Vietnam bad debt management and market development

Vietnam is transitioning its bad debt management from individual recovery efforts toward a structured debt trading market to improve transparency and banking system resources. By mid-2026, the internal bad debt ratio of the credit institution system had decreased to 3.31% from 3.44% at the end of 2025.

To facilitate this transition, the Vietnamese government issued Decree No. 359/2026/ND-CP, signed by Deputy Prime Minister Nguyen Van Thang, to establish a 100% state-owned Asset Management Company (AMC). Operating as a single-member limited liability company under the supervision of the State Bank of Vietnam, the AMC will function on a non-profit basis with a charter capital of 5,000 billion Vietnamese Dong. The company aims to cover its own expenditures through earnings while minimizing risks and costs associated with debt management.

The AMC is authorized to purchase bad debts from domestic credit institutions, joint ventures, and foreign bank branches at market value or through special bonds. Notably, borrowers whose debts are sold to the company may remain eligible for credit from financial institutions if they can present “viable business plans or investment projects.”

Complementing the establishment of the AMC, Law No. 96/2025/QH15, effective October 15, 2025, codifies the right of credit institutions to seize secured assets to resolve bad debts. This law transitions the previous pilot mechanism under Resolution 42/2017/QH14 into a permanent part of the Law on Credit Institutions. Unlike the previous pilot, which was limited to loans originated before August 15, 2017, the new law expands the scope to include all bad debts involving secured assets, allowing for the processing of overdue loans from the past decade through asset seizure rather than lengthy litigation. The law includes protections for individuals when seized collateral is their sole residence or primary means of labor.