Credit firms struggle to retrieve collateral

Gaps in regulations have hindered progress of credit institutions in retrieving debts, according to experts. (Photo: VNA)

While handling pledged assets is considered an effective tool for credit institutions to retrieve debts and reduce non-performing loans, gaps in regulation have been hindering progress on this front, experts said during a seminar in Hanoi last week.

According to Nguyen Tien Dong, Director of the central bank's Department of Credit for Economic Sectors, handling of pledged assets is becoming a pressing matter of concern in the operation of credit institutions.

He attributed the stagnation in handling pledged assets to the overlaps and gaps in relevant legal documents which make it difficult to properly evaluate the value of the pledged assets or hindered seizure of assets.

While a majority of pledged assets are in the shape of real estate, handling such assets involves many entities, but the lack of coordination among such entities is causing delays in transferring pledged assets.

The General Secretary of the Vietnam Banks Association, Tran Thi Hong Hanh, said the process to handle these pledged assets must be expedited as stagnation will hurt both lenders and borrowers as well as the economy. She urged that the legal framework needs to be improved.

Facts show that involved parties in any pledged asset hardly reached an agreement regarding the value of the asset, especially if the pledged assets were evaluated lower than the loan amount, experts said. Many such cases were brought to courts, thus taking valuable time.

According to Pham Hong Son, head of Agribank's Department of Individual and Household Customers, involved parties could take advantage of the gaps in regulation to prolong any dispute over asset handling.

In addition, auctioning process of pledged assets lacks transparency and sometimes the assets are over-evaluated on purpose, said a representative from Hanoi Civil Judgement Enforcement.

According to Dong, credit institutions should pay adequate attention to the evaluation and management of pledged assets to prevent conflicts which might arise later.

The coordination among local authorities, banks and police is also important in handling pledged assets, experts said, adding that regulations about responsibilities of police and people's committees, in coordination with credit institutions and Vietnam Asset Management Company, are needed to hasten resolution of bad debts.-VNA