Credit institutions and businesses can now relax after the State Bank of Vietnam enacted Circular No.14/2021/TT-NHNN to extend the time and scope of debt rescheduling for enterprises suffering from COVID-19.
Five months since the enactment of Circular No.03/2021/TT-NHNN as the first revision of State Bank of Vietnam’s (SBV) Circular No.01/2020/TT-NHNN on debt rescheduling for customers affected by COVID-19 pandemic, the central bank (SBV) has just released Circular No.14/2021/TT-NHNN as the second revision, on continued extension of debt repayment as well as debt rescheduling scope.
The commercial lenders have deemed the second revision as quick and timely, helping retail and corporate customers and the banks themselves to unclog impediments.
Compared to former regulations, Circular 04 carries two highlights. The scope of the loans which are entitled to delay in repayment with reduction or exemption of interest and fee now cover those arisen from June 10, 2020 until August 1, 2021, instead of just covering the loans prior to June 10, 2020 as regulated in Circular 03 in the first revision.
In addition, the repayment of debt has been extended by an additional six months to June 30, 2022 instead of December 31, 2021.
Nguyen Dinh Tung, general director of HCM City-based OCB said that the new Circular is supportive to both lenders and firms, and that “OCB will accelerate rescheduling debts for the customers based on amended regulations”.
As Circular 03 had only allowed banks to reschedule the loans arose before June 30, 2020, most customers taking loans, including those hardly hit by the fourth wave of COVID-19 from late April until present would not have their debts rescheduled.
Therefore, Pham Nhu Anh, member of military-run lender MB’s Board of directors assumed that extending the time for debt scheduling as in the newly-released Circular 14 is quite necessary, helping firms to resume production as well as quicken capital circulation for higher investment efficiency.
Analysts at PSI Securitiesassumed that Circular 14 would help firms to reduce interest burdens and banks to improve asset quality with their profit not being largely affected by the pandemic impacts.
Despite high assessments for the timely enactment of Circular 14, many bank executives said that further efforts towards policy improvement are needed to further uphold firms and banks alike.
For example, banks should be allowed to extend the time for debt rescheduling by three more months after the date the prime minister announces the pandemic is over. This is to avoid further revisions of the circular.
In addition, many lenders assumed that the SBV has not extended the time to make provisioning for rescheduled loans would exacerbate banks’ provisioning dilemma.
Banking experts, however, said that SBV’s prudence in the enactment of Circular 14 is understandable, as a lengthy time for debt rescheduling or extending too much provisioning time would mean more bad debts.