Central bank issues regulations for VAMC

The State Bank of Vietnam on September 25 announced administrative procedures relating to selling, buying and solving bad debts from domestic credit institutions for the Vietnam Assets Management Company.

The State Bank of Vietnam on September 25 announced administrative procedures relating to selling, buying and solving bad debts from domestic credit institutions for the Vietnam Assets Management Company.

The procedures include the issuance, revision, adjustment and supplement of management policies and regulations on VAMC’s activities, allowing the company to buy bad debts at market value, approving its plans on bond insuance, financial support for credit institutions and contributing registered capital and equity.

Bad debts amounted to 142.27 trillion VND (6.8 billion USD) or 4.64 percent of total loans by Vietnamese banks at the end of August, a 20.15 percent increase since the end of 2012, the SBV’s Inspection Agency reported.

According to Chief Inspector Nguyen Huu Nghia, many measures will be taken to solve bad debts. The SBV will direct credit institutions to apply measures to recover debt and collateral and use provisions to settle bad debts and assets. It will also coordinate with VAMC to implement bad debts transactions.

All such activities must contribute to the objective of cutting the bad debts ratio to the safety threshold of 3 percent by the end of 2015 as planned by the National Assembly.

VAMC is expected to eventually handle around 40-50 percent of the bad loans in the banking system.