Deputy Director of the State Bank Dao Minh Tu
On the morning of February 20, in Hanoi, the State Bank of Vietnam (SBV) organized an online conference of the entire banking sector to strengthen bank credit in 2024.
During the conference, banks expressed their opinions that, given the current difficult economic situation and weak market demand, which has affected customers’ ability to repay debts, banks propose to extend Circular 02/2023/TT-NHNN for an additional 6 months to 1 year instead of the deadline of June 30, 2024.
Vo Minh, director of the SBV’s Da Nang Branch, believes it is necessary to extend the time period of Circular 02, as the current market is still difficult and customers need more time to restructure and repay debts. However, Minh also believes that a careful examination, analysis, and forecasting of the difficulties and economic recovery are needed to determine the appropriate extension period, rather than simply extending it by 6 months or 1 year.
Deputy Director of the SBV Dao Minh Tu mentioned that it is necessary to consider extending Circular 02, but the specific extension period of 6 months or 1 year needs to be thoroughly examined. Although credit has slowed down in the first month of this year, banks should not lend at all costs, but they should also not tighten credit excessively. These are two issues that need to be ensured. Credit needs to be directed towards priority sectors, supporting struggling businesses, with conditions for recovery.
Prior to that, at the press conference on “Implementing the banking tasks for 2024,” Deputy Director Dao Minh Tu also stated that the State Bank would consider extending Circular 02/2023/TT-NHNN regarding the restructuring of debt repayment periods and maintaining the debt groups. If necessary, the SBV may continue to maintain Circular 02. This circular will expire on June 30. “By June 30, if the economy and businesses still need it, about 3 months before that, we will propose to continue maintaining Circular 02. However, it is necessary to ensure a comprehensive understanding of the existing expanded debts, deferred debts, and potential bad debts in the economy,” Dao Minh Tu said.
Also at the press conference, Head of the Credit Department of Economic Sectors Ha Thu Giang said that after nearly 8 months of implementing Circular 02 (from April 24, 2023, to November 30, 2023), the total value of principal and interest debts restructured and maintained in the debt groups by credit institutions reached 171,083 billion VND, with 175,581 customers having their repayment periods restructured and their debt groups maintained.
Circular 02 was issued by the SBV at the end of April 2023, stipulating the restructuring of debts and maintenance of debt groups by credit institutions and foreign bank branches to support customers facing difficulties and will be effective until June 30, 2024. The subjects considered for debt restructuring and maintaining debt groups are customers facing difficulties in production, business activities, and difficulties in repaying loans for daily life and consumption purposes.
The SBV gives the authority to credit institutions and foreign bank branches to proactively assess customers’ difficulties and decide on the debt restructuring. The period of debt restructuring is decided by the credit institutions but must not exceed 12 months from the due date of the restructured debt balance.
According to experts, Circular 02, which regulates debt restructuring for production and business loans and consumer loans, is one of the important regulations affecting the operations of many banks.
In addition to the production and business sector, Circular 02 also allows for debt rescheduling/deferrals in the consumer loan sector, which is also facing difficulties due to decreased borrower incomes (the draft does not include consumer loans).
At the same time, Circular 02 also stipulates maintaining debt groups based on the most recent debt group before the restructuring and excluding expected interest from the accounting balance sheet for monitoring purposes (excluding expected interest) until June 30, 2024.
