Illustrative photo (Source: VNA)
The Government has devised a series of measures to accelerate the settlement of bad debt and restructure credit institutions in a bid to limit bad debt holdings to around 3 percent by late 2015.
For a start, the Government will fine-tune the legal regulations on trading non-performing loans (NPLs) and collaterals, and the responsibility of borrowers and creditors.
The Vietnam Asset Management Company (VAMC), a Government-backed entity established last year to restructure NPLs and bank collaterals, will receive assistance to refine its function and financial capacity and develop a debt trading market involving domestic and foreign investors.
Credit institutions are asked to publicise figures on the extent of bad debt they hold and undertake efforts to reduce it, and improve their credit quality.
Inspectors will closely monitor the flow of NPLs and check whether legal regulations on debt classification and risk provision funds are being complied with.
Ministries, agencies and localities are required to cooperate closely.
The Government, in the meantime, will create a stable macro-economic environment that is conducive for securities and real estate markets, thus facilitating economic growth.
As of October this year, Vietnam cleaned up 54.3 percent of NPLs by collecting overdue payments and selling them to VAMC. The company acquired approximately 95 trillion VND (4.5 billion USD) worth of bad debt and recollected around 4 trillion VND (190 million USD).
The current proportion of bad loans is estimated at nearly 3.8 percent, down from 4.17 percent in June, 4.11 percent in July, and 3.9 percent in August.-VNA
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