Vietnam: To extend the time for the settlement of bad debts of credit institutions according to Resolution 42/2017/QH14

Vietnam: The National Assembly Standing Committee commented on the Government's report summarizing the implementation of Resolution 42 on April 14.

The resolution was implemented seriously and with the right objectives.

Under the authorization of the Prime Minister, reporting at the meeting, Governor of the State Bank of Vietnam Nguyen Thi Hong said that ministries, branches, and People's Committees of provinces and cities have proactively and actively implemented fully and promptly action programs and plans that closely follow the spirit of Resolution 42. With the great efforts and determination of the banking industry and the coordination of ministries, branches, and localities, after nearly 5 years of implementation (August 2017 to present), Resolution No. 42 has been seriously implemented with the right objectives and orientations and has achieved important results.

The bad debt of the system of credit institutions has been handled and controlled, and the bad debt ratio on the balance sheet is maintained at less than 2%. Total unresolved bad debts determined according to Resolution 42 of the whole system of credit institutions as of December 31, 2021 decreased by 17.21% compared to the time when Resolution 42 took effect (August 15, 2017).

The total number of bad debts determined according to Resolution 42 and handled from August 15, 2017 to December 31, 2021 reached an average of about VND 5.67 trillion/month, about VND 2.15 trillion/month higher than about VND 2.15 trillion/month compared with the average bad debt settlement results at the time before Resolution 42 took effect.

According to Ms. Nguyen Thi Hong, although bad debt settlement under Resolution 42 has achieved positive results, there are still some difficulties and obstacles when dealing with bad debts under Resolution 42, so it is necessary to continue to have the coordination of related ministries and branches to handle it.

The Government proposes and proposes to the National Assembly to promulgate the Law on handling bad debts of credit institutions on the basis of inheriting, supplementing, and completing the provisions of Resolution 42 in order to create a stable legal corridor sustainable for the handling of bad debts by credit institutions. At the same time, it is proposed to extend the application period of Resolution 42.

"The promulgation of the Resolution extending the application term of Resolution 42 is an urgent economic issue to continue to accelerate the resolution of bad debts, free up capital, and continue to support businesses and people." "In the context of the unpredictable impacts of the COVID-19 pandemic..." said the Governor of the State Bank of Vietnam.

Creating a continuous legal basis for bad debt handling

At the verification of this content, Chairman of the Economic Committee of the National Assembly Vu Hong Thanh said that the Standing Committee of the Economic Committee highly appreciated the efforts and drastic and timely direction of the government and Prime Minister, the focal role of the State Bank, as well as the participation of relevant ministries, branches, central agencies, and People's Committees of provinces and cities in promulgating guiding documents and organizing coordination to coordinate and implement Resolution No. 42.

The Standing Economic Committee also agreed with the government's report on the assessment of bad debt settlement results, according to Resolution No. 42. During the application period of the resolution, bad debts were handled by the system of credit institutions. application has made much progress, especially on bad debt identified under Resolution No. 42.

However, in order to ensure an objective, comprehensive, and complete assessment of the achieved results as well as the impact and influence of the pilot regulations in Resolution 42, the Standing Committee of the Economic Committee suggested that we analyze and clarify the situation of bad debts and the results of dealing with bad debts respectively; evaluate more closely the effectiveness of other measures specified in the Resolution; assess the operational status of the bad debt trading market; re

Regarding the draft Resolution on extending the entire application term of Resolution 42, the majority of opinions in the Standing Economic Committee agreed with the need to extend the application term of the Resolution. The dossier for the draft Resolution is basically complete as prescribed in Clause 1, Article 37, and Article 64 of the Law on Promulgation of Legal Documents.

The majority of opinions agreed with the need to extend the application period of Resolution No. 42 to December 31, 2023. Many opinions expressed their agreement with the government's proposal to report to the National Assembly Standing Committee for permission to add to the 2022 law and ordinance development program the Resolution to extend the application deadline. 42 and apply the shortened order and procedures for approving the Resolution at a meeting in May 2022 according to the competence specified in Articles 146 and 147 of the Law on Promulgation of Legal Documents.

National Assembly Chairman Vuong Dinh Hue suggested that it be necessary to analyze and clarify the situation of bad debts, the results of debt settlement, and to evaluate more closely the effectiveness of measures to handle bad debts and avoid spreading, lack of focus in the situation. At the same time, there must be a comparison between the overall objectives and results compared with those specified in Resolution 42, assessing the operational status of the bad debt trading market and the effects of the exercise of the right to seize collateral of bad debts on political security, social order, and safety.

The National Assembly Chairwoman also noted that when extending the application period of Resolution 42, it is necessary to pay attention to the goals and solutions and complete the instructions on the implementation of the resolution to ensure completeness and consistency. In addition, it is necessary to strengthen coordination between agencies and units, both central and local, by assigning responsibilities of the government to specific agencies and organizations in the implementation of the resolution.

Extension of time limit for application of Resolution 42

At the meeting, after discussion, the National Assembly Standing Committee of Vietnam voted to add a resolution to extend the application period of Resolution 42 on piloting bad debt settlement of credit institutions in the law-making program in 2022, with 100% of the members of the Standing Committee of the National Assembly present voting in favor.

Concluding the work, Vice Chairman of the National Assembly Nguyen Duc Hai said that the National Assembly Standing Committee unanimously assessed that the promulgation of Resolution 42 was a correct and timely decision of the National Assembly. The government, the State Bank, ministries, branches, central agencies, localities and credit institutions in the past 5 years have implemented the Resolution.

The Vice Chairman of the National Assembly of Vietnam, Nguyen Duc Hai, suggested the government study and absorb the opinions of the verifying agency and the participation of the National Assembly Standing Committee to continue to complete the final report on the implementation of Resolution No. 42 and the draft Resolution extending the application period of Resolution 42 to December 31, 2023.

The Vice Chairman of the National Assembly also suggested that the government receive comments to revise and complete the final report on the implementation of Resolution 42 of the National Assembly and a proposal to extend the time limit for application of Resolution 42 to the National Assembly and the verifying agency.

The Standing Committee of the National Assembly of Vietnam assigned the Economic Committee to formally verify and submit it to the National Assembly for consideration and decision at the May 2022 meeting.

Nguyen Hoang

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