Revised Law on Credit Institutions to cover bad debt recovery

Revised Law on Credit Institutions, non-performing loan, NPLs, SBV, Revised Law on Credit Institutions, non-performing loan, NPLs, SBV, Banking,
State Bank of Viet Nam's deputy governor Nguyen Kim Anh speaks at the forum. Photo SBV

The Government has directed the State Bank of Viet Nam (SBV) to add non-performing loan (NPL) settlement regulations under Resolution No.42/2017/QH14 into the revised Law on Credit Institutions, SBV’s deputy governor Nguyen Kim Anh said on Wednesday.

Addressing a forum on Viet Nam’s banking industry in 2020 held in Ha Noi, Anh said the restructuring of the credit institutions system, in association with bad debt handling, has been one of the key tasks of the banking industry during the 2016-20 period.

The National Assembly issued Resolution No.42/2017/QH14 in 2017 as a pilot programme for the first time to speed up the bad debt handling of credit institutions.

"The resolution has created positive changes and proved effective in the handling of bad debts and restructuring of credit institutions in the past few years", Anh said.

He said credit institutions have so far followed the resolution to build and implement their restructuring plans associated with bad debt handling in the 2016-20 period. As a result, credit institutions' credit quality has improved with their on-balance-sheet NPL ratio controlled below 2 per cent. Their size, financial strength, governance capacity and transparency have been also improved significantly, Anh added.

Besides, based on the resolution, inspection and supervision of competent authorities over credit institutions have been strengthened, which have contributed to removing cross-ownership of groups of shareholders in the institutions.

Nguyen Dang Phi, SBV’s deputy chief inspector, reported the NPL ratio of the banking sector has been gradually decreasing over the years, from 2.46 per cent at the end of 2016 to 1.99 per cent, 1.91 per cent and 1.63 per cent at the end of 2017, 2018 and 2019, respectively.

On average, the banking industry recovered some VND6.92 trillion (US$298.27 million) of bad debts per month by the end of July this year, much higher than the rate of VND3.94 trillion in the 2012-17 period.

However, deputy governor Anh noted the COVID-19 pandemic this year had adverse impacts on the restructuring and bad debt settlement of credit institutions in the 2016-20 period.

"If the pandemic continues, causing production and business to stagnate and affect the country’s economic growth adversely, the credit risk will rise and the pressure of bad debt will be very high. Therefore, meeting the Government’s targets of controlling bad debts is still a huge challenge for the banking industry," Anh said.

According to Do Giang Nam, deputy general director of the Vietnam Asset Management Company, despite its effectiveness, Resolution 42 is only a pilot programme and took effect for five years from August 15, 2017.

Therefore, Nam said, if there were no other regulations to replace the resolution after it expires, bad debt buyers would be concerned, causing a delay in the banking industry’s bad debt settlement. — VNS

News Related


Back in time at Cu Da ancient village in Northern Vietnam

Quietly nestled by Nhue river, Cu Da village in Cu Khe commune, Thanh Oai district, Hanoi retains its serene and ancient beauty despite the challenges of urbanization. Read more »

Flooding washes up Vietnam War bombs, grenades

Seven bombs and nine grenades left over from the Vietnam War have been washed up in Quang Tri Province. Read more »

Storm Molave leaves 64 dead and missing in Vietnam

Storm Molave has left 64 dead and missing in the central region, the Central Steering Committee for Natural Disaster Prevention and Control updated on Thursday evening. By 6 pm on October 29, the... Read more »

Untold story of a 100-year-old church on the back of turtle-shaped rock

The old church in Dong Chiem village (An Phu, My Duc, Hanoi) was built over 100 years ago on a rocky ledge. Read more »

Vietnam urge parties in Lebanon to restrain and abide by int’l law

Vietnam has called on all parties in Lebanon and in the region to abide by the basic principles of international law and restrain from escalating tension or worsening the situation. Read more »

Viet Nam’s electricity output forecast to rise to 950 billion kWh by 2045

A solar power project in Ninh Thuan. Viet Nam’s electricity output is forecast to rise to 950 billion kWh by 2045. — Photo Viet Nam’s electricity output is forecast to rise to... Read more »

Photos taken by Vietnamese photographers win prizes at Siena photo contest

Images of water coconut forest or anchovy catching taken by Vietnamese photographers are among award-winning photos at the Siena photo contest. Read more »

UK and Europe weather forecast latest, October 30: Flood warnings issued as remnants of Hurricane Epsilon batter Britain

Britain is forecasted to cope with remnants of Hurricane Epsilon bringing flood warnings for heavy rain. Meanwhile, fair conditions set to sweep western Mediterranean, heavy showers in the east, wind and rain to... Read more »

The first Viet Nam Card Day 2020 launched to promote non-cash payment

The “Viet Nam Card Day 2020” would provide more than 10,000 contactless prepaid cards for customers to experience banking services. — VNS Photo The “Viet Nam Card Day 2020”, the first of its... Read more »

Chile opens door for Viet Nam’s pomelo

Traders buy pomelo in Viet Nam. — Photo VNA Chilean authorities have granted permission for Viet Nam to ship pomelo to the Latin American market, according to Minister of Agriculture of Chile Antonio... Read more »