Hanoi (VNA) - Prime Minister Nguyen Xuan Phuc has taken action so that theNational Assembly’s new resolution on bad debt settlement could be applied fromAugust 15.

ThePM issued Directive 32/CT-TTg, stating that all regulations to guide theimplementation of the NA resolution on settling non-performing loans must beissued before August 15, the date the resolution takes effect, a move thatreflects the Government’s determination to settle bad debts.

Underthe directive issued on July 19, Phuc assigned the Ministry of Justice todirect the enforcement agencies at all levels to rapidly settle lawsuits, whichhave taken legal effect, related to bad debts of credit institutions and the VietnamAsset Management Company (VAMC).

Theministry will also be responsible for drafting a decree on collateraltransaction, which will be submitted to the Government for approval.

Thedirective orders the Ministry of Public Security to direct its agencies tomaintain security and social order when credit institutions and the VAMCexercise their legal right to confiscate and sell collateral assets of baddebts as per the regulations stated in the resolution.

TheMinistry of Natural Resources and Environment must direct its propertyownership registration agencies to carry out procedures to transfer theproperty ownership and use rights to legal purchasers and assignees of baddebts, as stipulated in the resolution.

ThePM also entrusted the Ministry of Planning and Investment to co-operate withrelevant agencies to map out plans to disburse State budget in order to payarrears for the Government’s infrastructure construction projects.

Underthe directive, PM Phuc required the State Bank of Vietnam (SBV) to closelysupervise and inspect credit institutions and the VAMC in the implementation ofthe resolution.

[Infographics🔥: Over 27 billion USD of bad debts settled]

Thecentral bank must also work out with relevant ministries and agencies astreamlined legal framework proposal for settling bad debts and collateralassets and submit it to the Government before August 15, 2021, based on effectsof the enforcement of the resolution.

Besidesenhancing supervision, the SBV must also take responsibility for streamliningcurrent legal regulations on the governance of credit institutions, especiallyrisky governance, and credit granting for credit so as to minimise bad debtsthe next time.

Lastmonth, NA deputies ratified the resolution on dealing with banks’ bad debts.Experts have applauded the resolution, saying it is necessary to reduce the baddebt ratio of credit institutions, including the debts sold to VAMC, to below 3percent.

Withthe resolution, credit institutions and the VAMC can trade bad debts in anopen, transparent manner at market prices, in accordance with the law, theysaid.

HuynhMinh Tuan from VnDirect Securities said the resolution would perform theimportant job of clearing away congestion in the economy, which agencies havebeen trying to do for the past five to six years but only with modest success.Now, the resolution will give more rights to credit institutions to liquidatemortgaged assets, thereby helping to avoid prolonged lawsuits related to debtcollection and reducing capital costs.

Accordingto an SBV report, by the end of 2016, non-performing loans across all creditinstitutions accounted for 5.8 per cent of the institutions’ total outstandingloans. If hidden debts are also taken into consideration, the total is 10.08percent.-VNA