According to the Project of resolving bad loans completed by the State Bank of Vietnam (SBV), besides increasing risk provisions, credit institutions have to actively recover bad loans through handling collateral.
According to the SBV, 72 percent of total loans in the economy are secured by assets, of which 66 percent are secured by real estate. As to total bad debts, 80 percent of them are secured, of which 57 percent are secured by real estate. If these collaterals are well handled, bad debt resolution will improve rapidly in the near future.
Currently, Decree 163 of the Government on secured transactions and Decree 11 amending and supplemented Decree 163 have favourable regulations for organisations and individuals in process of handling collateral to recover debts.
However, because of lacking detailed guiding documents, organisations and individuals face many difficulties in applying this. Besides, handling collaterals depends on cooperation of securers or collateral keepers, and support from competent state authorities.
In fact, collaterals in banks include two forms: movables and immovables. With movables that do not require property right register (machine, production lines…), according to current regulations bank can base on commitments in credit contracts to organise collateral auction, capital recovery.
However, as for collaterals in form of real estate, these assets must be registered and are subject to many other laws. If customers do not sign in agreement for transferring real estate to the bank, the bank cannot sell the property to recover debts.
Therefore, to handle collateral and recover debts, the secured usually must pursue legal proceedings. However, these proceedings take time and require complicated procedures through many levels and processes, which influence largely business activities, investment of the secured.
In many cases, even if the secured win, it is unsure that collaterals can be handled. Or real estate market is in the downtrend and selling real estate becomes difficult, especially deficient ones.
To resolve “the knot” of collateral in handling with bad debts, under direction of the Government, the Ministry of Justice is consulting on draft of Inter– Circular providing guidelines for resolving collaterals. The Inter-Circular is expected to create favourable conditions for credit institutions to actively handle with collaterals, as well as to complete internal processes and policies of credit management in banks.
Disengaging the knot helps limit bad debts in credit institutions, increase liquidity of collaterals and create stability in credit activities. Related to mortgaged assets, in case the mortgagor sells, exchanges, donates mortgaged assets that are not goods circulated in production or trading processes without agreements of mortgagee, the mortgagee will be entitled to recover these assets.
Mortgaged asset recovery is applied even to assets undue to collaterals handling. The Draft also has detailed guidelines on processes of confiscating collaterals to handle and responsibilities of the local People’s Committee in supporting those who are entitled to seize collateral.
In Resolution 02, the Government requires Ministry of Justice to issue inter – circular on handling with collaterals right in quarter I – 2013.
Besides, to help the inter-circular soon take practical effect, justice authorities must cooperate comprehensively to push up progress and finish at a given moment cases related to banking activities and execute civil cases, creating opportunities for credit institutions to recover debts, reduce bad debts and enlarge credit supply to the economy.
At the same time, it is necessary to criminalise economic activities in the banking field; give priorities to apply economic, civil sanctions to surmount consequences and recover maximum money and assets for banks.
PV
Vietnamese
