Vietnam central bank to grant more time for debt rescheduling

By Minh Anh
Fri, May 17, 2024 | 3:05 pm GMT+7

Vietnam’s central bank is set to extend by six months, until the end of 2024, the time that the nation’s commercial banks can take to reschedule debts for struggling clients.

It said in a statement that the proposed extension of Circular No. 02/2023/TT-NHNN has been endorsed by the government.

Banks' clients may have their loan payment extended by another six months. Photo courtesy of the Dau Tu (Investment) newspaper.

Banks' clients may have their loan payment extended by another six months. Photo courtesy of the Dau Tu (Investment) newspaper.

The State Bank of Vietnam (SBV) said that extending the time provided for rescheduling debts will help banks’ clients overcome difficulties and contribute to the nation’s economic recovery.

It also noted renewal of the circular will not affect the risk provisioning mechanism of banks and would, on the other hand, contribute to reducing the pace of bad debt growth on the banks’ balance sheets.

After restructuring the loans, banks shall have to make risk provisions according to the roadmap drawn by the SBV’s Circular No. 11/2021/TT-NHNN. Under this, additional provisions must be made for restructured debts in two stages: at least 50% as of December 31, 2023 and 100% by the end of 2024.

At a regular quarterly press briefing last month, Nguyen Xuan Bac, deputy head of the SBV’s Department of Credit for Economic Sectors, said the central bank had assessed the impact of Circular No. 02 and reported it to the Prime Minister when requesting approval for its extension.

“Every policy has two sides. The SBV will extend the circular until end-2024 and evaluate its impact later,” he said.

SBV data shows that, by the end of 2023, nearly 188,000 customers had their debt repayment deadlines extended and retained in the same debt category, with the value of total restructured outstanding principal and interest exceeding VND183.5 trillion ($7.21 billion).

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