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
The State Bank of Vietnam (SBV) has selected six credit institutions, including: Sacombank, ACB, BIDV, Techcombank, VietinBank and Agribank to implement the Resolution No. 42 in order to focus on comprehensive, drastic and effective implementation of all policies to handle bad debt, identify targets and roadmap for each year as well as report difficulties and propose to ministries and branches to complete the documents guiding on dealing with bad debts. This will be the base for creating a legal framework to deal quickly and financially with bad debts of credit institutions, thus contributing to stimulating the development of the economy. As soon as having the pilot results, the SBV will apply the Resolution 42 to all credit institutions. |
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.
Dr. Doan Van Thang, General Director of Vietnam Asset Management Company (VAMC): Early provide a fund for VAMC With the model of handling bad debt without using the state budget, it can be said that the model of bad debt treatment through VAMC of Vietnam over time is the optimal solution, but there is no precedent in the world. However, the handling bad debt of VAMC has had positive impacts on credit institutions and enterprises, contributing to the socio-economic stability. By August 31, 2017, the VAMC has purchased 26,110 bad debts from 16,197 customers, worth 266,335 billion vnd. In the period 2013 - 31/12/2016, the VAMC has cooperated with credit institutions to sell 139 debts worth 7,816 billion vnd of 59 customers, sell the guaranteed assets of 11,026 billion vnd. However, in order to ensure that the market for handling bad debts in Vietnam is operated effectively, authorities need to improve the legal framework to accelerate the process of dealing with bad debts, implement the Resolution No.42 under the direction of the Government. In addition, VAMC has been approved to raise capital from 500 billion vnd to 2,000 billion vnd. However, the VAMC has not yet received sufficient capital so far. Therefore, the VAMC has proposed to soon provide the sufficient capital for VAMC to ensure capital for buying and dealing with bad debt. In addition, it needs to build the valuation standard of bad debt at market prices; creating a favorable environment for foreign investors to participate in the market. By Hương Dịu |
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