The inspections focussed on non-performing loans (NPLs), asset quality, and implementation of restructuring, apart from appraisal on real capital and financial status, and obeying legal regulations of credit institutions. — Photo vnexpress.net

HA NOI (Biz Hub) — The inspectorate body of the State Bank of Viet Nam has conducted 6,555 inspections on credit institutions in the past five years and uncovered many violations in the banking sector.

According to the central bank, results of the inspections, which were conducted from 2011 to September 15, 2015, have helped it boost the restructuring of the banking system in the past year.

The inspections focussed on non-performing loans (NPLs), asset quality, and implementation of restructuring, apart from appraisal on real capital and financial status, and obeying legal regulations of credit institutions.

According to the central bank, through these inspections the central bank received a more accurate appraisal on quality, effectiveness and safety of credit institutions, which will enable it to take suitable restructuring measures on each credit institution.

A number of serious violations related to debt restructuring and classification, as well as risk provisions which were taken by credit institutions to conceal their non-performing loans resulting in incorrect business performance results, were revealed thanks to the inspections.

Many risks, shortcomings and legal violations by credit institutions mainly in credit activities, financial investments, dominant shareholders, and high NPLs, apart from poor business performance, and a weak governance system, have been uncovered through these inspections.

Based on the inspections, the central bank's inspectorate also decided to impose 724 administrative violation cases for a total fine of VND12.7 billion ($570,000).

The inspectorate also sent documents of some cases with criminal intent to the police to handle it in accordance with the legal regulations.

According to experts, the central bank is on track to settle shortcomings of the banking system including weak banks and bad debts, under a scheme to restructure credit institutions from 2011 to 2015.

National Financial Supervisory Committee Vice Chairman Truong Van Phuoc hailed the better banking management quality, which was possible thanks to manpower and financial support following mergers and acquisitions.

Since 2011, 17 credit institutions and 2 branches of foreign banks have shut down through mergers, acquisition or dissolution, according to the central bank.

According to government data, the NPL ratio in the banking system fell to 2.93 per cent at the end of September, below the 3 per cent target set to be achieved by the end of 2015. — VNS