Credit firms struggle to retrieve collateral
Credit firms struggle to retrieve collateral
While handling pledged assets was considered an effective tool for credit institutions to retrieve debts and reduce non-performing loans, gaps in regulation have been hindering progress on this front, experts said during a seminar in Ha Noi last week.
According to Nguyen Tien Dong, Director of the central bank's Department of Credit for Economic Sectors, handling of pledged assets was becoming a pressing matter of concern in the operation of credit institutions.
He attributed the stagnation in handling pledged assets to the overlaps and gaps in relevant legal documents which made it difficult to properly evaluate the value of the pledged assets or hindered seizure of assets.
While a majority of pledged assets were in the shape of real estate, handling such assets involves many entities, but the lack of co-ordination among such entities was causing delays in transferring pledged assets.
The general secretary of Viet Nam Banks Association, Tran Thi Hong Hanh, said the process to handle these pledged assets must be expedited as stagnation would hurt both lenders and borrowers as well as the economy. He urged that the legal framework needs to be improved.
Facts show that involved parties in any pledged asset hardly reached an agreement regarding the value of the asset, especially if the pledged assets were evaluated lower than the loan amount, experts said. Many such cases were brought to courts, thus taking valuable time.
According to Pham Hong Son, head of Agribank's Department of Individual and Household Customers, involved parties could take advantage of the gaps in regulation to prolong any dispute over asset handling.
In addition, auctioning process of pledged assets lacked transparency and sometimes the assets were over-evaluated on purpose, said a representative from Ha Noi Civil Judgement Enforcement.
According to Dong, credit institutions should pay adequate attention to the evaluation and management of pledged assets to prevent conflicts which might arise later.
The co-ordination among local authorities, banks and the police was also important in handling pledged assets, experts said, adding that regulations about responsibilities of the police and people's committees, in co-ordination with credit institutions and Viet Nam Asset Management Company, were needed to hasten resolution of bad debts.
