HA NOI (Biz Hub)— The National Fund for Monetary Policy Implementation has disbursed VND500 billion (US$24 million) in charter capital approved by the State Bank of Viet Nam (SBV) last week.

The money was transferred to the Viet Nam Asset Management Company (VAMC) to fund the removal of non-performing loans from Viet Nam's banking sector. It will attempt to remove between VND80 trillion to VND100 trillion ($3.8-4.76 billion) worth of non-performing loans, with recovery ratios between 20 and 40 per cent.

The VAMC will have the option of issuing special bonds and shares, or investing capital directly in credit institutions hampered by non-performing loans. It is expected that VAMC bonds will carry a validity of five years at zero per cent interest and that banks can use the bonds as security to apply for refinancing loans from the central bank.

It is also estimated that the company's annual revenues will hit VND60 billion-160 billion ($2.85 million-7.6 million) in the next five years, allowing it to break even.

The VAMC's Members Council, Management Board and Board of Controllers will oversee the programme.

Dang Thanh Binh, the SBV's former Deputy Governor, will take the reins as Chairman of the Members Council, accompanied by Nguyen Huu Thuy, from the SBV's Banking Inspection and Supervision Agency, as General Director.

Speaking about the programme, the new General Director said the VAMC would be rushing to issue the special bonds to 10 banks in the next two months to purchase VND10 trillion ($476.1 million) worth of bad debt.

He added that the IFC, a member organisation of the World Bank, TPG Growth LLC and Standard Chartered Plc had contacted the VAMC to discuss solutions to reduce bad debt in Viet Nam's banking sector. — VNS