Over one million drivers are finding themselves stuck between the hammer and the anvil as traffic police these days intensify checks and punish those failing to show original vehicle ownership certificates.

The problem is that a great number of people use such ownership cards as collateral to take out loans from banks to buy vehicles and are provided scanned copies of ownership certificates, while police insist that failing to produce the original document while on the road is a violation of the traffic law. 

The sticky situation, according to local media, will not only affect drivers, but will also hamper transport enterprises and put credit institutions at risk if a solution is not soon worked out by relevant State agencies.

For long years, car owners who have relied on bank loans have produced scanned papers to prove the legality of the transport means they use, but the Ministry of Public Security on May 31 asked traffic police to impose punitive sanctions on those drivers without original certificates, citing the Traffic Law. Apart from financial sanctions, such vehicles can also be detained. Such measures put numerous individual car owners and transport enterprises in jeopardy.

The news site www.vov.vn of Voice of Vietnam radio station says that at transport cooperatives and taxi service companies, most of the vehicle purchases are funded by bank loans. 

Vu Quoc Huy of Hanoi-based taxi company Ba Sao says on the news site that his company has around 1,000 taxi cabs, with half of them purchased using loans from banks. 

All taxi drivers at the company are using scanned copies of ownership papers, but all of a sudden, traffic police demand original certificates, which causes huge problems for the firm.

In Tien Phong newspaper, Huy of Ba Sao says up to 11 taxi cabs of the company have been detained by police due to the lack of original ownership certificates.

Meanwhile, Do Hoang Tuan of a transport enterprise in Quang Ninh Province says in Tien Phong that his company suffers hundreds of millions of dong, as 18 of his trucks have been detained by police due to the lack of original certificates.

Meanwhile, it is quite logical when banks ask borrowers to use their vehicle ownership certificates as collateral, since it is the only way to ensure that credit institutions can recover car loans.

An officer at the National Commercial Bank in Hanoi expresses worries over the new legal changes, saying in Tien Phong that lending to car buyers has become a lucrative market segment for most banks, and if banks cannot keep certificates as collateral, it will be very risky for them and business performance will be adversely affected.

If banks give loans without any measures of guarantee to recover funds, it will be very risky and can result in bad debts, according to Lao Dong, citing financial experts. Le Xuan Nghia, a financial expert, is quoted as saying in the newspaper that “it is a matter of course when banks keep hold of original ownership papers from those who borrow to buy homes or cars; it is in accordance with international practices.”  

An official at the central bank also admits in Tien Phong that banks will certainly shy themselves away from lending to buyers of homes or cars if they cannot keep hold of original ownership papers as collateral.

Experts wonder why traffic police need to see original ownership papers when overseeing traffic compliance.

Le Hoang Son, a former senior official at the Ministry of Justice, says in Tuoi Tre he does not understand why police insist on original ownership certificates. 

“I have repeatedly stressed that drivers should be allowed to carry along only the driving license, and vehicle inspection papers for automobiles. The original ownership certificates should only be required in circumstances whereby officers need to verify the ownership,” he says in the paper.

Lao Dong in an editorial says it is unnecessary to demand the original certificate be produced, even in case ownership needs to be verified, since scanned copies certified by a public notary will suffice.

In fact, experts point out that traffic police are abiding by the law when insisting on original papers from drivers. The Traffic Law specifies that drivers must have original ownership certificates on the road. A decree coded 11/2012/ND-CP issued by the Government also strips banks of the right to keep hold of such papers from vehicle owners. And, on May 24, 2017, the State Bank of Vietnam, regarding the Traffic Law, also issued an instruction asking banks to return such papers to vehicle owners.

However, citing numerous risks mentioned above, and referring to the 2015 Civil Code, banks say they have no other choice but to retain original ownership papers, a practice that has existed for long years, and has been upheld by many experts.

The news site Infonet explains that the 2015 Civil Code in Article 323 allows banks to keep such papers as collateral, pursuant to the agreement between the lender and the borrower. 

And in all circumstances, the Civil Code prevails over the decree as well as the Traffic Law.

As the confusion gets increasingly heated these days, the governor of the State Bank of Vietnam has just written to the Ministry of Justice and the Ministry of Public Security asking for provisionary measures to deal with the current stalemate. 

The central bank suggests that traffic police refrain from imposing punitive sanctions on those drivers without ownership certificates pending a final solution.

The news site www.vov.vn citing data from the Secure Transactions Registration Bureau says that there are as many as 1.3 million vehicles whose registration papers are being kept by banks as collateral. Since such a sizable number of drivers are being affected by conflicting regulations, apparently policymakers when issuing new rules have failed to anticipate chaos as a consequence of the rule, which is very much regrettable.

Banks are determined to hold original ownership certificates; police also insist on such papers from drivers. All have very good reasons – and legal ones at that - for their differing stances. 

And, “the consequence is that up to 1.3 million vehicle owners are being held hostage by the new rule,” says Lao Dong newspaper.

Such a situation can be avoided if the laws are not at odds with one another. In other words, for policies whose impacts on the society are far-reaching, policymakers should have conducted surveys early on to formulate the right ones. The possible confusion should be eliminated from the very beginning, according to Lao Dong.

SGT