Banks are expected to expand their support for businesses and people in form of debt rescheduling, waiving, and freezing of lending rates for a further six months until June 30, 2022, from the previous deadline of December 31, 2021.

A customer at a VietinBank branch in Hanoi. Photo: Tien Lam

The move was revealed in a recent proposal from the State Bank of Vietnam (SBV) on solutions to support banks’ customers affected by the Covid-19 pandemic.

According to the SBV, the support would expand for all debts incurred before August 1, 2021, instead of June 10, 2020, and overdue debts since July 17, 2021, as the fourth Covid-19 outbreak is causing severe impacts on economic activities and subsequently payment capabilities of businesses and people.

The central bank explained the reason for a 6-month extension of debt rescheduling is based on the government’s vaccination plan and current Covid-19 situation in the country.

“With such a plan, customers would have another six months to recover their business operations,” noted the SBV.

On July 17, Prime Minister issued document No.969/TTg-KGVX on the adoption of social distancing measures in localities, which allows 19 provinces/cities to carry out such measures. This has taken a heavy toll on business activities and people’s lives, making it hard for many to pay bank loans that were subject to reimbursement from July 17, 2021.

In 2020, the SBV cut the policies rates three times for a combined of 1.5-2 percentage points per, 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 last month's meeting, 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.