Bad debt increases, new direction expected for Circular 02

According to the latest statistics of the State Bank, the ratio of bad debt on the balance sheet has reached 4.95%, bad debt sold to VAMC and bad debt at risk of becoming bad debt is very high.

Informing the press at a recent press conference, Deputy Governor of the State Bank Dao Minh Tu said that the increase in bad debt ratio is due to the economy facing many difficulties and challenges.

Deploying key tasks in 2024, the Standing Deputy Governor of the State Bank of Vietnam said that the State Bank of Vietnam will direct credit institutions to step up the handling and recovery of bad debts; striving for the ratio of bad debts on the balance sheet (excluding weak commercial banks) to be below 3% in 2024.

Regarding the continued maintenance of Circular 02 on debt restructuring and maintaining the debt group, the Deputy Governor said that it will be considered so that it can continue to be applied if necessary.

"As of June 30, if the economy still needs it and businesses still need it, about 3 months before that, we will submit a proposal to continue maintaining Circular 02," said Mr. Dao Minh Tu.

The State Bank will also continue to coordinate with the National Assembly's agencies to complete the draft Law on Credit Institutions (amended) to submit to the National Assembly at the nearest session. Develop, submit for promulgation/issue detailed legal documents after the Law on Credit Institutions (amended) is promulgated.

Along with that, the State Bank will continue to promote digital transformation in banking activities and non-cash payment activities, meeting the requirements for new business models and products and services on the basis of information technology, digital banking, and digital payment. Strengthening security and safety in payment activities and digital transformation.

The State Bank of Vietnam actively innovates and enhances the effectiveness and efficiency of inspection, examination and supervision of the banking sector; conducts focused inspections in areas with potential risks to prevent, detect and strictly handle risks, problems and violations of credit institutions, contributing to ensuring security and discipline in the monetary and banking markets.

According to financial experts, Circular 02 of the State Bank is a timely sharing of difficulties between banks and enterprises in the national economy.

With Circular 02 not transferring debt groups, extending or postponing debt collection time and not transferring bad debts, businesses can manage to survive, develop and repay loans to banks.

However, some opinions say that Circular 02 should not be extended too long to avoid affecting the safety of the banking system. Some other opinions suggest extending it until June 2025 to help the real estate sector recover.

Source