The State Bank of Vietnam (SBV) will not further delay enacting Circular02/2013/TT-NHNN on debt classification but enforce it as scheduled onJune 1, 2014.
According to SBV deputy chiefinspector Dang Van Thao, last year the central bank delayed enforcingthe circular for one year to help businesses get easier access to bankloans and give credit institutions more time to prepare the roadmap andconditions to fully apply the provisions of the document.
The circular strictly regulates asset classifications, the levels andmethods of risk provisioning and the use of provisions to handle risksin the operation of credit institutions and branches of foreign banks.
Earlier, leaders of some banks expressed the viewthat the application of the circular in June 2014 means businesses willcontinue to be tied up and massive bad debts will be incurred.
To prepare for enactment next year, the SBV has asked banks tocalculate how non-performing loans (NPL) will increase when applyingthis document to have specific plans for risks.
Thaosaid that SBV's Inspection and Supervision Agency will next yearpropose to the SBV Governor to classify NPLs into three groups.
The first consists of businesses that have gone bankrupt or liquidatedwithout the ability to recover debts. In this case, banks will useprovisions to clear the debts.
The second consistsof businesses that are in difficulties. This group needs banks torestructure debts and lend more funding, along with rescheduling debtsand reducing interest payments.
The third consistsof businesses that have been bankrupt or liquidated, but havecollateral. In this case, banks will be able to sell the collateral torecover debts.
Banks will also be allowed to set up an Auction Council to liquidate and sell assets more quickly.
The grouping is planning to be directed towards credit institutions tohelp handle the expected increase in NPLs after the enactment of thecircular.
Interest ceiling remains
The central bank will continue to apply the interest rate ceiling ondong deposits next year to stabilise market interest rate levels, saidSBV's Monetary Policy Department head Nguyen Thi Hong.
The central bank will actively and flexibly regulate interest rates tocontrol and supervise market interest rates, along with monetary andmacroeconomic developments, especially inflation, contributing tostabilising the currency market.
It will alsoactively use tools to enforce monetary policies to control inflation,stabilise the economy, support economic growth at a reasonable rate andensure safe liquidity for credit institutions.
Thecentral bank will also closely watch exchange rates, foreign currencymarkets and balance of payments to create suitable management policies,in a move to raise foreign exchange reserves and avoid the dollarisationin the economy, Hong said.-VNA
According to SBV deputy chiefinspector Dang Van Thao, last year the central bank delayed enforcingthe circular for one year to help businesses get easier access to bankloans and give credit institutions more time to prepare the roadmap andconditions to fully apply the provisions of the document.
The circular strictly regulates asset classifications, the levels andmethods of risk provisioning and the use of provisions to handle risksin the operation of credit institutions and branches of foreign banks.
Earlier, leaders of some banks expressed the viewthat the application of the circular in June 2014 means businesses willcontinue to be tied up and massive bad debts will be incurred.
To prepare for enactment next year, the SBV has asked banks tocalculate how non-performing loans (NPL) will increase when applyingthis document to have specific plans for risks.
Thaosaid that SBV's Inspection and Supervision Agency will next yearpropose to the SBV Governor to classify NPLs into three groups.
The first consists of businesses that have gone bankrupt or liquidatedwithout the ability to recover debts. In this case, banks will useprovisions to clear the debts.
The second consistsof businesses that are in difficulties. This group needs banks torestructure debts and lend more funding, along with rescheduling debtsand reducing interest payments.
The third consistsof businesses that have been bankrupt or liquidated, but havecollateral. In this case, banks will be able to sell the collateral torecover debts.
Banks will also be allowed to set up an Auction Council to liquidate and sell assets more quickly.
The grouping is planning to be directed towards credit institutions tohelp handle the expected increase in NPLs after the enactment of thecircular.
Interest ceiling remains
The central bank will continue to apply the interest rate ceiling ondong deposits next year to stabilise market interest rate levels, saidSBV's Monetary Policy Department head Nguyen Thi Hong.
The central bank will actively and flexibly regulate interest rates tocontrol and supervise market interest rates, along with monetary andmacroeconomic developments, especially inflation, contributing tostabilising the currency market.
It will alsoactively use tools to enforce monetary policies to control inflation,stabilise the economy, support economic growth at a reasonable rate andensure safe liquidity for credit institutions.
Thecentral bank will also closely watch exchange rates, foreign currencymarkets and balance of payments to create suitable management policies,in a move to raise foreign exchange reserves and avoid the dollarisationin the economy, Hong said.-VNA
