B/ The problem of NPLs in Vietnamese bank:
I/The Definition of Non-Performing Loans (NPLs):
Based on IMF:
A loan is non performing when payments of interest and principal are past due by 90 days or more, or at least 90 days of interest payments have been capitalized, refinanced or delayed by agreement, or payments are less than 90 days overdue, but there are other good reasons to doubt that payments will be made in full.
Based on the SBVDecision 493/2005/QD-NHNN dated 22 Apr 2005:
NOL are prescribed to only debts cannot afford to pay both principal and interest or to fall into this situation. Within 3 months, if the debts that cannot afford to pay will be provided for bad debt. ...view middle of the document...
II/The NPLs in Vietnam, where was it come?
In 2006, when Vietnam became 150th member of WTO, there are so many foreign companies which have launched their business in Vietnam. The flow of Capital increases day by day and come to production, services and trading. Vietnam has become the new attractive destination of the foreign direct investment.
The HOSE is full of investor, there are a lot of services Securities Company was established to help the investor used their money. Vietnamese Index was increased day by day over 1500. The HOSE want to expand their business so that the Enterprise and Bank has a plan to issue stock as IPO.
The securities Company consult their clients to issue share on the stock market such as HOSE or HASE and get the money back. There are a lot of IPO at that time and Enterprise has got a lot of money. Unfortunately, The Enterprise do not know how to invest the fund which is easy to get back via the IPO. They invest in real estate and stock market.
The real estate becomes the most business profit which has been speculative by the enterprise. The price of house, apartment was increased day by day so The investor has to queue for buying their house.
At that time, The Vietnamese banking system have to expand their business. The bank has mobilized a huge amount of capital and massive growth in credit operations. Many new banks do not have enough expertise, technology and personnel to manage effectively in fund and risk management. They easy made loans to their clients such as individual and enterprise. The credit of the commercial banks was growth up to 30% year by year from 2006 to 2007. When the Enterprise borrows the money from the bank,...