Banking bad debts at the end of September were worth VND142.3 trillion (US$6.7 billion) or 4.62 percent of outstanding loans, the State Bank of Vietnam reported Tuesday.
It is 20 percent higher than at the end of last year, news website VnExpress quoted Le Minh Hung, deputy governor of the State Bank of Vietnam, as saying.
But the rate of increase in non-performing loans has significantly slowed down in the last three quarters to 2.2 percent per month from 3.91 percent last year.
Hung said by September the banking system had cleaned up VND101.7 trillion ($4.82 billion) worth of bad debts this year.
The Vietnam Asset Management Company (VAMC), set up in July to buy up bad debts, has bought nearly VND18.4 trillion ($871.8 million) worth bad debts and the figure is expected to go up to at least VND30-35 trillion by year end.
The deputy governor said that the central bank and Ministry of Finance would create a legal framework for the bad debts trading market. Now the VAMC sets the price for the bad debts it buys.
He added that the central bank encourages foreign investors to invest in Vietnamese banks, saying they are allowed to buy a 20-percent stake compared to only 15 percent for domestic investors.
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