Vietnam: Identification of bad debts using quantitative and qualitative method

15:21, 04/07/2017

This is a featured content of Resolution No. 42/2017/QH14 on pilot settlement of bad debts of credit institutions approved on June 21, 2017 by the 14th National Assembly of Vietnam at its 3rd session.

Resolution No. 42/2017/QH14 of the National Assembly of Vietnam, bad debts are identified as follows:

- By quantitative method:

+ Sub-standard debts (group 3): Debts remaining overdue for a period of 91 to 180 days;

+ Doubtful debts (group 4): Debts remaining overdue for a period of 181 to 360 days;

+ Loss debts (group 5): Debts remaining overdue for a period of more than 360 days;

- By qualitative method:

+ Group 3: Loans whose principal and interest are considered non-recoverable on due date by credit institutions;

+ Group 4: Loans are considered highly possible losses by credit institutions;

+ Group 5: Loans whose principal and interest are considered irrecoverable on due date by credit institutions.

Moreover, if a client has at least two debts arising before August 15, 2017 at one or multiple credit institutions, in which one debt is identified as a bad debt according to the above-mentioned 02 methods, remaining debts are also treated as bad debts.

Resolution No. 42/2017/QH14 of the National Assembly of Vietnam takes effect from August 15, 2017.

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