular No. 45/2018 / TT-NHNN dated December 28, 2018 guiding credit institutions to provide loans with guarantees of the Credit Guarantee Fund under the provisions of Decree No. 34/2018 / ND-CP.

Regarding the recommendations of the Club of former members of the National Assembly on the use of assets of the enterprise by science and technology enterprises (including inventions, inventions with registered intellectual property) as assets loan collateral, according to the Civil Code 2015 and Decree 163/2006 / ND-CP dated December 29, 2016, collateral can be an existing asset or an asset to be formed in the future, At the same time, property rights are a kind of property and are the right to be worth in money, including property rights over the subject of intellectual property rights, land use rights and other property rights.

Therefore, invention products that have been registered for intellectual property can be considered as collateral for loans at credit institutions.

However, the reality of operating in Vietnam and internationally shows that the mortgage of intellectual property rights in the system of credit institutions is still limited partly due to the difficulty in valuing intellectual property rights. In the other part, because the value of intellectual property rights is only guaranteed in the chain of activities of that enterprise, it is difficult to transfer when dealing with collateral.

In addition, a number of enterprises that have not proven effective and feasible production and business plans will be difficult, creating pressure and risks in the credit institution's operations when considering lending.

Innovate the lending process towards simplicity

Obtaining the opinion of the Club of former members of the National Assembly, the SBV will continue to coordinate with ministries and agencies to complete the legal framework to implement credit programs and policies for priority and incentive areas. develop under the guidelines of the Party and Government; implementing synchronous SME support policies as stipulated in the Law on SME Support; directing credit institutions to continue researching and building credit products and programs with reasonable interest rates, diversifying banking products and services; reforming the lending process towards simplifying lending procedures in order to improve the ability of non-state enterprises to access bank credit.

The State Bank of Vietnam also requested the Club of former members of the National Assembly to inform the Hanoi Association of SMEs and non-state enterprises about the credit programs, policies of the State Bank and the provisions of relevant laws to non-state enterprises can apply to enjoy appropriate credit policy; At the same time, it is suggested that businesses continue to strengthen their financial capacity and governance capacity so that credit institutions can be more advantageous in appraisal, review and decision on lending.

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