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Banking & Finance

SBV issues directions on handling bad debts

Released at: 14:22, 09/07/2015

SBV issues directions on handling bad debts

Central bank directs credit organizations on bringing down bad debt ratios.

by Hung Nguyen

The State Bank of Vietnam (SBV) is pushing forward with the handling of bad debts in issuing a series of legal documents.

Document No. 5057/NHNN-TTGSNH states that financial institutions must implement robust solutions this month to handle their bad debts. Banks with non-performing loan (NPL) ratios higher than 3 per cent must manage it less than 3 per cent this month and fulfill plans for managing bad debts and send the results to the SBV by September 30.

Financial institutions must also report monthly to the SBV’s Credit Information Center on the implementation of Circular No. 02/2013/TT-NHNN.

Financial institutions are limited in expanding their branch networks and ATM points, which is contained in Document No. 5056/NHNN-TTGSNH, until their bad debt ratio is managed to less than 3 per cent by October 1.

The SBV also said it will announce detailed requirements for the handling of bad debts at each particular financial institution.

Regarding foreign bank branches, joint ventures, or fully foreign-owned financial institutions, Document No. 5055/NHNN-TTGSNH asks those organizations to adopt strong solutions to manage their bad debt ratios to less than 3 per cent by October 1, and to report to the SBV their detailed plans for doing so by July 20.

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