A bank teller counts cash at a transaction office in Hanoi. (Photo: cafef.vn)The NA’sResolution 42/2017/QH14 on piloting bad debt settlement of credit institutions,which was issued in 2017 and was set to expire on August 15 this year, will beapplicable until December 31 next year.
Underthe new resolution, the NA assigned the Government to study regulations onhandling bad debt and collateral, and review to amend the Law on CreditInstitutions to submit them to the NA before its meeting in May 2023.
Duringthe extension of Resolution 42, the NA requires the Government to havesolutions to overcome existing difficulties and problems besides directingcompetent ministries and agencies to work to ensure effective implementation ofthe resolution.
Atthe NA’s meeting last month, Governor of the State Bank of Vietnam Nguyen ThiHong reported that after five years of implementing Resolution 42, the bad debtsettlement of credit institutions has achieved positive results.
Accordingly,the bad debt ratio of credit institutions was controlled at below 2 percent.Compared with August 15, 2017 when the resolution started, total bad debtsdeclined by 17.21 percent at the end of last year. From August 15, 2017 to November30, 2021, 373.3 trillion VND (16 billion USD) of bad debt was recoveredaccording to Resolution 42. On average, some 5.67 trillion VND of bad debtswere handled each month during the application of Resolution 42, against about 2.14trillion VND previously.
TheGovernment, therefore, proposed extending Resolution 42 while it studies tolegislate the policies specified in the resolution into a new law tocontinually enable the banking industry to settle bad debts of creditinstitutions. The issuance of a new law on bad debt handling will helpcredit institutions maintain and accelerate the handling of bad debts to avoidpotential risks for the economy, Hong said.
Expertshave also suggested streamlining Resolution 42 to better deal with baddebts.
Accordingto banking expert Can Van Luc, one of the major problems when dealing with baddebts currently is the handling of collateral. The right to seize securityassets of a credit institution is one of the key contents in Resolution 42, butit does not specify regulations when the borrowers do not cooperate.Therefore, Luc said it is necessary to have a law on bad debt settlement with astronger legal framework.
LawyerTruong Thanh Duc, Director of ANVI Law Firm, said Resolution 42 has a goodeffect in dealing with bad debts, however, the policy still needs to be furtherstreamlined to improve the handling of bad debts in the bankingindustry./.
VNA
