|Earlier this month, the central bank raised a draft decree about conditions for debt trading business for public comments. — Photo baodatviet.vn
HA NOI (VNS) — The Vietnamese central bank was seeking to lay the grounds for the development of a debt secondary market in an effort to accelerate the handing of bad debts.
Earlier this month, the central bank raised a draft decree about conditions for debt trading business for public comments.
The lack of a debt trading market was a bottleneck in the process of handling toxic debts, Nguyen Quoc Hung, chairman of the Viet Nam Asset Management Company (VAMC) said. The VAMC was founded under the central bank's umbrella in 2013 with a charter capital of VND500 billion (US$22.2 million) to resolve bad debts.
The VAMC and the Ministry of Finance's Debt and Asset Trading Corporation were Viet Nam's motivating force in handling bad debts but still struggling to resolve the pile of toxic debts in the economy due to a various reasons such as limited capital and incomplete legal framework.
Although the bad debt ratio was reportedly cut to below 3 per cent, non-performing loans remained a pressing issue.
"Only with a debt trading market, can non-performing debts be handled thoroughly and radically," Hung said.
Hung said that Viet Nam needed a legal framework for handling bad debts as many foreign investors and funds were now looking to participate in the country's debt restructuring and handling process.
The central bank's draft about debt trading business aimed to develop a legal framework for the launch of debt trading services, including the foundation of debt trading floors where debt trading, consultancy and brokerage takes place.
Under the draft, debt trading companies must have a minimum legal capital of VND100 billion (US$4.45 million) and VND1 trillion for debt trading floor. — VNS