The National Assembly’s Economic Committee on Monday agreed to streamline existing legal regulations to better recover bad debts and restructure credit institutions.

During the meeting, the Governor of the State Bank of Viet Nam Le Minh Hung, on behalf of the Prime Minister, presented a report on the draft resolution on fixing bad debts by credit institution. He also presented amendments to the Law on Credit Institutions for consideration and approval.

The draft resolution comprises 18 articles regarding the rights of legal lenders, the development of debt markets, the settlement of guaranteed assets and other topics.

Chairman of the NA’s Economic Committee Vu Hong Thanh said that the committee basically agreed with the Government’s report on the need to settle bad debts and further restructure the system of credit institutions during the 2016-20 period.

The committee stressed the need to streamline laws to build a system of financially healthy credit institutions that operate under international rules.

It asked compiling agencies to continue reviewing draft law regulations to ensure that they are synchronous with the Constitution and relevant laws.

Once the resolution is approved by the Legislature, the Government affirmed that it would focus on improving legal documents, mechanisms and policies for restructuring credit institutions and settling bad debts.

The Government would also improve plans to fix weak banks in line with market rules in an expeditious, sweeping and cautious manner to safeguard the banking system and depositor interests.

According to Governor Hung, after four years implementing a project on settling bad debts of credit institutions, the entire system of credit institutions recovered VND611.59 trillion (US$26.82 billion) of non-performing loans (NPLs). Of that total, over 56 per cent were settled by the institutions themselves, and the remaining were sold to the Viet Nam Asset Management Company (VAMC) and other individuals and institutions.

“The results of settling bad debts have helped credit institutions expand loans to the economy, especially to priority and strategic sectors. It has contributed to removing difficulties in production and business, thereby promoting economic growth," Hung said.

However, the restructuring of ailing CIs and settlement of bad debts still faced difficulties, Hung said, adding that total NPLs of the entire credit institutions system until March 31, 2017 were VND160 trillion, equal to 2.56 per cent of the institutions’ total outstanding loans.

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

For example, 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. — VNS