The State Bank of Vietnam is drafting amendments to a circular that restructures repayment periods, waives and reduces interest rates and fees and maintains debt classification to support people affected by the COVID-19 pandemic to ensure more receive the support.

A branch of the Viet Nam Bank for Agriculture and Rural Development in Yen Bai Province.
The State Bank of Viet Nam was drafting an amended circular which would allow more
loans to be restructured. - VNA/VNS Photo Hai Quan

 According to the draft circular which was recently made public for comments, more loans could have repayments postponed until after the end of this year.

Restructuring of the repayment periods and maintaining debt classification would be provided to loans which required repayments to be made from January 31 to December 31, instead of from January 31 to three months after the Prime Minister announces the pandemic is over.

The draft circular also allows credit institutions and foreign banks’ branches to restructure repayment periods and maintain debt classification for loans disbursed from January 23 to April 24. Under Circular 01, restructuring of the repayment periods and maintaining debt classification were only provided to loans disbursed before January 23.

According to Can Van Luc, chief economist of the Bank for Investment and Development of Viet Nam (BIDV), expanding loans subject to the circular’s supports was essential to ease the financial burden for companies affected by the virus.

Financial and banking expert Nguyen Tri Hieu expressed concerns over maintaining debt classification.

Hieu said problems would arise if enterprises went insolvent but their debt classification stayed the same, which would not fully reflect the risks as some loans were becoming non-performing.

Hieu said it was necessary to raise details for classifying restructured debts which were not repaid following the restructured payment periods, which would help prevent risks for the financial market and improve the efficiency of the policy.

According to the State Bank of Viet Nam, credit institutions restructured payment periods for nearly 260,000 customers with total outstanding loans of nearly VND180 trillion and reduced interest rates for 421,000 customers with total outstanding loans of VND1.3 quadrillion. Credit institutions also provided new loans worth VND1.1 quadrillion to 240,000 customers with interest rates 0.5-2.5 percentage points per year lower than the pre-pandemic period.