Central bank sets key tasks for second half of the year
Measures to be taken to reduce lending interest rate.
Topic: bad debt
Bad debt ratio at banks at safe level
A report from the State Bank of Vietnam (SBV) presented to the National Assembly reveals that as of the end of August, the bad debt ratio on the banking system’s balance sheets remained at a safe 1.9 per cent. The ratio of bad debts, unresolved debts sold to the Vietnam Asset Management Company (VAMC), and potential bad debts at credit institutions was 4.99 per cent, down sharply from the 6.3 per cent posted at the end of 2021.
SBV directs plan on bad debt settlement
The Governor of the State Bank of Vietnam (SBV) has issued an action plan for the banking industry to implement the “Restructuring the system of credit institutions associated with bad debt settlement in the 2021-2025 period” project. The project clearly states the action plan for the banking industry on matters such as handling bad debts, improving credit quality, and boosting the financial capacity and operational efficiency of the Vietnam Asset Management Company (VAMC).
Debt trading market needed to tackle bad debts
Speaking at a dialogue entitled “Improving the law on bad debts after the pilot of Resolution 42 ends”, organized by Vietnam Economic Times / VnEconomy, analysts acknowledged that there are many shortcomings in the process of property management. They recommended building a proper debt trading market that buys and sells both bad debts and regular debts.
Many factors to affect bad debts into future
Dr. Can Van Luc, Chief Economist at BIDV and Head of the BIDV Training and Research Institute, told the “Improving the legality of bad debts after the end of the Resolution 42 pilot” seminar, organized by VnEconomy on July 13, that Covid-19 remains unpredictable and the Russia - Ukraine conflict, China’s growth slowdown, rising prices, higher interest rates, and growing financial risks count among the factors affecting bad debts in Vietnam in 2022 and subsequent years.
Concerns ease over Covid-related bad debts
A Circular from the State Bank of Vietnam (SBV) on allowing credit institutions to restructure debt repayment terms and exempt or reduce interest rates and fees in order to support customers affected by Covid-19 became effective on June 30. Banks actively setting up risk provisions has eased concerns over bad debts due to Covid-19.