The handling of bad debts will be differentiated.

According to Dr. Chau Dinh Linh (Ho Chi Minh City University of Banking), Government Decree No. 304/2025/ND-CP, which stipulates the conditions for seizing collateral assets for bad debts, creates a clearer framework for the seizure and handling of collateral assets, while also raising concerns about costs and requiring a change in risk management culture at banks.

Dr. Chau Dinh Linh ( Ho Chi Minh City University of Banking)

How will Decree No. 04/2025/ND-CP affect banks in handling bad debts, sir?

In my opinion, Decree No. 304/2025/ND-CP reflects an approach that balances the interests of all stakeholders, including lenders and borrowers. A notable point is that the Decree clarifies the conditions for legally seizing collateral, especially in cases where the collateral is of a specific nature, such as the borrower's sole residence or primary means of livelihood.

In such cases, when banks seize and process collateral while simultaneously supporting the borrower's livelihood, it ensures both humane treatment and a clearer definition of rights and obligations between the parties, instead of allowing seizure activities to become complicated or lead to prolonged disputes as in the past.

From a banking perspective, Decree No. 304/2025/ND-CP provides a clearer framework for handling bad debts, thereby potentially increasing the recovery rate of "real money" instead of allowing bad debts to linger on the books. However, it should also be noted that the obligation to support livelihoods will increase the cost of debt resolution, and this will certainly impact bank profits. When costs increase, profits decrease, affecting ROE, and this could later affect the valuation of bank shares.

Many banks are stepping up the sale of bad debts. In your opinion, is this a sign that the process of handling and selling bad debts will become easier?

Yes, the new regulations in Decree No. 304/2025/ND-CP will create an impetus for banks to accelerate the handling of collateral assets and the recovery of bad debts. Especially those collateral assets with good legal standing will be prioritized for processing by banks.

However, in my opinion, the crucial factor driving banks to strengthen collateral handling remains the pressure to meet targets and KPIs by the end of the 2025 fiscal year. If bad debts are handled well, banks can reverse provisions, improve profitability, and reduce the bad debt ratio on their reports. This is especially important in preparing for credit growth in 2026. Given the system-wide credit growth target of around 15%, each bank still needs to meet specific conditions, indicators, and levels of compliance to be allocated a specific credit limit.

With the new policies, what do you think the picture of handling bad debts will look like in 2026?

In my opinion, the picture of handling bad debts will clearly differentiate between groups of banks. For large banks, this process is generally smoother thanks to their relatively complete risk management systems; many banks have approached high standards such as Basel III. Experience and resources help them handle the process more systematically, focusing on recovery of debts with clear legal collateral or loans to businesses that still have the potential to recover cash flow.

Conversely, smaller banks face more challenges. The quality of collateral is generally low, coupled with weak customer financial capacity, while unresolved old debts create continued pressure on the banks. If the bank's risk management system is not standardized, and resources and experience in handling debt are limited, the resolution speed is often significantly slower. In this context, the requirement is for banks to classify debts more thoroughly and realistically. This should not be limited to accounting standard debt categories, but should be classified according to their remediation potential: recoverable quickly, requiring restructuring, suitable for sale, or should be transferred to VAMC. In other words, classification is necessary to determine the correct priority order and resolution plan for each debt category.

Therefore, the role of VAMC will be particularly important, especially for smaller banks. Through supporting debt resolution and transferring experience, VAMC helps these banks improve their debt resolution capacity in a more systematic way.

Source: https://thoibaonganhang.vn/xu-ly-no-xau-se-co-su-phan-hoa-176710.html