Streamlining legal regulations and making a specific law on restructuring of credit institutions and settling bad debts are very necessary and must be done urgently, Prime Minister Nguyen Xuan Phuc said.

At a Government meeting on Tuesday, Phuc said that delaying this would negatively affect the State’s socio-economic management.

The Prime Minister agreed with the proposal of relevant ministries and agencies to submit two legal documents related the issues to the National Assembly (NA): a NA resolution draft on bad debt settlement, and a draft law on revising Law on Credit Institutions and other relevant laws. The two documents must be submitted to the NA at the same time, he said.

As per the State Bank of Viet Nam (SBV) reports, after four years of implementing a project on restructuring the credit institutions (CIs) system in 2011-15, there have been achievements such as restructuring a number of ailing banks, ensuring the safety of the banking system and assets of the State and the people.

However, because of inadequate legal regulations, there remain obstacles to speeding up the restructuring of ailing banks and settlement of bad debts.

When the SBV is dealing with weak CIs, the current regulations are found to be inadequate. According to the central bank, the process of recovery and restructuring of weak CIs is difficult because there is no legal basis for applying solutions suitable to the situation. Also, there is no effective financial support to help weak CIs recover.

The law on the handling of mortgaged assets to recover debts still has many inadequacies related to the confiscation of mortgaged assets, especially land, which limits the progress and effectiveness of debt settlement.

Most of the hindrances come from existing laws, so to thoroughly deal with these shortcomings, it is necessary to issue specific laws that will ease the difficulties and facilitate the restructuring of weak CIs and bad debt settlement, the SBV said.

According to the SBV, specific laws on restructuring of credit institutions and bad debt settlement need to be issued urgently. It will contribute to sustainable, safe and effective development of the CIs system, and protect the legitimate interests of depositors, it said. — VNS