Loan balance of VND 926 trillion affected by Covid-19 epidemic

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The conference on strengthening solutions to surmount difficulties for customers affected by the Covid-19 epidemic. Photo: H. Diu

On March 2, the State Bank and credit institutions in Hanoijointly organized a conference on strengthening solutions to help solve difficulties for people and businesses affected by the Covid-19 epidemic.

At the conference, Director of the SBV’s Credit Department Nguyen Quoc Hung said that there were so far 23 credit institutions reporting impacts of the epidemic,with estimated loans of VND926 trillionaffected by Covid-19, accounting for about 14.27% of the total loan balance of these 23 credit institutions, and about 11.3% of the total loan balance of the whole system.

In particular, some sectors were likely to be greatly affected such as agriculture, forestry and fishery, businesses involved in import and export activities, accommodation services, catering service, food, beverages, transportation, textiles, footwear, electronics, refrigeration, oil and gas, tourism and education, etc.

Therefore, in the last three weeks, credit institutions have followed the SBV’s guidance on urgently reviewing the situation of borrowers to actively develop action programs and scenarios to remove difficulties.

Hung said that initially 44,000 customers were supported with a loan balance of about VND222,000 billion through measures such as restructuring repayment deadlines, exempting and reducing interest rates of existing loans, reducing interest rates for new loans, exempting and reducing fees, launchingcredit programs and products to share difficulties, support businesses and people to overcome losses.

Nearly 30 commercial banks have joined with Napas to launch a program on remittance fee reduction and exemption to share the responsibility with the community and customers, helping promote cashless payments. In addition, the National Credit Information Center of Vietnam (CIC) has reduced the credit information service fee to help credit institutions reduce costs and interest rates, thereby indirectly improving accessibility to credits of people and businesses.

However, to better support the affected people, at the conference, commercial banks all expressed their desire for the SBV to soon issue a circular to guide credit institutions to restructure repayment deadlines, exempting and reducing loan interest ratesand maintain loans for customers affected by the epidemic.

Accordingly, the representative of Agribank proposed that the Circular should clearly state the principles and criteria for the bank to implement the loan structure, interest rate exemption and reduction. This will help banks remain consistent in the implementation, avoiding inconsistency leading to risks for policy makers.

Also on this issue, Mr. Nguyen Toan Thang, Chairman of the Banking Association, said that the banking sector was not alone in the determination of these supportive criteria, commercial banks could not self-check and assess customers, but this might be done by a third independent unit to identify right customers who are in need of support.

Accordingly,SBV’s Deputy Governor Dao Minh Tu said that the SBV was working with relevant ministries and agencies to actively and urgently improve the legal system in order to create conditions for both credit institutions and businesses in surmounting difficulties and damages caused by the epidemic.

He also asked banks to identify this as an important political task that must be focused and handled to continue growth and control inflation and stabilise the macroeconomy. However, credit institutions must strictly comply with the SBV’s regulations on the interest rate ceiling, closely monitor and control each loan and transaction; continue to promote administrative reform, increase the ability to borrow loans for customers, facilitate convenient payment and develop online services.

He also required banks to study loan classification, loan identification, risk assessment of potential bad debts to actively save costs to minimize impacts on management costs and profit.