Concerned about amending regulations on debt restructuring time

	It is necessary to promulgate the revised Law on Insurance Business
	Vietnamese consumers expect seamless banking experience
	State Bank agrees to extend debt rescheduling for six months

The State Bank allows extending the debt restructuring by six months, until June 30, 2022. Photo: Internet

Helps ease the burden of paying interest

From September 7, Circular 14/2021/TT-NHNN amending Circular 01/2020/TT-NHNN of the State Bank (SBV) takes effect. In particular, the Circular 14 was issued after only five months that Circular 03/2021/TT-NHNN first revised Circular 01 on debt structure took effect.

Compared with the old regulations, Circular 14 has two new points worth noting. That is the scope of debt with restructured repayment term, exemption and reduction of interest and fees, including debts arising from June 10, 2020 to before August 1, 2021, instead of only including debts arising before June 10, 2020 as stipulated in Circular 03. In addition, the debt restructuring period was extended by six months (extended to June 30, 2022, instead of December 31, 2021).

According to commercial banks and businesses, this second amendment takes place quickly, promptly removing difficulties for borrowers who are individuals, businesses and even commercial banks.

Pham Nhu Anh, Pham Nhu Anh, member of the MB’s Board of Management, said extending the time for debt restructuring according to the new circular of the State Bank of Vietnam is very necessary, helping many entities to restore production, turnaround capital, thereby matching the terms of old and new loans that customers need to pay when due.

Analysts from Petrovietnam Securities Incorporated (PSI) said Circular 14 will help businesses reduce the burden of interest payments, give banks have more time to restructure debts, and reduce the impact of Covid-19 on the asset quality and profitability of the banking industry.

Also on this issue, economic expert Dr Le Xuan Nghia said that banks are allowed to extend the debt restructuring time for businesses, which means banks have not yet faced great pressure on setting up risk provisions for restructured debts. This will help bank profits be less affected throughout the rest of the year. However, when Circular 14 expires, banks are forced to account for restructured debts and many of them may become bad debts, at that time the pressure is on the banks.

Worried about bad debts, risks

However, there are still many that are unsatisfied with the time extension and the scope of debt restructuring. A representative of a bank said Circular 14 has just removed a very small part of the difficulties of banks and businesses. Moreover, extending debt restructuring time by six months is considered as not reasonable as it is not known when the pandemic will last and will end, there is no basis to confirm that a restructured enterprise after 12 months will be able to repay its debt.

A representative of a textile and garment enterprise shared it takes 2-3 months to implement Circular 14 because it is still difficult due to the implementation of social distancing, businesses take a few more months to a whole year to restore production, so the deadline should be extended. So extending the debt restructuring by six months is not enough. He is also concerned that Circular 01 will be revised if the pandemic is still complicated.

On the business side, the biggest desire is to implement the new circular quickly, because they are struggling with debt repayment plans, facing the risk of bankruptcy. In addition, businesses want better access to the policies of exempting and reducing interest and fees from banks, to have more financial resources to repay loans.