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SBV claims bad debts are falling
Bad debt has decreased by VND36 trillion (US$1.715 billion) thanks to the efforts of debt restructuring, debt payment delay and quittance, according to the State Bank of Viet Nam (SBV).
The settled debts made up for nearly 18 per cent of the VND202 trillion ($9.62 billion) total bad debt reported in September by the SBV's inspectors. This amount accounted for 8.6 per cent of outstanding loans.
SBV also seeks to establish a debt purchase-and-sale company to resolve bad debts. This plan has been in formation since last year and SBV expects to propose it to the Government next month. Accordingly, the company would be able to handle some kinds of bad debt estimated to total about VND60-100 trillion ($2.857-4.762 billion).
Forming a council under the Government to deal with bad debt was also mentioned as a possible measure to curb the problem.
According to SBV's chief inspector Nguyen Huu Nghia, the current bad debts could be traced back to the rapid credit growth - nearly 30 per cent on average per year - during the period from 2005-10.
Nghia said that this year could not result in more bad debts because all of the debts this year were of a short-term nature, adding that the total bad debt accounted for around 8-10 per cent of outstanding loans.
He said that 85 per cent of bad debts had security assets equal to 135 per cent of the total. The credit institutions also had credit risk provisions of about VND70 trillion ($3.334 billion).
However, most security assets of bad debts were real estate, and the real estate market was now deep in difficulty. SBV said that it was important to tackle the difficulties affecting the real estate market and speed up inventory clearance to eliminate bad debts and boost the economy.
Meanwhile, SBV also enhanced the restructuring of the commercial bank system.
The bank discovered that the real bad debts of nine commercial banks awaiting restructuring were much higher than the reported figures.
To date, five out of nine banks had their restructuring plans approved and the implementations were in progress. SBV said that after 2012, commercial banks that failed to raise a proper restructuring plan would be subject to coercive measures.
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