{"id":8824,"date":"2022-02-25T13:16:35","date_gmt":"2022-02-25T06:16:35","guid":{"rendered":"https:\/\/anvilaw.com\/vi\/?p=8824"},"modified":"2022-02-25T13:18:24","modified_gmt":"2022-02-25T06:18:24","slug":"2-087-law-on-bad-debt-settlement-urgently-needed-experts","status":"publish","type":"post","link":"https:\/\/anvilaw.com\/vi\/2-087-law-on-bad-debt-settlement-urgently-needed-experts\/","title":{"rendered":"2.987. Law on bad debt settlement urgently needed: experts"},"content":{"rendered":"(VN News) &#8211; Experts said a law on bad debt settlement should be put in place before two regulations expire in six months.<\/p>\n<h3><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-8825 img-fluid img-fluid\" src=\"https:\/\/anvilaw.com\/wp-content\/uploads\/2022\/02\/1-25-450x278.jpg\" alt=\"\" width=\"450\" height=\"278\" srcset=\"https:\/\/anvilaw.com\/wp-content\/uploads\/2022\/02\/1-25-450x278.jpg 450w, https:\/\/anvilaw.com\/wp-content\/uploads\/2022\/02\/1-25.jpg 640w\" sizes=\"auto, (max-width: 450px) 100vw, 450px\" \/><\/h3>\n<p>Clients conducting bank transactions at BIDV. Thanks to the bad debt\u00a0resolution, the bank has been settling bad debts at an average rate of about VN\u011025 trillion ($1.1 billion) per year. \u2014 Photo vietnamplus.vn<\/p>\n<p>C\u1ea5n V\u0103n L\u1ef1c, chief economist at BIDV, is\u00a0concerned that Circular No.14 and Resolution No.42, which regulate bad debts in the banking system, will soon expire.<\/p>\n<p>He believes\u00a0a law on bad debt settlement should be introduced to fill the legal gap left by their expiration, or\u00a0unregulated bad debts will\u00a0pile up, destablising the economy.<\/p>\n<p>\u201cBad debts are expected to\u00a0soar\u00a0in the second half of 2022 and continue to rise faster in the following years unless a legal mechanism for bad debt settlement is set up in time,\u201d L\u1ef1c said.<\/p>\n<p>Without such a mechanism, the bad debt ratio will climb to 2.3 to 2.5 per cent this year and rise higher from 2024.<\/p>\n<p>The economist proposed a two-step plan to facilitate the rollout of such a law.<\/p>\n<p>First, it is necessary to extend the resolution for three more years to have enough time to prepare for a draft.<\/p>\n<p>Second, lawmakers\u00a0formulate the law in line with international practices and, simultaneously, make it suitable for the banking system.<\/p>\n<p>In the meantime, amendments to the resolution should also be made\u00a0to address its shortcomings, which include the absence of a formal debt trading market,\u00a0difficulties\u00a0in debt and collateral valuation, and\u00a0issues related to the seizure of collateral.<\/p>\n<p>Ho\u00e0ng V\u0103n C\u01b0\u1eddng, a National Assembly deputy, said\u00a0that the Resolution No.42 had helped banks settle bad debts at a faster pace.<\/p>\n<p>With the resolution, bad debts in the banking system were handled at an average rate of VN\u01107.15 trillion (US$313.6 million) per month, much higher than the rate of VN\u01103.63 trillion per month previously.<\/p>\n<p>However, he underlined the nature of the resolution, which is just a pilot legal document of five years,\u00a0pointing to its shortcomings and stressed the need for a more comprehensive law on bad debt settlement.<\/p>\n<p>\u201cResolution No.42 remains in effect over\u00a0just five years. Many debtors take advantage of such a short duration to circumvent the resolution,\u201d he said.<\/p>\n<p>\u201cThe resolution stipulates that credit contracts include a provision for the seizure of collateral. Unfortunately, credit contracts prior to the resolution did not include such a provision, falling outside its scope.\u201d<\/p>\n<p>Nguy\u1ec5n Qu\u1ed1c H\u00f9ng, general secretary of Vi\u1ec7t Nam Banks\u00a0Association, acknowledged that the Resolution No.42 had stepped up the settlement of bad debts for nearly five years.<\/p>\n<p>Nevertheless, he said that there still existed some shortcomings in the resolution that render it inapplicable in many cases.<\/p>\n<p>\u201cAlmost no bank has successfully applied simplified processes to resolve contract-related disputes. The reason\u00a0is that Article 8 of the resolution is applicable only to collateral-related disputes\u00a0and has yet to cover\u00a0the broader contract-related disputes. As a result, the court has\u00a0no legal grounds to invoke such a process to resolve contract-related disputes,&#8221;\u00a0H\u00f9ng said.<\/p>\n<p>The secretary called for amendments to the resolution to address the shortcomings and develop\u00a0the resolution into a full-fledged law that moves the bad debt settlement process\u00a0faster.<\/p>\n<p><em>Tr\u01b0\u01a1ng Thanh \u0110\u1ee9c, a lawyer at ANVI Law Firm, revealed that the Resolution No.42 was\u00a0due to\u00a0expire in\u00a0mid-August, 2022.\u00a0\u00a0 \u00a0 \u00a0<\/em><\/p>\n<p><em>He believes\u00a0the\u00a0expiration will\u00a0cause additional problems to the banking system, which was facing mounting bad debts during the pandemic.<\/em><\/p>\n<p><em>Accordingly, a law on bad debt settlement is\u00a0considered necessary to enable banks to continue resolving bad debts at a fast rate.<\/em><\/p>\n<p><em>&#8220;In case such a law is not introduced or not introduced in time, the resolution should be extended,&#8221;\u00a0\u0110\u1ee9c added.<\/em><\/p>\n<p>In that case, it is recommended to extend the resolution for at least 5-10 years, until legal cases related\u00a0to bad debts could be quickly and effectively resolved in courts of law.<\/p>\n<p>By late 2021, the banking system has managed to settle over VN\u01101.3\u00a0quadrillion ($57 billion) of bad debts, of which VN\u0110369.9 trillion\u00a0are bad debts under the Resolution No.42.<\/p>\n<p>Bad debts ratio stayed at 1.9 per cent last year, increasing 0.21 percentage points against 2020. \u2014 VNS<\/p>\n<p>Vietnam News 25-02-2022:<\/p>\n<p>&nbsp;<\/p>\n<p><em><a href=\"https:\/\/vietnamnews.vn\/economy\/1157984\/law-on-bad-debt-settlement-urgently-needed-experts.html\">https:\/\/vietnamnews.vn\/economy\/1157984\/law-on-bad-debt-settlement-urgently-needed-experts.html<\/a><\/em><\/p>\n<p><em>\u00a0<\/em>","protected":false},"excerpt":{"rendered":"<p>(VN News) &#8211; Experts said a law on bad debt settlement should be put in place before two regulations expire in six months. Clients conducting bank transactions at BIDV. Thanks to the bad debt\u00a0resolution, the bank has been settling bad debts at an average rate of about VN\u011025 trillion ($1.1 billion) per year. \u2014 Photo [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":8825,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[17,26],"tags":[],"class_list":["post-8824","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-binh-luan-gop-y","category-legal-media"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>2.987. 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