Seizing secured assets and handling bad debts are facing difficulties.

DNVN - According to the State Bank, in the first 6 months of 2024 alone, the entire system handled 167,300 billion VND of bad debt, an increase of about 45.6% over the same period last year. The seizure of collateral and handling of bad debt are facing many difficulties.

Data from the Banking Supervision and Inspection Agency, State Bank of Vietnam (SBV) shows that as of the end of June 2024, the bad debt ratio of the entire system was at 4.56%, higher than the 4.55% at the end of 2023 and the 2.03% at the end of 2022.

Total on-balance sheet bad debt, unprocessed debt at the Vietnam Asset Management Company (VAMC) and potential debt of the credit institution system as of the end of June 2024 accounted for 6.44% of total outstanding debt. The increase in bad debt ratio was recorded in most banks in the context of a gloomy economy, especially the real estate market still facing many difficulties.

Total on-balance sheet bad debt, unprocessed debt at VAMC and potential debt of the credit institution system as of the end of June 2024 accounted for 6.44% of total outstanding debt.

Assessing the bad debt situation of credit institutions, Mr. Dao Minh Tu - Permanent Deputy Governor of the State Bank of Vietnam said that bad debt is on the rise and this is a challenge not only for the banking sector but also for the entire economy. Bad debt is the result of a whole process, not due to the weakness of the banking sector.

According to the Vietnam Banking Association (VNBA), a member of the VAMC Board of Members, the handling of bad debts and collateral assets of bad debts faces some major obstacles related to the right to seize and attach collateral assets; the order of priority for payment of funds collected from handling collateral assets; and the application of simplified procedures when litigating in court.

Along with that are difficulties related to the process of handling and returning collateral assets as evidence in criminal cases; handling collateral assets as shares and stocks; handling collateral assets as real estate formed in the future...

Regarding this issue, Ms. Nguyen Thi Thu Hang - Deputy Director of the Department of Registration of Secured Transactions (Ministry of Justice) admitted that there is currently no strong enough legal mechanism to allow the secured party to access and recover the secured assets for processing.

Mr. Pham Duc An - Chairman of the Board of Members of Agribank said that Resolution 42/2017/QH14 of the National Assembly on piloting bad debt settlement has expired, but some regulations are not inherited in the Law on Credit Institutions 2024. Especially the issue of support from police agencies and local authorities in exercising the right to collect and keep collateral of creditors.

Mr. Nguyen Van Trinh - Vice Chairman of the Banking Law Club, under the Vietnam Banking Association, emphasized that some regulations are still difficult to implement, such as the order of priority for payment when handling secured assets or the application of simplified litigation procedures. For example, regarding the application of simplified litigation procedures, when bad debts occur, most customers avoid and do not cooperate with credit institutions to coordinate the handling, so this is very difficult to implement.

If new circumstances arise that the parties do not agree on, leading to the case no longer meeting the conditions for settlement under the simplified procedure, the court must issue a decision to transfer the case to settlement under the normal procedure.

Experts expect the scale of bad debt to decrease slightly by the end of the year, when banks are in a better profit position than in 2023. In addition, economic recovery can help reduce bad debt pressure and speed up the handling of collateral assets of bad debts.

Hoai Anh

Source: https://doanhnghiepvn.vn/kinh-te/tai-chinh-ngan-hang/thu-giu-tai-san-bao-dam-va-xu-ly-no-xau-gap-kho/20240812100436708