Prime Minister Nguyen Xuan Phuc has requested the banking system work to enhance the reform of the credit organisation system in line with bad debt settlement while supporting socio-economic recovery and development amid the impact of COVID-19.
He made this request at a meeting reviewing the implementation of the National Assembly's Resolution 42 and Project 1058 on restructuring the credit institution system in association with bad debt settlement for 2016-20 on Monday in Ha Noi.
The Government leader appraised the banking industry's improvements over the last three years in many facets including financial scale, credit quality and restructuring, efficiency and security of the whole system.
Total asset value and equity have increased by 5 per cent while the non-performing loans (NPLs) rate has been brought down to 1.63 per cent. The system has handled VND557 trillion (nearly US$24 billion) worth of bad debt, of which credit institutions dealt with over 76 per cent while the ratio of internal non-performing loans (including sold to VAMC) and the potential bad debt plummeted from 10.08 per cent to 4.43 per cent.
The divestment of capital from non-core businesses and the settlement of cross-ownership and cross-investment have been carried out actively. As a result, VND2.2 trillion (US$95.2 million) has been divested, and manipulation by big shareholders has been basically solved.
Almost the entire system has been rectified and consolidated. Notably, State commercial banks continue to play an important role as their total assets account for 42.8 per cent and their loans 47.9 per cent of the whole system.
Besides, non-bank credit institutions, people’s credit funds and microfinance organisations have been restructured and operated more healthily, helping curb loan sharking.
However, the PM said the biggest test for the credit system is the COVID-19 pandemic. The system has not only sustained itself but also supported the country's recovery in the past six months. Yet, there are still some obstacles in the restructuring process such as increasing charter capital, especially of State-owned commercial banks.
PM Phuc emphasised the need to ensure system safety and limit black credit. He said it was necessary to review and improve the most relevant laws, especially on judgment execution, handling of security assets, asset recovery, promoting the handling of bad debts and restructuring of weak banks.
He basically agreed with the State Bank's assessment of the achievement of goals under Decision 1058, which indicated there were three out of nine targets possibly to be completed, another three goals likely to be completed with solutions and conditions attached and the last three goals unlikely to be achieved.
He asked the State Bank to keep devising key tasks and solutions to achieve the targets. — VNS