Handling bad debts: the door just “ajar”, not open completely

Buying projects involving bad debt, investors are in trouble to adjust projects’ design or uses. Photo: ST.

Depend on the assets owners

According to the Resolution No. 42, the bank has the right to revoke the mortgaged property of the loan as bad debt for sale, if the property owner does not cooperate, the court will take measures to handle it quickly. However, a leader of a joint stock commercial bank in HCM City said, in dealing with collateral assets to recover bad debts, all banks are afraid to go to court due to complicated procedures, waste too much time...

Therefore, negotiating with customers is a priority choice of banks. However, this solution depends on their “luck”. In particular, if lucky, the bank will receive the cooperation of customers in the asset handover. In this case, the bank has to accept a reduction of interest rate for customers to quickly complete the procedures and recover the debt. Collecting debt of the bank is not always smoothy. Most of the customers are uncooperative, even against the asset seizure of bank.

The banking leader also said that, although the Resolution No.42 of the National Assembly on piloting the settlement of bad debts gives the right to banks to seize assets, in fact, many families have only a house to mortgage for loans serving their business activities. Unfortunately, their business activities are losing, causing their house be distrained. That time, if the property is seized drastically, the bank will be criticized for pushing the asset owners in the unplanned housing situation. Thus, it is hard to handle these situations reasonably. Aware of these cases, most of the asset owners are very fiercely for denying handing over assets to the banks. In these cases, even the representatives of District police station and local authorities also join to size but cannot deal with.

Some banks also share, in many cases, the bank has seized the property and decided to auction successfully but the landlord suddenly "turn around", causing difficulties for procedures to transfer assets. This is the reason why many people want to buy, but also afraid the real estate involving bad debt. The liquidation of the small real estate was difficult, with large projects, the difficulty is much larger than many times. Recently, an investor from Luxembourg, EZ Land, joined the Vietnamese real estate market by acquiring the land project.

However, the company has resolutely refused real estate projects such as Saigon One Tower (District 1, Ho Chi Minh City), V-Ikor Building (Binh Thanh District, Ho Chi Minh City)... Among the reasons that property involving bad debt is refused is that the procedure to transfer assets often lasts several years costly. In addition, if you want to modify the design or performance of the real estate project also encountered many difficulties. That's not to mention hundreds of possible situations for a collateral such as a property that is being rented to a third party or a property owner who has died and is in a dispute over the right. inheritance ... At this time, banks have no way to sell assets.

Need functional agencies to take action drastically

Talking about the bank's difficulties in bad debt recovery, Mr. Nguyen Tri Hieu, a financial and banking expert, said that bad debts damage both the economy and borrowers and lenders. In particular, the lenders are the banks are stagnant cash flow, making the loan flow does not recover. Thus, banks continue to raise interest rates to mobilize more capital.

At this time, the economy is difficult due to the high interest rates. Meanwhile, the borrower who has a bad debt cannot borrow money from any other bank. The longer the bad debt is being handled, the greater the damage is. In that case, the borrower will incur interest arrears, sometimes even higher than the value of collateral assets.

According to Mr. Hieu, the resolution 42 is the door for banks to handle bad debt, but this door is only ajar but does not open completely. Because the problem is that whether the provisions of the Resolution are implemented or not. This depends heavily on the cooperation of customers, the authorities as well as the ability of the banks themselves.

Mr. Hieu said that in Vietnam there are no regulations on personal bankruptcy. In the United States, when an individual is in insolvency and his assets are seized by the banks, he has the right to go to court to declare bankruptcy. The court then proceeds to declare the property of the person to allow him to retain a part of his property to meet the minimum living needs. The rest will be liquidated to repay the banks. But in Vietnam, there are no precedents and no regulations allow this.

In this context, Mr. Hieu said that in order to speed up the process of dealing with bad debts, it needs the authorities to take action drastically. The circular guiding of the Resolution No. 42 should define what agencies should participate and what is the level that they participate. At present, banks have only just seized assets, while waiting for other banks as well as the VAMC, but not be really drastically, ultimately. In the case of the VAMC seizing Sai Gon M & C Tower of Sai Gon One Tower Joint Stock Company, Mr. Hieu said that the VAMC is likely to face legal troubles related to civil disputes with those who have bought apartments in this building.

Economist Bui Quang Tin also said that the State Bank of Vietnam is drafting a circular detailing the implementation of Decree No. 42. Accordingly, it is necessary to have detailed instructions on the right to seize assets of banks. In addition, Mr. Tin said that there should be a joint circular between the SBV, the Court, the Ministry of Public Security, the Procuracy and some other ministries and agencies detailing the coordination among related parties to resolve issues in the spirit of the Resolution No. 42.