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Banking & Finance

WB offers support in bad debt resolution

Released at: 13:39, 31/05/2017

WB offers support in bad debt resolution

Illustrative image (Source: canvaytien.net))

Representatives from World Bank meet with State Bank of Vietnam on May 29.

by Hai Van

Ms. Ceyla Pazabassiouglu, the World Bank’s Global Finance and Market Director, and members of an accompanying delegation introduced issues relating to bad debts and bank restructuring at a meeting with the State Bank of Vietnam (SBV) on May 29.

The management and resolution of bad debts is divided into the following stages: bad debt warning; identifying bad debts and making provisions to handle them; classifying and prioritizing bad debt handling; and purposeful interventions by regulatory authorities.

Resolving bad debts is complex a complex matter, the WB said. Safety monitoring regulates credit risk provisioning, loan provisioning, bad debt identification, conversion of bad debt into good debt, bankruptcy, bad debt treatment, and delays. Agencies involved in the management and handling of bad debts include the Ministry of Finance, the Ministry of Justice, the Ministry of Planning and Investment, banks, the tax office, and auditing units.

The WB stated that monitoring the problem of bad debts in Vietnam requires comprehensive implementation in the long term. It proposed four main pillars to support the handling of bad debt in Vietnam: modernizing the finance sector; consolidating banking regulation and supervision; restructuring and processing subprime banks and assets; and consolidating macro security.

These four pillars are necessary to support the resolution of bad debts. Vietnam should build policies and the Vietnamese Government must ensure the success of bad debt resolution plans and credit institution restructuring.

The mission of the WB is to help Vietnam deal with bad debts and it has designed a four-year technical cooperation program and are currently in discussions with donors about funding the program.

Deputy SBV Governor Nguyen Kim Anh said that the government and the central bank pay the management of bad debts close attention. In 2012, the government issued key documents on dealing with bad debts and bank restructuring, and the SBV has actively implemented and achieved many positive results.

However, in the course of implementation, many difficulties and obstacles have been encountered. The SBV conducted a preliminary review, assessed the situation of bad debt handling, and learned many lessons. It also learned from the experience of other countries and international organizations and put them into practice.

Vietnam is in the process of stepping up the handling of bad debts and restructuring its bank sector. “Therefore, the SBV needs to consult and exchange experience and technical assistance with the WB in order to fulfill its target of successfully implementing plans for banking restructuring and dealing with bad debts in the 2016-2020 period,” Deputy Governor Kim Anh said.

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