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Bad debts, latent bad debts and related risks are always present, directly affecting the operations of credit institutions. Therefore, addressing and recovering bad debts is an urgent task.
On April 15, at the headquarters of the Vietnam Asset Management Company (VAMC), the Vietnam Banks Association (VBA), in cooperation with relevant agencies, organized a roundtable titled “Bad debts in the new context”.
Participants from central government agencies included Mr. Nguyen Hai Nam, a dedicated member of the Economic and Financial Committee of the National Assembly; along with representatives from the Government Office, the Ministry of Public Security, the Ministry of Justice, the State Bank of Vietnam, and the Ministry of Finance.
From the Vietnam Banks Association, there were Mr. Nguyen Quoc Hung, Vice Chairman and Secretary General; Ms. Nguyen Thi Phuong, Head of the Bank Legal Club; and Mr. Nguyen Dinh Duc, Head of the Consumer Finance Club, together with deputy heads of the clubs under the association.
Representing VAMC were Mr. Tran Trung Dung, Chairman of VAMC’s Board of Members and head of the Debt Resolution Club, and Mr. Dang Dinh Thich, Acting General Director.
The roundtable also included Dr. Can Van Luc, Chief Economist of BIDV, a member of the National Financial and Monetary Policy Advisory Council; Mr. Moon Youngso, CEO of Welcome DTC; and representatives from credit institutions, AMCs, and clubs under the VBA.
In his opening remarks, Dr. Nguyen Quoc Hung said the roundtable was held in the context of the successful 14th National Congress, which set strategic directions for the country and a two-digit growth target. He noted that the banking sector plays a crucial role in macro stabilization, inflation control, supporting growth, ensuring business stability, and enabling enterprise development. However, bad debts remain a major issue requiring effective and sustainable resolution.
Dr. Hung cited government assessments that Resolution 42/2017/QH14 significantly aided the banking sector in handling bad debts. After its expiry, challenges emerged due to the COVID-19 pandemic, economic crises, and geopolitical developments that affected global economies and Vietnamese enterprises. As a result, bad debts, latent bad debts and related risks continue to directly affect credit institutions’ operations.
Dr. Hung said preliminary data indicate that the ratio of on-balance-sheet bad debts and latent bad debts is around just over 2.8%. He added that if these resources were mobilized into productive activities, the economic benefits could be substantial—reducing costs for credit institutions and returning capital to circulation to support enterprise development and economic growth.
He emphasized that, given the current bad debt conditions, without decisive solutions and active support from authorities and sectors, the banking sector cannot address the issue unilaterally. He warned this could become a heavy burden on the banking system, raise lending costs, limit the ability to reduce loan rates for enterprises, and impede capital flows that support growth.
Dr. Hung noted that the Governor of the State Bank of Vietnam has recently asked banks to implement measures to harmonize deposit rates at reasonable levels, ensuring lending rates remain suitable for enterprises to access capital for production and business activities.
On the legal framework, he said the National Assembly passed the Law amending and supplementing the Law on Credit Institutions 2025, granting banks additional powers, especially the right to seize collateral. However, he said implementation remains challenging: although regulatory guidance has been issued, practical obstacles persist at credit institutions.
He highlighted that VAMC has been established for 13 years and has succeeded in moving bad debts from on-balance-sheet to off-balance-sheet, helping banks reduce the on-balance-sheet bad debt ratio below 3% in line with international practice. Despite this, the underlying bad debts persist and debt recovery remains difficult.
Dr. Hung said that while credit institutions and asset management companies (AMCs) perform debt recovery functions, their powers are not significantly different from VAMC. Without a special enabling mechanism, debt resolution continues to face obstacles.
He pointed to practical difficulties in debt collection. Even after collateral is seized, ownership transfer can face issues. Asset-handling processes involve disputes, sometimes including unfounded disputes aimed at hindering handover and disposal, complicating banks’ efforts and resulting in modest recoveries.
He also said that although the legal framework is relatively complete, implementation has deficiencies. Court judgments are enforceable, but enforcement is limited. Coordination among credit institutions, VAMC, AMCs, and enforcement agencies is not fully effective. Transfer procedures for secured assets—whether seized or auctioned—still face many hurdles, particularly regarding resources and the operating environment.
Dr. Hung emphasized an upcoming issue: the government will issue a decree replacing Decree 53/2013/ND-CP on the organization and operation of VAMC.
He said he hoped the VBA would consolidate opinions and recommendations and submit them to state agencies and the Government to improve the policy framework to better match practice. This, he added, would support the banking sector and credit institutions in handling bad debts effectively, help unblocked capital return to circulation to contribute to economic growth toward a two-digit target, and help reduce costs for customers while stabilizing interest rates at reasonable levels.
During the roundtable, participants discussed key topics: (1) sharing international experiences in bad debt resolution; (2) accurately assessing the current state of bad debt resolution in Vietnam; (3) analyzing legal obstacles; and (4) proposing solutions and policy recommendations to better fit practical realities.
With that spirit, it is hoped that the roundtable will contribute to the effective management of bad debts and support the overall stability and growth of the financial system.
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