A transaction at Maritime Bank (Photo: Maritime Bank) Hanoi (VNA) – Flawedlegal regulations on collateral for debt collection have hampered bad debtsettlement, participants said at a workshop in Hanoi on May 23.
The problem was pointed out by National Assembly(NA) deputies at the event held by Dai bieu Nhan dan (People’s Deputies)newspaper.
The State Bank of Vietnam (SBV) reported thatthe credit institution system handled 616.7 trillion VND (27.18 billion USD) ofnon-performing loans (NPLs) as of January 2017. The sum of handled bad debtshas increased each year, from 74.68 trillion VND (3.29 billion USD) in 2012 to118.49 trillion VND (5.22 billion USD) in 2016. Bad debts settled in January2017 alone were valued at 5.14 trillion VND (226.52 million USD).
NPLs settled by credit institutions themselveswere 349.7 trillion VND (15.41 billion USD), accounting for 56.7 percent oftotal bad debts. The remaining 43.3 percent were sold to other organisationsand individuals.
About 53.24 trillion VND (2.35 billion USD) ofdebts collected through the Vietnam Asset Management Company (VAMC) from 2013to March 31, 2017 were solved.
However, only 17.1 trillion VND (753.6 millionUSD) or 2.8 percent of the handled NPLs was collected through sellingcollateral, the SBV said.
Legal regulations did not protect the rights ofcredit institutions and VAMC and hindered the development of a bad debt marketwhich includes sales and purchases of bad debts guaranteed by land use rightsand land assets.
Legal regulations on collateral settlementhaven’t ensured creditors’ rights to collateral seizure. Meanwhile, it takes upto two years to solve bad debts and collateral via courts, making expensesaccount for 29 percent of collected debt value.
At the workshop, participants said that ifcredit institutions can’t seize collateral will it substantially influencetheir debt collection capacity.
Nghiem Xuan Thanh, Chairman of Vietcombank’sboard of directors, asked courts to streamline procedures for resolvingdisputes over collateral. He also called for police assistance in dealing withdebtors who intentionally dodge debt repayment obligations.
Nguyen Duc Kien, Vice Chairman of the NA’sCommittee for Economic Affairs, said the NA Standing Committee and the economiccommittee agreed on the need to issue a resolution on bad debt settlement, whichis expected to be approved at the NA’s ongoing third session.-VNA
VNA
