PM urges bad debt settlement

(VOV) - The Prime Minister has asked the State Bank of Vietnam (SBV) to quickly establish a national asset management company (AMC) to deal with bad debt burdening credit organisations.

In instructions released by the Government Office on February 22, the PM urged the central bank to submit a bad debt settling plan for approval, as well as the detailed rules that will govern the AMC’s operations once taking effect in the first quarter of 2013.

The company, which is said to have an initial capital fund of VND100 trillion, will purchase commercial banks’ bad debts.

The central bank has said the company will mobilise capital from alternative sources other than the State budget.

Credit organisations reported that as of November 2012, the bad debt/total outstanding loan ratio stood at 4.7 percent (VND117 trillion). However, the SBV estimated the ratio at 8.82 percent (VND202 trillion) in June 2012.  

Bad debt is one of the major issues hampering economic development. Experts say the best solution to bad debt is to assist businesses owing large amounts of capital to banks. 

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