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Banking & Finance

Bad debts at $7bn as at March 31

Released at: 11:07, 23/05/2017

Bad debts at $7bn as at March 31

Illustrative image (Source: canvaytien.net)

Figure equal to 2.56% of total outstanding loans at all credit institutions.

by Van Long

Total non-performing loans (NPLs) at all credit institutions as at March 31 were VND160 trillion ($7 billion), according to a government report released on May 22 at the meeting of the National Assembly (NA).

The figure, which excludes NPLs sold to the Vietnam Asset Management Company (VAMC), was equal to 2.56 per cent of total outstanding loans.

According to a report quoted by the Vietnam News Agency (VNA), credit institutions recovered NPLs valued at more than VND610 trillion ($26.89 billion) in the 2012-16 period. Over 56 per cent of these were settled by the institutions themselves and the remainder were sold to VAMC and other individuals and institutions.

However, the restructuring of ailing credit institutions and the settlement of bad debts still faces difficulties.

The government submitted a resolution on bad debt settlement to the NA meeting for approval.

Following approval, the government will instruct relevant ministries and agencies to streamline legal regulations on restructuring ailing credit institutions so that the settlement of bad debts is more effective.

As per State Bank of Vietnam (SBV) reports, also quoted by VNA, after four years of implementing a project on restructuring credit institutions in 2011-15, achievements include the restructuring of a number of ailing banks and the safety of the banking system and the assets of the State and the people.

However, because of inadequate legal regulations, obstacles remain in speeding up the restructuring of ailing banks and the settlement of bad debts.

While dealing with weak credit institutions, the SBV found current regulations to be inadequate.

According to the central bank, the process of recovery and restructuring at weak credit institutions is difficult because there is no legal basis for applying solutions suitable to the situation. Also, there is no effective financial support to help weak credit institutions recover.

The law on the handling of collateral assets to recover debts still has many inadequacies relating to the confiscation of such assets, especially land, which limits the progress and effectiveness of debt settlement.

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