Chủ đề: bad debts

Loans for consumption, real estate, and build-operate-transfer (BOT) and build-transfer (BT) projects in transport have bad debt ratios higher than overall ratios, according to the Economic Committee of the National Assembly (NA). As bad debt pressure is predicted to increase, the Economic Committee has asked the government and the State Bank of Vietnam to offer guidance on credit flows.

It has been forecast that the bad debt ratio in the banking system may increase in the near future as Covid-19 is still to be brought under control. While waiting for the Law on Handling Bad Debts of Credit Institutions to be developed, the State Bank of Vietnam (SBV) has proposed extending the application period in Resolution No. 42, on handling the bad debts of credit institutions, by three years, to August 15, 2025. Resolution No. 42 from the National Assembly is valid for five years from August 15, 2017.

The central bank held a regular press conference on December 28, where it summed up the banking sector in 2021 and set tasks for 2022.

The decision to extend social distancing measures in economic centers such as Hanoi, Ho Chi Minh City, and southern provinces has put pressure on cash flow in businesses. Experts have said that even though loans have been suspended, when they become due once again there will be more problems surrounding bad debts, especially when they are covered as restructured debts.

The State Bank of Vietnam has issued Circular No. 11/2021/TT-NHNN on the classification of assets and provision for risks, the use of provisions to deal with risks in the operations of credit institutions, and spending by foreign bank branches. Under the Circular, after five years, debts that have been settled by all measures but cannot be recovered will be removed from the off-balance sheet (OBS).

Banking activities during the first half of the year have been acknowledged by the National Assembly Economic Committee, in particular the management of exchange rates, interest rates, and inflation. Appropriate solutions will be needed in the second half to handle bad debts, simplify procedures, support business recovery, and seize opportunities to develop the digital economy, e-commerce, and non-cash payment services.