The SBV's administrative procedures are expected to handle around 40-50 per cent of the bad loans in the banking system. Photo dantri.com.vn

HA NOI (Biz Hub) — The State Bank of Viet Nam announced administrative procedures relating to selling, buying and solving bad debts from domestic credit institutions for the Vietnam Assets Management Company on Wednesday.

The procedures include the issuance, revision, adjustment and supplement of management policies and regulation on the VAMC's activities, allowing VAMC to buy bad debts at market value, approving the VAMC's plans on bond issuance, financial support for credit institutions and contributing registered capital and equity.

Bad debts accounted for VND142.27 trillion (US$6.8 billion) or 4.64 percent of total loans by Vietnamese banks at the end of August, a 20.15 percent increase since the end of 2012, according to the SBV's Inspection Agency.

According to Chief Inspector Nguyen Huu Nghia, many measures will be carried out to solve bad debts. The SBV will direct credit institutions to apply measures to recover debt and collateral and use provisions to settle bad debts and assets. It will also co-ordinate with the VAMC to implement bad debt transactions.

All such activities must contribute to the objective of cutting the bad debt ratio to the safety threshold by the end of 2015 as planned by the National Assembly. The VAMC is expected to eventually handle around 40-50 percent of the bad loans in the banking system. — VNS