State Bank of Vietnam will not delay the implementation of a circular addressing bad debt classifications. — Photo ybahcm.vn

HA NOI (Biz Hub) —State Bank of Vietnam (SBV) will not delay the June 1, 2014, implementation of a circular addressing bad debt classifications, said its Deputy Chief Inspector Dang Van Thao on Monday.

Thao's remarks were made at a press conference on the implementation of banking duties in 2014.

Circular 02/2013/11-BHNN regulates asset classifications, the levels and methods of risk provision, and the use of provisions to handle risk in the operation of credit institutions and the branches of foreign banks.

It was issued early this year, but its implementation was delayed until June 1, 2014, to help businesses access bank loans, support the economy's credit growth, reduce loan interest rates, and resolve difficulties for production and business.

Thao claimed the delay also gave credit institutions more time to prepare a roadmap and the necessary conditions to fully apply the provisions of this circular.

The SBV has asked banks to calculate how the rate of bad debts will increase when the circular goes into effect on June 1, so they can establish specific plans for risk provision.

Earlier, the leaders of some banks worried that applying the circular in June 2014 could leave many businesses constrained with massive bad debts piling up.

It has been reported that the Vietnam Asset Management Company has bought nearly 28,170 billion (US$1.34 billion) worth of bad debts from 26 credit institutions since it was established in July this year. With the above progress, the company expects to proceed with plans to buy about VND35 trillion ($1.66 billion) worth of bad debts this year. — VNS