Bad debt has decreased by 36 trillion VND (1.7 billion USD) thanks to the efforts of debt restructuring, debt payment delay and quittance, according to the State Bank of Vietnam (SBV).

The settled debts made up for nearly 18 percent of the 202 trillion VND (9.62 billion USD) total bad debt reported in September by SBV inspectors. This amount accounted for 8.6 percent of outstanding loans.

SBV also seeks to establish a debt purchase-and-sale company to resolve bad debts. This plan has been in formation since last year and SBV expects to propose it to the Government next month. Accordingly, the company would be able to handle some kinds of bad debt estimated to total about 60-100 trillion VND (2.8-4.7 billion USD).

Forming a council under the Government to deal with bad debt was also mentioned as a possible measure to curb the problem.

According to SBV's chief inspector Nguyen Huu Nghia, the current bad debts could be traced back to the rapid credit growth - nearly 30 percent on average per year - during the period from 2005-10.

Nghia said that this year could not result in more bad debts because all of the debts this year were of a short-term nature, adding that the total bad debt accounted for around 8-10 percent of outstanding loans.

He said that 85 percent of bad debts had security assets equal to 135 percent of the total. The credit institutions also had credit risk provisions of about 70 trillion VND (3.3 billion USD).

However, most security assets of bad debts are real estate, and the real estate market is now deep in difficulty. SBV said that it is important to tackle the difficulties affecting the real estate market and speed up inventory clearance to eliminate bad debts and boost the economy.

Meanwhile, SBV also enhanced the restructuring of the commercial bank system.

The bank discovered that the real bad debts of nine commercial banks awaiting restructuring were much higher than the reported figures.

To date, five out of nine banks have had their restructuring plans approved and the implementations are in progress. SBV said that after 2012, commercial banks that fail to raise a proper restructuring plan would be subject to coercive measures.