Central bank offers cheap refinancing to lenders selling off bad debts

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The State Bank of Vietnam on December 4 began refinancing banks that sold bad debts to the state asset company VAMC at 2 percentage points lower than the market rate.

This means at least 20 banks which sold nearly VND18.4 trillion (US$864.8 million) worth non-performing assets to the company can use the bonds they got in exchange to borrow from the State Bank of Vietnam at preferential rates.

The market rate is now 7 percent.

More banks are negotiating with the VAMC to sell bad debts, and VND30-40 trillion ($1.41-1.9 billion) worth NPL are expected to be sold this year. 

News website VnExpress quoted Nguyen Quoc Hung, the VAMC's vice chairman, as saying it would take five years to clean up all the bad debts, estimated at $6.7 billion or 4.6 percent of outstanding loans as of September.

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The central bank has cut it refinancing rate two times this year because of the sluggish pace of lending and low inflation.

Credit grew by 7.54 percent as of November end against the year's target of 12 percent.

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