The Legal Problems Of Non-performing Loan Disposal

The commercial banks and the Asset Management Corporations taking a large step towards Non-performing Loan (NPL) resolution in recent years and therefore open up NPL market in China. The disposal of NPL, as effectively handle these huge NPL to maximize the recover value and minimize losses, has played an important role in driving China's economic growth. With analyzing the cause, the situation, and the disposal of the NPL problem in China, this article explores the environment of macroeconomic of the Chinese NPL market and the legal issues that have arisen during this stage, and moreover, introduce two disposal methods of NPL: NPL securitization and debt-for-equity swap. Besides, the article compares modes and experience of NPL disposal in different countries, finally points out that there is still lack of effective way to resolve existing NPL problems in the current environment in China. Accordingly, to address the NPL problem, it is necessary for Chinese government to legislate The Financial Asset Management Company Law, set up personal bankruptcy system, provide further legal support for NPL disposal, build a maturity market for financing channel, reduce and transfer credit risk in banks, improve the development of capital markets,establish an efficient social credit system, strengthen the management of asset management agencies, meantime, attracting foreign investors to NPL disposal.