Bad State-Owned Bank-Debts to Be Sold to DATC

The bad debts of state-owned banks will be sold to the DATC. (Photo: T.C)

After coming to an agreement with Ministry of Finance (MOF), the State Bank of Viet Nam (SBV) has issued a letter to allow some kinds of non-performing state-owned loans to be sold to the MOF’s Debts & Assets Trading Company (DATC).

According to letter No. 7129/NHNH-TD on August 8 2006 from SBV, bad debts of state-owned commercial banks to be sold to DATC include non-performing loans in group 3, 4 and 5, defined in Decision No. 493/2005/QĐ-NHNN from SBV, and debts of parties regulated by the Prime Minister’s Decision No. 149/QĐ-TTg, as well as debts which have been settled by provisions or other sources and are currently monitored separately on off-balance sheet accounts.

In detail, bad debts in Group 3 (sub-par debts), stated in Decision 493, include debts that have been delayed from 90 to 180 day and rescheduled debts that are delayed up to 90 days after the restructured term.

Bad debts in Group 4 (doubtful debts) consist of debts that are delayed from 181 to 360 days and rescheduled debts that are delayed from 90 to 180 days after the restructured term.

Bad debts in Group 5 consist of debts over 360 days of delay, debts waiting for the government to settle as well as rescheduled debts that are delayed over 180 days.

Moreover, state-owned banks can also sell to DATC bad debts from parties mentioned in the Prime Minister’s Decision 149/QĐ-TTg issued on October 5, 2001, on the approval of settling bad debts in commercial banks.

The debt sale between state-owned commercial banks and the DATC will be conducted through contracts between the two parties. Prices on the debts and financial cost related to the debt sale are regulated in the MOF’s Circular No. 38/2006/TT-BTC, issued on May 10, 2006.

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Source: VNEconomy – Translated by Cat Tri

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