Tackling non-performing loans is becoming increasingly urgent as Việt Nam targets double-digit growth. Photo bnews.vn

HÀ NỘI — Tackling non-performing loans is becoming increasingly urgent as Việt Nam targets double-digit growth, experts have said, warning that unresolved bad debts could constrain credit flow and economic expansion.

According to Nguyễn Quốc Hùng, deputy president of the Vietnam Banking Association, the banking sector plays a key role in maintaining macroeconomic stability and supplying capital to the economy, but bad debt continues to weigh on its capacity.

Statistics show the ratio of bad debt has climbed above 2.8 per cent, reflecting mounting pressure on lenders and a significant volume of capital tied up in non-performing assets.

“If this capital is unlocked and returned to production and business, the benefits would be substantial,” Hùng added.

The issue had become more pressing amid a mismatch between credit growth and deposit mobilisation, he said. In the first quarter of 2026, credit expanded by more than 3 per cent while deposits rose by less than 1 per cent, highlighting funding constraints.

Experts also warn that bad debt risk is increasingly concentrated in sectors like real estate, construction and exports, which are highly sensitive to global market fluctuations.

“This shows that bad debt is not only a problem of the past, but also a risk for the future. Without strong and coordinated measures, it could return in a new cycle,” said Đặng Đình Thích, acting director general of Vietnam Asset Management Company (VAMC).

Legal bottlenecks

Experts say legal and institutional constraints remain a major obstacle to resolving bad debt despite recent reforms.

Although the revised Law on Credit Institutions has granted lenders more authority, including the right to seize collateral, implementation has been inconsistent due to overlapping regulations and procedural delays, according to Hùng.

Even when collateral is seized, ownership transfers often face disputes and administrative hurdles, sometimes involving deliberate legal challenges that delay proceedings and reduce recovery efficiency.

Head of the association’s Banking Legal Club Nguyễn Thị Phương pointed out three key bottlenecks: ineffective fast-track court procedures, insufficient protection of creditor rights and the lack of legal tools to handle unfinished or future-formed assets.

Nguyễn Ngọc Tuyên, director of debt litigation and recovery at Saigon - Hanoi Commercial Joint Stock Bank (SHB), said debt resolution still relied heavily on traditional methods that involve multiple internal steps and lengthy legal processes.

“Previously, debt trading was only a supporting solution. But in the current context it should be treated as a central tool to improve bad debt resolution,” he said.

Việt Nam’s debt trading market remains underdeveloped, with limited investor participation and low liquidity, making it difficult to transfer and resolve distressed assets efficiently.

Debt trading market

Many experts said greater focus should be placed on developing a fully functioning debt trading market in Việt Nam.

CEO of Welcome DTC Moon Youngso said Việt Nam should strengthen the role of central institutions like VAMC, which could help manage the market, attract investors and accelerate transactions if given sufficient financial resources and authority.

VAMC chairman Trần Trung Dũng said that for a debt exchange to function effectively, investors must see a clear path to returns within a reasonable time frame.

It would therefore be necessary to accept appropriate discounts on debt sales to enable investors to restructure assets and realise profits within two to three years, especially amid ongoing legal and enforcement delays, he said.

While existing rules allow banks to sell debt below book value, protections for staff involved in such transactions remain unclear, making institutions cautious, according to Dũng.

“This creates a situation where market demand exists, but conflicting incentives slow down transactions,” Dũng said.

“A robust legal framework is essential to protect market participants and enable the development of a functioning debt market,” he noted.

He added that VAMC was working with the Korea Asset Management Corporation on technology transfer, including upgrades to information platforms, the application of search and listing systems for distressed assets and the rollout of an online auction system.

Dũng also stressed the need to improve transparency and standardise market information, noting that data on bad debt is being gradually refined, while information on collateral is also being standardised.

According to Hùng, the Government is preparing a new decree to replace Decree 53 on VAMC, with an aim to strengthen its legal framework and operational effectiveness.

“Resolving bad debt is not solely the responsibility of the banking sector. It requires coordinated action across the entire system,” Hùng said.

“If done effectively, it will free up capital, support economic growth and help stabilise interest rates.” — VNS