Speaking at the industry-wide online conference on strengthening bank credit in 2024 held by the State Bank of Vietnam (SBV), Mr. Pham Thanh Tung, CEO of Vietcombank, suggested and hoped that the SBV would extend Circular 02 on debt restructuring to provide better conditions for both customers and banks to repay their debts.
The economic condition at the beginning of 2024 is still difficult, thereby affecting the repayment of bank debts by businesses. Photo: Nhu Y
Similarly, Mr. Tran Long, Deputy CEO of BIDV, also stated that market difficulties are affecting customers’ ability to repay their debts. It should be noted that when Circular 02 expires on June 30, the likelihood of bad debts will increase. Therefore, BIDV’s leadership believes that it will be difficult for both customers and banks if Circular 02 is not extended as the trend of bad debts increases.
Mr. Ho Nam Tien, Vice Chairman of the Board of Directors and CEO of LPBank, said that LPBank has restructured around VND 2,500 billion of debt under Circular 02. However, it is also difficult to repay the debt when Circular 02 comes due on June 30. Therefore, banks desire to have more time for debt restructuring and extension according to Circular 02 from the SBV.
Regarding Circular 02, MB’s management also proposed a one-year extension, until June 2025, to help customers and banks have more time and conditions to repay their debts.
Mr. Pham Quang Thang, Deputy CEO of Techcombank, also said that Techcombank’s bad debts by the end of January 2024 are equivalent to the end of 2023, with a ratio of 1.2%.
Regarding customer debt restructuring at Techcombank under Circular 02, by the end of January 2024, it is about VND 6,000 billion, and now customers are starting to repay their debts. However, according to Mr. Thang, Techcombank also proposes an extension of time for debt restructuring and repayment under Circular 02 to create conditions for businesses to have time to repay their debts.
Mr. Nguyen Duc Vinh, CEO of VPBank, also suggested the need to extend Circular 02 for about 12 months compared to the deadline in June 2024 to create conditions for customers to repay their debts. According to Mr. Vinh, debt collection at present encounters many difficulties, especially for the recovery of consumer loans, which is increasingly difficult, so the staff in the debt collection department has also reduced sharply. In particular, the number of FE Credit debt collectors has decreased by 50%.
Extension of Circular 02 is necessary
Mr. Vo Minh, Director of SBV’s Da Nang branch, said that it is necessary to extend the time of Circular 02 because the market is still difficult, and customers need more time to restructure and repay their debts. However, according to Mr. Minh, research, analysis, and forecasting of difficulties and the recovery of the economy are necessary to determine the extension period, rather than simply extending it for 6 months or 1 year.
Deputy Director of SBV, Dao Minh Tu, said that it is necessary to consider extending Circular 02, but the extension period of 6 months or 1 year needs careful consideration. Although credit growth has slowed in the first month of this year, banks should not lend indiscriminately, but they should not tighten credit either. These are two issues that need to be ensured. Credit should be directed to priority areas, support businesses in difficulty, but with conditions for recovery.
Previously, at the press conference “Implementing banking tasks in 2024,” Deputy Director of SBV Dao Minh Tu also stated that the SBV will consider extending Circular 02 on debt restructuring and keeping the debt group. If necessary, the SBV may continue to maintain Circular 02. This Circular will expire on June 30. “If the economy and businesses still need it by June 30, three months before that, we will propose to continue maintaining Circular 02. However, it must be ensured that we have a real view of the extended, deferred debt, avoiding hidden bad debts,” Mr. Tu said.
Also at the press conference, Ms. Ha Thu Giang, Head of the Credit Department of Economic Sectors, said that nearly 8 months after the implementation of Circular 02 (from April 24, 2023, to November 30, 2023), the total value of principal and interest debts restructured and maintained by credit institutions is VND 171,083 billion, with 175,581 customers having their debt repayment period restructured and debt group maintained.
Circular 02 was issued by the SBV in late April 2023, specifying credit institutions, foreign credit branches restructuring the debt repayment period, keeping the debt group to support customers in difficulty. The Circular is valid until June 30, 2024. The subjects considered for debt restructuring and maintaining the debt group are customers facing difficulties in business activities and having difficulty repaying loan amounts serving living and consumer purposes.
