Bad debts debated at central bank governor’s Q&A session
Governor of the State Bank of Vietnam (SBV) Nguyen Van Binh on September 29 attended a Q&A session at the ongoing 31st meeting of the National Assembly Standing Committee, during which he focused on clarifying issues relating to bad debts and credit growth.
In his report delivered at the session, the Governor highlighted a great effort by the Government and the banking system to deal with bad debts.
He said July reported the lowest monthly increase of 0.79% in bad debt growth, a remarkable decrease compared to June’s 21.5%.
Bad debts had by the end of July totalled at VND162.2 trillion (US$7.62 billion), accounting for 4.11% of the total outstanding debt.
So far this year, about VND105 trillion (US$4.935 billion) worth of bad debts have been handled.
The Vietnam Assets Management Company (VAMC) proved effective when it had purchased nearly VND60 trillion worth of bad debts from 35 credit institutions by September 1.
The central bank’s head agreed with several NA deputies’ opinions of handing over more tools in dealing with bad debts to the VAMC. He also proposed raising the company’s chartered capital from VND500 billion currently to VND2 trillion.
Regarding credit growth, the governor forecast credit to grow by 10% by year-end.
As of September 29, credit growth was estimated at 7% against the end of 2013.
The report also revealed that credit institutions have adjusted the interest rate of old loans. By the end of August, outstanding loans in dong with an interest rate of more than 15% accounted for 4.3% of the total number of loans, while outstanding loans with an interest rate of more than 13% accounted for 12.3%.
The total means of payment rose by 9.09% while deposit growth rate went up by 8.52%, with deposit in dong rising 9.94% and deposit in foreign currency down by 0.1% compared to the same period last year.
The liquidity of credit institutions remained abundant and the interest rate of the inter-bank market was stabilised at a low level, it added.
Addressing the closing session, National Assembly Chairman Nguyen Sinh Hung stressed the need to strengthen monetary policies and economic restructuring so that Vietnam will have a transparent financial system by 2015.