Cleft 'clots': Who benefits the most?

Congress has passed a resolution on dealing with bad debt. This is a step that can be taken to help clear up the bad debt thru the whole economy.

Decisive progress
After a long period of reviewing, discussing and evaluating, on June 21, 2017, National Assembly deputies passed a resolution on the handling of bad debts, effective from August 15, Implement the objective of dealing with bad debts of credit institutions to less than 3%.

The resolution is to deal with the bad debts incurred by credit operations before the effective date of the resolution, ie 15/8/2017, with the orientation is to deal with bad debt incurred abnormally. during the past.

In essence, the content of the Resolution is not limited to bad debt and taking into account the bad debt arising from credit operations implemented before August 15th, ie the loans signed before this time, Include long-term credit contracts of a few three years before this point.

This is a consensus to essentially deal with bad debt and an expansion of the future so that bad debt becomes a blood clot in the economy at this time as well as longer. Significant in the future.

According to the State Bank of Vietnam (SBV), in the Decree, some of the most noteworthy points are: Credit Institutions, Foreign Bank Branches, Bad Debt Trading Organization, Bad Assets Public, transparent, in accordance with the law; The selling price is in line with the market price, which may be higher or lower than the principal of the debt.

Organizing the purchase and sale of bad debts to sell bad debts to legal persons and individuals, including legal persons and individuals not engaged in the debt trading business.
This means that the debt trader has expanded and the purchase price of the debt is more flexible and suitable for the market.

And one thing is very significant for CIs is the right to receive a mortgage, register the mortgage of land use rights, assets attached to land, assets attached to land formed in the future is the security property Of the debt purchased. The decree is seen as a viable solution to unlock bottlenecks that have been treating the past five to six years, but there are still many inadequacies.

According to the SBV, with the target of an average loan book of around 16%, it is estimated that NPLs will increase in the next five years (2017-2022) to VND 350,000 billion. To maintain the NPLs target of less than 3%, NPLs need to be processed in the next five years at VND 640,000 billion.


Pump more resources to the economy
Huynh Minh Tuan, head of division of Ho Chi Minh City branch of Vndirect Securities, said that the resolution on dealing with bad debts has just been approved as an important solution for the development of the economy.

According to Tuan, the core content of the resolution is positive, empowering CIs to liquidate mortgage assets. This is the most important issue. The entry of functional agencies and the political system will help to address the more fundamental problem of bad debt.

Accordingly, the Resolution will help to prevent widespread and drawn-out litigation, lowering capital costs at a high level in production and business activities, and improving the competitiveness of the economy.

However, according to Tuan, that is not enough, it is necessary to establish debt trading market and proceed to allow the sale of debt to foreign investors. These are issues that have been mentioned and planned by the authorities in the future.

Some other securities experts said that the resolution will help a series of banks are flooded with difficulties to have the opportunity to deal with bad debt, which hidden in the collateral that can not be resolved as well. Can devalue in years.

According to these experts, long-term credit institutions will be the beneficiaries will directly benefit, bank shares will flourish in accordance with the improvement in business operations. Meanwhile, the real estate market also has the opportunity to flourish. A series of land freezes, projects lying quiet, deserted...will have a chance to relive.

The handling of bad loans will help revive the real estate projects, the credit institutions get the loan. Credit to the economy increased. Reduced financial costs will also help reduce the lending rates to the economy. All will help to stave off the stalemate for not only banking, real estate but also the economy in general, avoiding the waste of the whole society.

Not only the banking and real estate sectors, with lower production costs and more credit and pumping in the economy, businesses in most industries will benefit. The stock market will flourish.

The resolution passed was highly appreciated but this is not a magic wand. The way the implementation of the resolution and the entry of relevant ministries is decisive for the success of the "blood clot" breakthrough that has lasted for decades.

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