July 15, 2020 18:07

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Non-Performing Loans remain hidden, concerning about BOT credit

20:45 | 30/05/2020

VCN- According to areport on the implementation of the National Assembly's Resolution of the State Bank (SBV), non-performing loans being handled is an important step but still contain many risks.

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Photo: H.D

Nearly VND1,077 trillion of non-performing loans were handled

According to the report, the non-performing loan(NPL) ratio of credit institutions (CIs) by the end of March 2020 was 1.77%. This ratio remained below 3% as set out in the target, it increased slightly compared to the end of 2019 (1.63%).

From 2012 to the end of March 2020, the whole credit institution system has handled nearly VND1,077 trillion of non-performing loans, particularly in 2019, nearly VND160 trillion hasbeen handled.In the first three months of 2020, VND26.94trillion wasdealt with.

The ratio of non-performing loans, sold debts to the Credit Institutions Asset Management Company (VAMC), has not been processed and the potential bad debts become non-performing loans of the CI system until March 2020 at 4.46%, a sharp decrease compared to 10.08% at the end of 2016, 7.36% at the end of 2017 and 5.85% at the end of 2018.

Regarding the handling of bad debts, which is determined in accordance with Resolution 42 of the National Assembly, the State Bank's report said that accumulated from August 15, 2017 to the end of March 2020, the whole credit institution system solved VND299.8 trillion of NPL.

In addition, by the end of March 2020, credit institutions used VND154.58 trillion of risk provisions to handle NPLs.

Particularly with VAMC, after seven years of operation, from 2013 to March 31, 2020, this unit has purchased debts of credit institutions totaling over VND335.6 trillion, handling more than VND272.2trillion of principal outstanding loans of the CI. The remaining outstanding principal to be processed is over VND95.1 trillion.

"Risk" from VND64 trillion of BOT outstanding loans

Although the figures of NPLs and settlement of NPLs are now better compared to the past, according to the SBV, the bad debt still has many potential risks to safety and operational efficiency of credit institutions. NPL is currently concentrated mainly in weak credit institutions, but it cannot be handled quickly due to many debts related to the cases, incomplete legal documents and the ability to set up a risk provision of a number of credit institutions is limited.

In addition, with many specific credit programs, NPLs also contain potential risks, in an unfavorable direction.

The SBV said that the current NPLs of the program under the Government's Decree 67/2014/ND-CP to support offshore fishing is on the rise.

NPLs began to arise in 2017 in eleven provinces and cities at a rate of 3%. But by the end of 2018, there were eighteen provinces and cities with the rate of 17%. Up to now, there are twenty five provinces and cities with the NPLs ratio atabout 35.2% of the total outstanding loans.

According to the State Bank,in addition to the objective reason of force majeure, leading to fishermen being unable to pay their debts, the cause of this situation are also due to: their owners are deliberately unable to pay their debts; weak shipowner's capacity; unfavorable fishing grounds; the means of operation are too new and modern, so the ship owners face many difficulties in operation and inefficiency.

In particular, for lending of BOT transport projects, the SBV said that there are currently about 49 completed transport BOT projects and put into operation with unsatisfactory revenues as the original financial plan, with outstanding loans over VND64 trillion is in danger of having to restructure debts, transfer debt groups, increase provisioning, affect business performance and the implementation of the scheme of restructuring and handling bad debts of credit institutions.

Therefore, in order to facilitate the effective implementation of lending activities for transport projects in the form of BOT, serving economic development, the State Bank proposed the Government and the Prime Minister to continue directing the concerned ministries, branches and localities to coordinate closely in supporting the banking industry.

Firstly, continuing to implement solutions to mobilize all resources to ensure the ability to pay bank debts under the signed credit contracts.

Secondly, focusing on handling problems related to toll collection and automated toll collection implementation to control revenue.

Thirdly, ensuring security and order at the tollgates and coordinating with the Ministry of Transport to manage tolls and local transportation planning.


 

 

By Huong Diu/Quynh Lan