Buying and selling debts Song Long - Developing a true debt trading market to "break the ice" of bad debts

NPLs are gradually decreasing thanks to a positive effect over the past two years of implementing Resolution 42 of the National Assembly on piloting the handling of bad debts by credit institutions. However, those are only solutions that are posed in the urgent situation, when the "blood clot" of bad debt has accumulated, becoming the bottleneck of the process of economic restructuring and growth model transformation. . In the long term, it is still necessary to form a true debt trading market, considering it as one of the fundamental solutions to handling bad debts in the economy.

Many difficulties and problems

According to the State Bank of Vietnam (SBV), from 2012 to the end of the third quarter of 2019, the system of credit institutions has handled 968.89 trillion dong of bad debts. The result of bad debt handling alone, determined according to Resolution 42 (accumulated from the effective date of the Resolution on August 15, 2017 to the end of the third quarter of 2019) is VND 236.8 trillion. So, on average, each month, the whole system can handle about 9.6 trillion dong, 4.7 trillion dong higher than the average bad debt handling results before Resolution 42 takes effect. In addition, by the end of August 2019, credit institutions used 123.89 trillion dong of risk provisions to handle internal bad debts. From this result, the State Bank assessed that bad debts according to Resolution 42 have handled an important step. However, the above results have not been as expected because the process of dealing with bad debts still faces many difficulties and problems related to the application of shortened procedures in settling disputes on obligations. delivery of collateral, disputes over the right to handle collateral of bad debts ...

The main measure to handle bad debts currently applied is to deal with the risk provision. According to experts, in essence it is still using internal resources of credit institutions, leading to the possibility of increasing pressure on liquidity as well as the ability of credit institutions to focus resources on operations. other. That is not to mention, the actual bad debts, including debts sold to the Vietnam Asset Management Company (VAMC), paid by special bonds (special bonds) and potentially risky debts turn into bad debts. It is quite high, making a threat to system stability and safety present. In the absence of using the State budget (state budget) to handle bad debts and international experience shows that encouraging the development of the debt trading market is very necessary in Vietnam.

In fact, the debt trading market in Vietnam has existed for more than 15 years with the establishment of the Debt Buying and Trading Company (under the Ministry of Finance), the predecessor of the Company. Vietnam Debt Trading Company Limited (DATC). To date, debt trading activities have involved DATC, VAMC and more than 20 debt management and asset exploitation companies (AMCs) belonging to commercial banks and dozens of private companies. However, it is not really the true debt trading market because compared with international practice, the legal framework on debt trading market management and the operations of market participants is not yet complete.

Specifically, in terms of the legal framework, the guidance on the implementation of Decree 69/2016 / ND-CP on the conditions for debt trading services is still very sketchy and has no clue to create and develop a transaction market. debt trading. Regarding market participants, at present, the number of companies participating in professional debt buying in the market is still limited, only DATC has built a good foundation and took debt settlement associated with reconstruction. Enterprise recovery (DN) is the main mechanism of action. Compared with other debt handling measures such as buying debt with special bonds, selling debt, restructuring debt, handling assets ..., the debt settlement mechanism associated with DATC's corporate reconstruction has the advantage of solving the original problem. bad debt problem, increasing the value of enterprises, thereby increasing the value of bad debts, associating debt settlement with ensuring social security and increasing state budget revenues (new tax collection and collection of tax arrears, arrears Social insurance) and investment socialization for private investors to participate in debt settlement or later transfer of contributed capital.

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