Bad debt hinders economic development but is not a burden on society and the economy, because in essence, bad debt is debt of shareholders, bosses of banks, not debt. of society and of the economy.
If the debt cannot be collected, the direct sufferer is still the credit institutions themselves. Therefore, so far, the person who is most worried about dealing with bad debts is still the credit institutions themselves, but specifically the major shareholders – who are managing and operating the credit institutions.
Currently, when bad debt is a hot spot, credit institutions themselves always identify debt collection as their top priority. Many commercial banks, even the chairman of the Board of Directors and senior executives, still have to listen to reports, direct and approve each bad debt handling file every day. That clearly demonstrates the enthusiasm and worry about bad debts of credit institutions themselves.
However, the handling of bad debts of credit institutions in the past time has not been as effective as expected. There are many reasons leading to this situation, both subjective and objective. In this article, from a personal point of view, the writer points out four objective barriers that credit institutions are facing in dealing with bad debts today.
Firstly, the law lacks detailed regulations to support the handling of collateral and bad debt recovery
In general, the legal provisions related to the handling of bad debts in general and the handling of collateral to recover bad debts in particular are relatively adequate. However, due to the lack of guidelines, detailed regulations and implementation tools, the enforcement of some legal provisions on handling collateral for debt recovery is a difficult problem.
For example, the law stipulates that credit institutions are entitled to seize and sell security assets by themselves to recover debts. But in reality, this regulation is not easy to be enforced because of the lack of supporting tools and guiding documents. More specifically, stipulations that credit institutions are entitled to seize security assets of customers, but if customers do not agree or obstruct, the law does not have regulations that create a clear mechanism to enforce this right. of CIs.
Second, we are not understanding and applying the provisions on the right to be guaranteed housing of citizens incorrectly.
Most of the mortgaged assets at credit institutions are houses and land use rights. The Constitution stipulates that “everyone has the inalienable right to shelter”. Social psychology also places heavy emphasis on the right to have a home to live in and to be secure in housing. Therefore, when credit institutions handle security assets such as houses and residential land use rights to recover debts, they face many obstacles.
Take the example of a story related to banks in Ho Chi Minh City. HCM. Between 2013 and mid-2014, many courts in Ho Chi Minh City. In Ho Chi Minh City, there are regulations that make it difficult for banks: when the bank sues the owner of the secured property (house) to court for sale and debt recovery, the court will summon all the people residing in the apartment. that house comes to court to participate in the proceedings (as a person with related rights and obligations), including those who are not related to owning and disposing of the house such as employees or domestic helpers. The reason given is to ensure the right of citizens to be protected in terms of accommodation, which is enshrined in the Constitution.
One more thing to comment here is that, the Constitution provides for the protection of accommodation, the inviolable right to accommodation is legal accommodation. When the house has been mortgaged to the credit institution and the credit institution is entitled to handle the property to recover the loan, the aspect of protection of accommodation and the inviolability of housing should be understood differently. At that time, the law could no longer protect this right because the house owner’s right to use and dispose of the property was no longer or restricted.
The third is the “ambiguity” in transferring bad debt to VAMC.
According to current regulations, selling debt to VAMC in exchange for special bonds is similar to mortgaging bad debt to VAMC so that the credit institution can borrow a sum of money for business. After selling debt to VAMC, the credit institutions themselves still have to deal with that debt, so in fact, not many credit institutions are interested in selling bad debts to VAMC because they understand that selling debt is already a loss, but because of the problem of demand. capital demand and pressure on provision should be sold. However, from the perspective of public opinion, many people are mistaken that the State is spending the budget to buy back bad debts of credit institutions and credit institutions are the most profitable when selling debt. for VAMC.
Therefore, in order to strengthen the role of VAMC in supporting credit institutions to handle sold debts, should there be regulations on coordination mechanism to handle bad debts between credit institutions (debt sellers) and VAMC? (debt purchaser), such as capacity building, mechanism for VAMC so that VAMC can directly handle and recover purchased debts by itself…
Fourth, credit institutions are “lonely” in dealing with bad debts.
In fact, credit institutions can be considered as businesses that contribute a lot to society in both economic and social aspects: creating jobs for many workers, paying taxes to the national budget, creating capital for the economy… High bad debt is a problem that credit institutions themselves do not want. A number of incidents at ACB (the Huyen Nhu case, the election of Kien), Ocean Bank (the Ha Van Tham case), a number of specially controlled banks… in the past time are just isolated cases, of specific individuals, it cannot be used to conclude that it is the general situation of credit institutions.
Bad debts occurred, thoroughly considered, not entirely due to subjective reasons of credit institutions. So when credit institutions have difficulties in dealing with bad debts, public opinion should have a more positive view to contribute to helping credit institutions overcome the immediate difficulties.
Bad debt settlement plays a huge role of law enforcement agencies such as courts, judgment enforcement agencies, public security agencies and other judicial agencies. However, at present, the participation of these units is still not really drastic and lacks synchronization.
The above are the barriers that credit institutions face when dealing with bad debts, of course there are also subjective barriers arising from the credit institutions themselves. But it must be affirmed that the above barriers are difficulties that are really beyond the expectations of credit institutions.
Lawyer Tran Duc Hung
Post on Securities Investment newspaper on October 5, 2015