The State Bank of Vietnam (SBV), the country’s central bank, has agreed for banks to extend the debt schedule for another six months until June 30, 2022.
|A customer at a VPBank branch in Hanoi. Photo: The Hanoi Times.|
The move came following the SBV’s release of circular No.14 to revise its previous circular No.01 on rescheduling debt payment deadlines and waiving, freezing of lending rates for customers affected by the Covid-19 pandemic.
The move is set to be applicable to all debts incurred before August 1, 2021, instead of the previous timeline of June 10, 2020.
According to the SBV, the fourth Covid-19 pandemic with serious socio-economic consequences has posed negative impacts on businesses and people’s lives.
“Many have now lost their source of revenue and are in no position to pay debts,” it added.
Under the new circular, banks and credit institutions are now given the permission to lower lending rates for loans incurred before August 1, except for loans to purchase corporate bonds, which payments of principals or interest rates are expected from January 23, 2020, to June 30, 2022.
While these requirements above are set forth by the SBV for banks to comply, in reality, customers looking for their debts restructured would depend on each bank’s assessment of their payment capability after restructuring.
In 2020, the SBV cut the policies rates three times for a combined of 1.5-2 percentage points, which created room for commercial banks to lower their lending rates for customers.
To date, nearly 800,000 customers have received banks’ support with total outstanding loans of VND2,000 trillion (US$87.73 billion), and another VND18.8 trillion in interest rates were foregone.
In a meeting held in July, 16 banks and credit institutions agreed to cut interest rates for total loans of VND20.3 trillion ($886.55 million) from now until late 2021.