The rate of non-performing loans ( NPLs) in Vietnam still remains high at 4.62 percent of the banking sector as of September 2013, said the country's prime minister here Thursday.
Addressing the ongoing National Assembly meeting in Vietnam's capital Hanoi, Vietnamese Prime Minister Nguyen Tan Dung said it is difficult to address debt settlement in Vietnam due to the slow recovery of the property and stock markets.
The prime minister said there is no effective mechanism for heightening businesses' responsibility towards tackling the debt.
The government will implement consistent solutions for settling NPLs by establishing provisions, restructuring debts, improving credit quality, and increasing inspections to ensure transparent operation of credit organizations, Dung said.
In a move to tackle NPLs, the Vietnamese government established the Vietnam Asset Management Company (VAMC) earlier this year to resolve bad debts and boost credit growth.
The fully state-owned company is permitted to buy bad debts from banks and will recover debts and put collateral up for sale as well as restructure debts. It will also adjust the conditions on loans and convert debt into equity.
The cabinet leader said efforts to settle non-performing loans of commercial banks have witnessed initial results. More than 101 trillion Vietnamese dong (roughly 4.8 billion U.S. dollars) has been settled through banks' provisions, while the VAMC is expected to purchase 30 to 35 trillion Vietnamese dong (1.42-1.65 billion U. S. dollars) of NPLs from banks in 2013.
The VAMC is set to purchase 100 to 150 trillion Vietnamese dong (4.73-7.1 billion U.S. dollars) worth of NPLs from banks in 2014. Endi