Hanoi (VNS/VNA) - Settlingnon-performing loans (NPLs) has been easier since the applicationof Nation Assembly’s Resolution 42 a year ago, but detailed guidanceis still needed to make the use of the regulation smoother, industry insiderssaid.

Enhanced legal frameworks in Resolution 42,which allows credit institutions and the Vietnam Asset Management Company(VAMC) to rapidly repossess collateral if a borrower defaults, have helpedinstitutions and VAMC manage bad debts. 

However, Tran Van Du, Deputy General Director ofthe Bank for Agriculture and Rural Development (Agribank), said the Ministry ofFinance issued a document in April this year regulating the implementation ofResolution 42, but the document doesn’t provide detailed guidance on taxpayment when dealing with collaterals of NPLs.

It was still difficult to sell the assets due tothe tax payment issue, Du said, explaining that buyers struggled to get theassets after buying them as the tax wasn’t paid.

He suggested there should be clearer legalguidelines on paying taxes when auctioning collateral.

Representatives from Vietcombank said thatauthorities in some cities and provinces are still cautious and do not want tohelp credit institutions repossess collaterals.

In addition, though credit institutions have theright to repossess collaterals according to Resolution 42, they stillhave to initiate lawsuits to be entitled to handle the collateral if borrowersdeliberately oppose them.

As such, credit institutions couldonly repossess collateral successfully in cases where collateral wasvacant land or borrowers had fled while collateral was not under dispute, theVietcombank representative said, adding that this limited the bad debtsettlement of credit institutions.

According to Deputy Governor of the State Bankof Vietnam (SBV) Nguyen Kim Anh, Resolution 42 has helped resolve manydifficulties in settling bad debts, and the above mentioned difficulties arejust encountered during the implementation of the resolution and the SBV willreport to the Government to fix them.

Anh also affirmed that with Resolution 42, legalregulations for bad debt settlement at credit institutions and VAMC areadequate and effective so he urged VAMC to better settle bad debts.

In the future, VAMC needs to be more active infinding partners and investors for brokerages, buying and selling of bad debtand collaterals and striving to take a key role in the country’s trading debtand collateral, Anh said.

Run by SBV since it was established in 2013,VAMC is responsible for purchasing NPLs from local banks and handling them onthe lenders’ behalf. VAMC plans to recover 24.89 trillion VND (1.09billion USD) of NPLs in 2018. It also aims to buy some 30.5-35.5 trillion VND(1.34-1.56 billion USD) of NPLs from credit institutions this year.

According to VAMC Chairman Nguyen Tien Dong,thanks to Resolution 42 becoming effective last year, the company recouped 30.85trillion VND (1.35 billion USD) of NPLs in 2017, equal to nearly two thirds ofthe total NPLs recouped in 2013-2016.

Bad debt ratio at Vietnam’s credit institutionsdropped from 3.61 percent in 2013 to 2.18 percent by the end of June, the SBVreported.-VNS/VNA