The National Financial Monitoring Committee President has emphasised the need to restructure the commercial banking system if the country did not want to lag behind the rest of the world.

Vu Viet Ngoan told reporters on the sidelines of the ongoing National Assembly meeting in Hanoi that Vietnam ’s financial system was rated as “weak” in the pre-crisis period and that the world was now rushing to restructure the global financial system in order to increase working capacity and reduce risk.

“From this point, if Vietnam fails to speed up the process of financial restructuring, it will lag further behind,” the newly appointed chair of the committee said.

He recommended that upcoming restructuring increase the independent role to be played by the State Bank of Vietnam and close down all banks with weak financial health and poor management capacity.

The chief financial observer also warned of risks in taking hurry action.

“We can apply international criteria but should work out a long-term roadmap with concrete time frames for each goal,” Ngoan said.

His views were echoed by several other experts such as Huynh The Du, lecturer with the Fullbright Economic Programme, and Vo Tri Thanh, Vice Rector of the Central Economic Management Research Institute. They complained of the existence of a number of small banks with poor operations which were exposed to numerous risks such as low liquidity and high bad debt ratios.

These factors may lead to macro-economic instability, they said.

Statistics released by the State Bank of Vietnam showed that bad debts accounted for 2.72 percent of the entire banking system’s total loans up to June 10, compared to 2.17 percent late last year./.