Government rejects asset management firm to buy bad debts, seeks changed model

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The Vietnamese government refused to approve the establishment of an asset management company that will buy up bad debts at a meeting held on March 29, saying the plan does not go far enough.

The proposed Vietnam Asset Management Company can only deal with banks' non-performing loans and not firms' bad debts, Vu Duc Dam, chief of the Government Office, pointed out.

The government is also seeking to aid companies by helping reduce their bad debts.

Prime Minister Nguyen Tan Dung instructed the State Bank of Vietnam to continue working on the proposal to improve it, adding the government would not approve the plan before April.

The central bank had been hoping to set up the company by the end of the first quarter.

A draft decree by the central bank states that banks would have to keep bad debts at below 3 percent by selling off the rest to the VAMC.

Banks' bad debts fell recently to 6 percent of total loans from 8.82 percent earlier after they made more provision for risk and became more prudent in lending.

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