Bad debts at Vietnam Development Bank (VDB) by the end of 2010 had reached over VND38.1 trillion, accounting for 12.57% of its total outstanding loans, according to the Government Inspectorate.
The Government Inspectorate has focused on detecting the violations of the State-run bank in capital mobilization, debt classification, lending for investment and export, risk management and guarantee for loans of enterprises.
Inspectors have paid due attention to bad debts at VDB because the bank is a financial vehicle for the Government to implement socio-economic policies and grant certain loans, said Ngo Van Khanh, deputy inspector general of the Government Inspectorate, at a meeting on the inspection results last Friday.
Bad debts at VDB by the end of 2010 at more than VND38.1 trillion was VND15 trillion higher than the figure that the bank reported.
Specifically, unsettled bad debts from VDB’s predecessors had amounted to over VND5.2 trillion and bad debts from lending programs assigned by the Government had reached VND6.18 trillion. Bad debts from ODA lending had stood at VND2.2 trillion and debts owed by Vinashin alone were VND3.79 trillion.
From 2008 to 2010, VDB did not adhere to the rules of capital mobilization properly. The bank is only allowed to raise funds with interest rates equal to the market levels when it has fully used interest-free or low-interest capital sources, but this regulation has led to inefficient capital use.
In regards to pilot lending programs, VDB was found granting loans unduly, going against the regulations of the Government on credit for investment and export.
The outstanding loans of the bank’s pilot lending program as of October 31, 2011 had amounted to VND260 billion, in which bad debts made up 85.27%. “It is very difficult to fully recover this sum,” said the Government Inspectorate.
VDB has also committed many violations in lending for investment and export, giving loans worth trillions of dong to many unqualified projects.
For example, the lender has committed violations in loan disbursement for 41 out of 159 projects with total outstanding loans of VND3.16 trillion. Among those, it faces a high risk of capital loss in 33 shipbuilding projects with total loans of some VND3 trillion, said the Government Inspectorate.
A number of projects are incomplete, so their owners do not have money to repay debts. Meanwhile, collaterals are properties acquired or developed on the loans, making it difficult to handle and posing a high risk of capital loss.
“This issue needs special care,” the Government Inspectorate stated.
To deal with this issue, the Government Inspectorate suggested the Ministry of Finance request VDB and relevant local governments to review each project and then propose solutions. Moreover, specific violations in the lending process should be strictly handled.
The Saigon Times Daily