Prime Minister direct to pilot settlement bad debts

By 2020, the ratio of bad debt is below 3%. Source: The Internet

At the third session, the XIV National Assembly passed Resolution No. 42/2017 / QH14 on piloting bad debts of credit institutions, in that stipulating some measures to deal with bad debts and collateral of the bad debt in order to remove current legal problems and difficulties related to the settlement of bad debts and collateral of the debts of credit institutions, creating a mechanism of synchronous, efficient and possible to settle quickly and definitely eliminate bad debts. So that, credit institutions could continue to promote their role as a leading capital channel, meeting the capital demand for production and business activities of the economy.

In order to implement timely and effectively Resolution 42/2017/QH14, the Prime Minister requests the ministers, the heads of the ministerial-level agencies, the heads of the agencies under the Government, the chairmen of the People's Councils, The Chairmen of the People's Committees of the provinces and cities directly under the Central Government shall concentrate on implementing timely and effective provisions of the Resolution. At the same time, they should implement measures to prevent and minimize the rising bad debts. Also, improving the credit quality of credit institutions; promoting the role of Vietnam Asset Management Company (VAMC) of Credit Institutions in dealing with bad debt.

Accordingly, by the year of 2020, the bad debt ratio in the credit system of credit institutions, bad debts that already sold to VAMC and bad debts that have been applied for classification of debt to below 3% (excluding bad debts of the weak commercial banks are processed by the government according to their own plans).

Preparation conditions for guarantee implementation

In order to prepare the conditions for implementation, the Prime Minister requested ministries, branches, and localities to disseminate and propagate the Resolution and complete before 15^th August 2017.

The Ministry of Natural Resources and Environment will preside and coordinate with related agencies in guiding the registration of mortgage for land use rights and assets associated with land under the provisions of the Resolution. The State Bank will preside and coordinate with related agencies in guiding the purchase and sale of bad debts of VAMC in accordance with provisions of the Resolution. For guidance documents about the implementation of the Resolution must be issued before 15/8/2017.

The Prime Minister also assigned the Ministry of Justice to direct the enforcement agencies at all levels to implement regulations on civil judgment execution that related to bad debts of credit institutions and VAMC in accordance with provisions of the Resolution; Focus on directing, implementing promptly and lawful execution of the credit and bankruptcy judgment which has taken legal effect.

Additionally, the Ministry of Public Security directs police agencies at all levels to perform the task of maintaining security and order when the credit institutions, VAMC exercise the right to seize the collateral of the bad debts which should be handled in accordance with the provisions of Resolution.

Moreover, the Ministry of Natural Resources and Environment shall direct the property ownership and use right registries agencies to carry out the procedures for transferring the property ownership and use right to the purchaser and assignee of the collateral of bad debts as stipulated in the Resolution.

Dealing with bad debt related to the state budget

The Prime Minister assigns the Ministry of Planning and Investment to preside and coordinate with related agencies in setting up plans on allocation of capital sources for settlement of construction debts related to bad debts falling under the budget spending responsibility of the Central and bad debt of the loan program designated by the Government.

Local governments have a responsibility to work out a plan for allocating funds for the payment of construction arrears related to bad debt that falls within spending responsibility of the local budget.

The State Bank is responsible for supervising, inspecting and checking credit institutions and VAMC in the implementation of the Resolution.

Improve the law on dealing with bad debt

The Prime Minister assigned the State Bank to coordinate with the Ministry of Justice and relevant ministries, agencies in reviewing and reporting to the Government on the proposal to improve the legal system for the handling of bad debts and collateral based on practical application of the provisions of Resolution before 15/8/2021.

Besides that, State Bank is responsible for finalizing the regulatory framework for the governance of credit institutions, especially risk management; continuing to research and propose to complete legal documents on credit extension of credit institutions to limit incurred bad debts; To enhance the inspection and supervision capacity of banking inspection and supervision agencies system.

The Ministry of Justice is responsible for finalizing and submitting to the Government for the issuance of a Decree on secured transactions.