A customer at a Sacombank office. The Government has assigned the SBV to coordinate with relevant agencies in urgently finalising the draft resolution on extending Resolution 42/2017/QH14 to submit to the National Assembly. (Photo: cafef.vn) Undera decision issued late last week, the Government has assigned the SBV tocoordinate with relevant agencies in urgently mapping out the draft resolutionon extending the application of Resolution 42 to submit to the NationalAssembly (NA).
TheNA approved Resolution 42/2017/QH14 on piloting the bad debt settlement ofcredit institutions in 2017, however, the policy will expire on August 15 thisyear.
TheSBV has so far also completed the draft resolution and made it public forcomments. Under the draft, the SBV has proposed extending the application ofResolution 42 until August 15, 2025. During the extension, the Government willbe responsible for studying and proposing to develop a new law on bad debtsettlement of credit institutions.
Tomeet the current legal regulations related to procedures and deadlines, theGovernment will propose the NA allow the application of the shortenedprocedures to pass the extended resolution at the NA’s meeting in May2022, according to the draft.
Accordingto the SBV, after five years of implementing the resolution, the bad debtsettlement of credit institutions has achieved positive results.
Accordingly, from August 15, 2017 to November 30, 2021, 373.3 trillion VND ofbad debt was recovered according to Resolution 42. On average, some 5.66trillion VND of bad debts were handled monthly during the application of Resolution42, against about 2.14 trillion VND previously.
However,the outbreak of the COVID-19 pandemic has negatively affected the creditquality of the credit institution system. Bad debts have been increasing since2020 and reached more than 2 per cent by the end of November 2021. Manyhave warned bad debt will continue to rise again due to the pandemic’simpacts.
TheSBV, therefore, has proposed legislating the policies specified inResolution 42 into a new law to continually enable the banking industry tosettle bad debts of credit institutions. The issuance of a new law on baddebt handling will help credit institutions maintain and accelerate the handlingof bad debts to avoid potential risks for the economy./.
VNA
