Bad debt settlement becomes urgent priority in new context

As Vietnam experiences accelerating economic growth, addressing non-performing loans (NPLs) has become a critical priority for ensuring sufficient capital supply, experts stated at a recent forum. Nguyễn Quốc Hùng, general secretary of the Vietnam Banks Association, emphasized that NPLs impact not only the banking sector but also the broader economy’s ability to access capital. Currently, the NPL ratio stands at approximately 2.8 percent, but increasing bad debts force banks to increase provisions, reducing their lending capacity and raising capital costs.

Experts advocate for a more active debt trading market, allowing transactions at market prices, even below book value, to increase liquidity and accelerate NPL resolution. Dr. Cấn Văn Lực, chief economist of BIDV, highlighted the need for tools like debt securitization and a specialized trading exchange. He also stressed the importance of institutional improvements, increased transparency, and the development of a secondary market.

Failure to implement strong reforms, experts warn, will lead to continued pressure from NPLs and potentially jeopardize the stability of the financial system. Resolving bad debts is seen as crucial for reducing costs for credit institutions, supporting business development, and fostering sustained economic growth.

(Source：Vietnamnews.vn)