Photo credit: SGTO
The State Bank of Vietnam said it stands by its target to reduce bad debt in the banking system to 3 percent of loans by the end of the year.
Governor Nguyen Van Binh was quoted by local media as saying on Tuesday that even though the ratio slightly increased in the first two months, up to 3.59 percent from 3.25 percent last December, the bad debt situation was "under control."
In fact, the increase was expected, considering that bad debt tends to increase in the first months and decrease in the last months of the year, he said, without elaborating on it.
The central bank has said it will clean up more bad debt, but the amount has not been disclosed.
One of the bank's main solutions is to order local lenders to sell at least 75 percent of their bad debt to its asset management company VAMC by the end of June.
Between September 2012 and December 2014, the State Bank of Vietnam "tackled" VND311.1 trillion (US$1.42 billion) of bad debt, or 67 percent of the amount the bank had originally planned to deal with, Binh said in the report prepared for legislators.
About 44 percent of that was purchased by VAMC.
"Thanks to the banking sector's efforts and determination, bad debt has been controlled and a considerable amount has been cleaned up," the governor was quoted as saying.