Obstacles to bad debt settlement Economists are warning the slow progress in banking reform will increase the ratio of bad debts. The International Monetary Fund’s (IMF) Permanent Vietnam Representative, Sanjay Kalra, recommends stepping up the restructuring of the banking system at any cost. Judging by recent developments related to major banks in the country, the State Bank of Vietnam (SBV) is considered capable of ensuring liquidity as it is prime for stable growth. IMF Representative Sanjay Kalra is concerned about the lack of transparency in banking operations which he believes has led to instability and obstacles to further growth. Despite a credit growth boom, banks are faced with the rising bad debt ratios of State-owned enterprises (SOEs). The banking system is under heavy pressure from weak asset management and inadequate capital reserves, he says. Many economists differ on the validity of bad debt figures only verified by management agencies and the banks themselves they think that commercial banks put bad debt ratios at 8 percent, but the real figure must be higher, Sanjay Kalra says. As most bad debts are owed by SOEs and the real estate sector, he argues, bad debt ratios would rise higher if there were no…
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