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Mr. Nguyen Duy Hung pointed out four major bottlenecks in handling bad debts

One of the bottlenecks in dealing with bad debt is the handling of collateral. But Hung argued that lack of law was not the main cause but a failure to enforce the law fully.

During a discussion in the morning conference on 7/6, the Governor of the State Bank said that as of December 31, 2016 as reported in the National Assembly, the current bad debt of the credit institutions is now over 150,000 trillion, accounting for more than 2.52% of total outstanding loans. Total bad debt that debt purchase company VAMC has yet to handle is over 195,000 billion accounts for 3.29% of total outstanding loans. Bad debt and bad debt sold to VAMC has not been processed yet is over 345,000 billion accounts for 5.8% of total outstanding loans.

According to the calculations of the State Bank of Vietnam, in the past five years, NPLs incurred annually amounted to 1.3-1.5%. One of the reasons why bad debt continues to increase is the difficulties and obstacles of the current law. Therefore, the issuance of the National Assembly resolution on the handling of bad debts at the present time is considered by parliamentarians and industry experts as appropriate.

However, there are still many issues to be clarified so that the Resolution will be practical and effective. Nguyen Duy Hung , Chairman of SSI Joint Stock Co, stated in a recent article published in the Vneconomy website that four points need to be clarified in the Resolution .

Firstly, it is necessary to publicize the bad debt situation , to motivate the credit institutions to actively and proactively handle bad debts. If there are too heavy measures to deal with credit institutions, if there is fear of "criminalization" will arise the situation "raising debt" to "hide". Hung's view is that there should be a mechanism for time for credit institutions to overcome losses.

"It is not advisable for the credit institution to incur losses at a moment when it has not dealt with debt or changed its policy of making provisions, allocating interest ... so as not to affect its business results. It also does not change the patient's physical condition, "Hung said.

This view is also consistent with the objective reasons that Governor Le Minh Hung mentioned last morning. Political instability, the world economy, the crisis in the monetary and international economy have a strong impact on business activities of businesses while the capital is mainly from bank loans. In addition, the macroeconomic policies are also unstable, increasing the impact on business production and repayment capacity of customers. Or there are cases where the customer flees and evades the obligation to repay. These unwanted factors directly affect the business activities of CIs.

The second point that he raised Hung is the lingering debt market. Accordingly, at present, there is no market, there is no mechanism to determine the value of the debt, determine the liability of the lender and debt seller; There are not many subjects involved in buying debt, investors have not considered buying debt as an investment opportunity; The creditors' rights of credit institutions have not been guaranteed in practice.

"Few people dare to buy debt to inherit these rights is hardly feasible," Mr. Hung analysis. This is also depicted by National Assembly Pham Phu Quoc. According to this delegate, the problem must create a debt trading market with the participation of all economic sectors of the population. If the collateral is real estate, real estate businesses and people will be interested. If the security property is a car, the Uber, Taxi, Grab and other car companies will also be interested. The market will not only allow credit institutions to deal with bad debts of credit institutions but other participants in the economy and bad debt packages when the market is difficult to handle can be assigned to VAMC .

The third tipping point indicated by the SSI president is the handling of collateral assets. But Hung argued that lack of law was not the main cause but a failure to enforce the law fully. There are currently no regulations on seizure of property, but there is no mechanism to enforce it.

Regarding the right to house, the exercise of the right to seize shall be effected on the basis of a voluntary agreement already contained in the security contract between the parties. Thus, the seizure is housing, in principle the landlord when entering into a secured transaction agreement has agreed to the seizure. However, the fact that the property owner is not responsible for any damage while the CI if the lawsuit, the judgment execution takes much time to implement.

The last point he Hung pointed out that society should have the objective recognition of debt settlement activities in accordance with the rules of the market. Asset disposal is a process neither the bank nor the customer desires. This is risky for both 2 sides instead of the current conception of society is still losing client collateral Banking being processed.

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