The State Bank of Viet Nam (SBV) has issued a document asking credit institutions and branches of foreign banks to push the resolving of non-performing loans in 2018.

Vietcombanmk planned to lower its bad debt ratio to below 1 per cent in 2018. 

Accordingly, each bad debt must be reviewed and evaluated to provide a comprehensive picture about non-performing loans, mortgage assets and ability to reclaim debts, from which measures will be raised for resolving bad debts effectively.

Lenders have also been asked to cooperate with the Viet Nam Asset Management Company in handling bad debts and mortgaged assets sold to this company.

In addition to this, the selling of bad debts at market prices must be promoted, SBV said.

Central bank Deputy Governor Le Minh Hung said 2018 would be a special year for the banking sector to handle bad debts following the National Assembly resolution 42/2017/QH14.

Hung said handling bad debts was a hard job as the banking system was responsible for providing credits for the economy as well as for implementing restructuring and handling bad debts.

The central bank is completing circulars about credit risk management in sectors such as real estate, securities and build-transfer (BT) and build-operate-transfer (BOT) projects and internal audit to prevent risks.

According to Trinh Quoc Trung from the University of Economics and Law, it is critical to improve the management capacity of credit institutions to ensure the safe operation of the banking system.

Trung said detailed instructions to implement Resolution 42 must be issued.

Economic expert Nguyen Tri Hieu said the handling of bad debts also required the co-operation of relevant agencies such as police and local authorities to effectively handle mortgaged assets.

He said transparency in shareholdings at banks must also be improved.

Resolution 42 allows individuals to buy bad debts. But the lack of debt trading market also hindered the handling of non-performing loans, Hieu said, adding the development of such a market must be of great importance.

A report by the National Financial Supervisory Commission shows that some VND70 trillion (US$3.07) worth bad debts were handled in 2017, rising by 40 per cent over the previous year. — VNS