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Official Gazette

Saturday, October 20, 2018

Policy digest November 2014

Updated: 17:07’ - 20/11/2014

* Government shows determi-nation to suppress public debts: Two press communiques of the Government’s October regular meeting on settlement of non-performing loans (NPL) and public debts have recently been publicized on the Government e-portal.

The first communique mentions the targets that by the end of 2015, existing NPLs will be basically settled, credit facility quality improved and by 2020 the banking system’s credit operations will be truly sustainable.

The existing NPL ratio is 3.8 percent and on the fall as reported by credit institutions and 5.43 percent as assessed by the State Bank through its supervision. The recent slow settlement of NPLs can be attributed to an incomplete legal framework and lack of budget sources.

In the communique, the cabinet urged accelerated NPL settlement combined with restructuring of credit institutions, focusing on (i) improving the legal framework, especially regulations on purchase, sale and settlement of debts and security assets, responsibilities of borrowers and rights of creditors; (ii) defining clearer functions, consolidating the financial capability and role of the Vietnam Asset Management Company (VAMC), particularly for debt trading under the market mechanism; (iii) strongly developing the debt trading market and encouraging investors at home and abroad to purchase NPLs; (iv) requiring credit institutions to publicize their NPLs as well as results of NPL settlement, and to take measures to control credit quality and minimize NPLs; (v) intensifying inspection and supervision of NPLs and credit quality and observance of regulations on debt classification and setting aside of risk provisions; and (vi) enhancing coordination among ministries, sectors and localities in assisting credit institutions and VAMC in NPL settlement, especially in completing legal dossiers, recovering debts and handling collaterals...    

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