The central bank has pledged to speed up its purchase of VND30 trillion (US$1.41 billion) in bad debt while remaining hopeful that it will meet its annual target.
"The purchases have progressed at a turtle's pace," Chief Inspector of the State Bank Nguyen Huu Nghia admitted during a monthly press briefing held Wednesday.
The bank’s bad debt buyer has been working with lenders to push the process forward, Thoi Bao Kinh Te Sai Gon quoted Nghia as saying.
The Vietnam Asset Management Company (VAMC) was established last July to rescue debt-laden lenders and has met with banks to assess their debts and discuss debt purchases every month.
Despite delays, Nghia said this year's target purchase of VND70-100 trillion in bad debts remains feasible.
VAMC pays indebted banks with a “special bond,” which they can use to borrow from the central bank.
Bank Circular 09, which took effect March 20, gave banks until January 1, 2015, to submit to stricter assessments from the Central Bank’s Credit Information Center on loan classifications.
Bank loans are classified into five groups – current, special mention, substandard, doubtful, and bad.
The company has purchased nearly VND4 trillion from ten banks, including a wholly state-owned institution, in the first quarter.
Last November bad debts were estimated at VND152.18 trillion ($7.22 billion), or 4.55 percent of outstanding loans.
That represented an increase of VND19.76 trillion ($937.5 million) from January 2013 when the ratio was 4.3 percent.
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