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World Bank: 4 pillars for Vietnam to handle bad debt

 

WB mission proposed 4 main pillars to support the handling of bad debt for Vietnam, namely the pillars: modernizing the financial sector; Consolidation of banking regulation and supervision; Restructure and process subprime banks and assets; Consolidate macro security monitoring.


Ceyla Pazabassiouglu, World Bank's Global Finance and Market Director and members of the delegation, introduced the internal affairs of the Bank. It is related to the field of NPL remediation and banking restructuring.

Accordingly, the management and resolution of bad debts of the bank is divided into the following stages: bad debt warning; Identify bad debt and make provisions to handle bad debt; Classification, prioritization of bad debt handling, purposeful interventions by regulatory authorities.

For public sector policies on the management and handling of bad debts, it is necessary to create a favorable environment for the management and handling of bad debts. There must be strict regulations on the operational safety of credit institutions. Lead the supervision of bad debt. Public sector policy intervenes directly in case of need to strengthen the management and handling of bad debt. Bad debts must be recorded in a timely manner and must be accurately classified, thereby identifying appropriate measures and purposes for managing and dealing with bad debt.

WB experts say that bad debt management is a complex issue with many stakeholders. In particular, the supervisory body regulates the provision for credit losses, the loan loss reserve, the identification of bad debt, the conversion of bad debt into good debt, the treatment of bad debts according to the bank, the concepts About debt delays. Agencies involved in the management and handling of bad debts include the Ministry of Finance, the Ministry of Justice, the Ministry of Economy and Investment, banks, tax authorities, audit units. Fully processed, the economy will be stagnated, credit downgrades, commercial banks will not operate effectively, which can lead to loss of liquidity and chain disruption in the banking system. Therefore, there is a need for cooperation in the public sector in promoting the management and handling of bad debts.

Commenting on the handling of bad debts in Vietnam, the mission of the WB said that the issue of bad debt settlement in Vietnam requires a comprehensive implementation in the long run. WB mission proposed 4 main pillars to support the handling of bad debt for Vietnam, namely the pillars: modernizing the financial sector; Consolidation of banking regulation and supervision; Restructure and process subprime banks and assets; Consolidate macro security monitoring. These pillars are necessary and support each other to contribute to the overall solution of dealing with bad debt. Vietnam needs to build policies, the government and the National Assembly in a strong way to ensure the success of the plan to deal with bad debts and restructure credit institutions.

The mission of the World Bank said that in order to help Vietnam deal with bad debts, the Bank designed a four-year technical cooperation program for Vietnam and is currently in discussions with donors about funding for this program.

Speaking at the meeting, Deputy Governor Nguyen Kim Anh said that the Government of Vietnam and the State Bank are very interested in directing and managing bad debt. In 2012, the Government issued important documents on dealing with bad debt and bank restructuring, the State Bank has actively implemented and achieved many positive results. However, in the course of implementation, many difficulties and obstacles have been encountered and the SBV has conducted the preliminary review, assessment and implementation of NPLs and lessons learned. From there, identify and select the model of bad debt treatment in accordance with the characteristics and conditions of Vietnam. At the same time, enhance the learning experience of countries, international organizations and absorb and select to put into practice to achieve the highest efficiency.

Vietnam is in the process of stepping up the handling of bad debts and restructuring the bank. Therefore, the State Bank needs to consult, exchange experience and technical assistance of WB for the banking sector in order to fulfill the target of successfully implementing the plan of banking restructuring and dealing with bad debts in the period of 2016-2020.

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