Since Resolution No.42 came into effect last August, which provides special pilot treatment of bad debts at credit institutions, bad debts worth VND138.29 trillion (US$6.04 billion) were resolved as of June 2018.
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As of the end of June, Vietnam's bad debts accounted for 2.09% of total outstanding loans, down from the rate of 2.46% recorded on December 31, 2016 and below the 3% target set by the National Assembly.
Despite initial positive results, the State Bank of Vietnam (SBV) identified shortcomings during the process of resolving bad debts. Among those issues, the lack of a specialized debt trading market has restricted the efficiency of measures tackling bad debts.
Additionaly, there remain difficulties in implementing Article No.14 of the resolution, for example, which stipulates the return of collateral being exhibit in criminal cases, Article No.12 regulating order of payment upon liquidation of collateral, or Article.15 on assignment of collateral, among others.
Moreover, credit institutions are unable to identify correctly which collateral is under dispute or put under temporary emergency measures, due to the lack of information. This resulted in different understanding of collateral between presiding agencies, causing difficulties in dealing with collateral under Resolution No.42.
As of June 30, charter capital of the banking system stood at VND519 trillion (US$22.4 billion), up 1.3% against the end of 2017 and 6.3% from the end of 2016.
Additionally, the combined equity of the system reached VND720.43 trillion (US$31.1 billion), up 9.1% compared to the end of 2017 and 21.1% by the end of 2016.
