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Where are the handling of NPLs under Resolution 42 still entangled?

Tuesday 22, 10 2019
Although NPLs under Resolution 42 have dealt with an important step, there are still many difficulties and obstacles related to collaterals, etc.’
Where are the handling of NPLs under Resolution 42 still entangled?
Most of the collateral for debts is distrained, related to incomplete legal cases and documents, which makes it difficult to handle and recover debts and security assets.
236.8 trillion dong of bad debt under Resolution 42 was handled
The data updated by Governor of the Bank Le Minh Hung in the report on the implementation of the National Assembly's resolutions on interrogation activities shows that, from 2012 to the end of August 2019, the whole system of credit organizations had handled 968.89 trillion dong of bad debt.

Particularly, regarding the results of handling bad debts determined under Resolution 42, accumulated from August 15, 2017 to the end of August 2019, the whole credit institution system had been able to handle 236.8 trillion dong (without the utilization of risk provision and debt sold to VAMC through special bond issuance).
In which, solving bad debt in the balance sheet reached 137.7 trillion dong; dealing with debts which were being accounted off the balance sheet determined by Resolution 42 as VND 47.97 trillion; settlement of bad debts determined under Resolution 42 sold to VAMC and paid by special bonds was VND 51.12 trillion.
So, on average, the whole system handled about 9.6 trillion dong a month, 4.7 trillion dong higher than the average bad debt handling result before Resolution 42 took effect.

In addition, by the end of August 2019, credit institutions had used VND 123.89 billion of risk provisions to handle non-performing NPLs.
At a recent conference on Resolution 42 organized by the State Bank, Mr. Pham Toan Vuong, Deputy General Director of Agribank shared: "After 2 years of Resolution 42, Agribank has handled nearly 110,000 VND billion dong. Up to now, the bank has bought 100% of bad debt sold to VAMC. This is a great result and far surpasses the situation before Resolution 42 was issued ".

Difficulties in implementation

According to the State Bank, NPLs under Resolution 42 have dealt with an important step but still encountered many difficulties in implementation.
Specifically, regarding the application of simplified procedures in resolving disputes over obligations to hand over security assets and handling security assets, on May 15, 2018, the Council of Judges issued Resolution No. 03 / 2018 / NQ-HDTP guiding the application of simplified procedures in resolving disputes over the obligation to hand over security assets, disputes over the right to handle security assets of bad debts ...

However, at present, the number of cases dealing with bad debts through simplified procedures at the Court is limited, partly affecting the efficiency of debt recovery. Regarding the return of security assets which are material evidences in criminal cases, currently there is no specific legal document explaining in detail the term "affecting the settlement of cases and enforcing judgments" as provided for in Article 14 Resolution No. 42.
Therefore, whether the return of material evidence in a criminal case is the security property of the bad debt will depend heavily on the opinion of the proceeding agency. Regarding the mechanism for accessing information on the status of security assets, the Court and the Governor said that the civil judgment enforcement agency does not have a data system that allows credit institutions to extract and search information related to the case being processed.

At the same time, there are no guidelines on the effective early determination mechanism in the appraisal process, to determine which assets are in dispute, which properties are subject to temporary emergency measures, leading to an understanding of disputed property between the procedural agencies in various places and at various levels, making it difficult to apply property handling measures under Resolution No. 42.
With the above series of difficulties, the State Bank proposed the National Assembly to request the Supreme People's Court to send a written document to the local court to request these units to give priority to the application of simplified procedures prescribed in Resolution No. 03/2018 / NQ-HDTP when solving cases related to bad debt handling.

The Supreme People's Court shall consider and coordinate with the Supreme People's Procuracy, the Ministry of Public Security and the Ministry of Justice (General Department of Civil Judgment Execution) in writing soon to guide the return of collaterals, which is evidence of a criminal case after completing the evidence verification procedures specified in Resolution 42.
At the same time, the Supreme People's Court is required to coordinate with the civil judgment enforcement agencies in early building a data system related to cases being handled and allowing credit institutions to be investigated, which can be researched and extracted relevant information from. 

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