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Resolution 42 “reviving” bad debts

Bad debt Bad debts are loans that are subprime, may be past due and in doubt about their ability to repay. The more bad debts a bank has, the more it will affect its financial health.

In the past 5 years, since Resolution 42 The whole system of credit institutions has handled about 380.2 trillion dong of bad debt, helping to reduce the total bad debt by more than 17%. The ratio of bad debt on the balance sheet, which is bad debt recorded in the financial statements of the banking system, has decreased from 2.51% to 1.49% by the end of 2021.

The numbers for the whole system are like that, but for each business, each bank is much more practical. There are apartment projects, converted into international hospitals, but due to business losses, they become bad debts. After nearly 3 years of building the mat, the project was bought by an investor, poured capital and is gradually revived.

A bad debt worth more than VND 1,460 billion, if not bought by a new investor, will still lie in the sun and rain in the city center. But only next year, this place will form a high-class apartment complex.

Resolution 42 revives bad debts - Photo 1.

Since the issuance of Resolution 42, the whole system of credit institutions has handled about 380.2 trillion dong of bad debt. Illustration – Photo: VNA.

“We have searched for foreign operators, cooperated with them and hired to sign contracts with reputable design units to design. So far we have gone 2/3 of the way of the project. The project and favorable conditions are expected by the end of the third quarter of 2023 to bring the project to market,” said Mr. Nguyen Minh Ly – Deputy General Director of Hasco Group JSC.

Bad debts found new owners, and banks also got rid of debt burden.

“Prolonging Resolution 42 is necessary, demonstrating the consistency and stability of policies in the banking and finance sector and debt settlement measures. Especially, in the light of the COVID-19 pandemic, the economy is not affected by the COVID-19 pandemic. The economy will face difficulties, bad debts may increase, so it is necessary to extend Resolution 42”, said Mr. Phan Dinh Tue – Deputy General Director of Sacombank.

Problems in applying Resolution 42

The effectiveness of Resolution 42 in dealing with bad debts is obvious, but there are opinions that the efficiency can be even higher. So what are the problems when applying Resolution 42?

Talking about this issue with VTV reporter, Dr. Can Van Luc – a member of the National Financial and Monetary Policy Advisory Council said: “We have seriously implemented Resolution 42, but obviously there is a problem. Why not better, I think there are still important problems somewhere.”

Accordingly, Dr. Can Van Luc pointed out that obstacles such as the involvement of local authorities are still lack of drastic, lack of synchronization. For example, some guiding documents are only issued after 2 years, which is very slow while the duration of Resolution 42 is 5 years.

Besides, according to Dr. Can Van Luc somewhere, there are still difficulties about collateral assets from the story of how to evaluate, how to seize, there is always a lack of cooperation of the borrower.

“In Vietnam, credit thinking is also problematic because I always think that the right thing belongs to the borrower, even if they violate and delay paying the debt,” said Dr. Can Van Luc.

Resolution 42 revives bad debts - Photo 2.

There are still many problems when applying Resolution 42. Illustration – Photo: HNM.

Another problem pointed out by Dr. Can Van Luc is that the problem of transferring collateral is also extremely difficult, especially real estate collateral because it requires the bidders to win the bid and win the auction. must be professional real estate companies. If they are not professional, they will not be transferable.

In addition, the problem is also related to the priority order of using the processed money, which is still controversial today. “The tax side demanded collection immediately because they said it was according to the Tax Law, and the bank side told to collect the debt in advance according to Resolution 42. Obviously it was not synchronized in terms of law as well as understanding and practice”, said Dr. Can. Van Luc said.

Previously, there were similes that banks fell into the situation of “standing for lending, kneeling to collect debt”. It is known that the borrower’s sense of debt repayment has been higher, but there are still debtors who are inactive, looking for ways to abort and avoid debt even though there is Resolution 42 stipulating shortened procedures for settlement. Disputes related to the handling of collateral.

At the end of the 10th session, the National Assembly Standing Committee agreed to extend the application deadline for all provisions of Resolution 42 until December 31, 2023, without expanding or narrowing the scope. vi, subjects of application compared to Resolution 42. If the scope is not changed, that is, bad debts arising after August 15, 2017 will not be applied by Resolution 42 to handle, so the amount of bad debts in How has the system evolved over the last 5 years and is it worrisome?

Concerns about recent bad debts related to BOT projects, real estate, corporate bonds that are issued by banks, will it increase bad debts of the banking system?

Programme Today’s problem broadcast on April 15 with the participation of Dr. Can Van Luc has further analyzed the above contents!

* Invite readers to watch programs broadcast by Vietnam Television on TV Online and VTVGo!

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