A residential area in Hanoi (Photo: VNA) The central bank on April 24 issued Circular No 02/2023/TT-NHNN that providesinstructions for banks on debt rescheduling and retention of debt categories toassist borrowers of business and consumer loans. Under the circular, banks arepermitted to defer borrowers’ debts until June 30, 2024.
According to the SBV, the move is aimed to implement the directive of theGovernment in Resolution No 50/NQ-CP 2023 and Resolution No 59/NQ-CP 2023.
According to the circular, a bank will consider rescheduling principal and/ordebt interests on the basis of borrowers’ requests, the financial capacity ofthe bank and compliance with the following regulations.
First, debts that are rescheduled and have debt categories retained areprincipal of loans granted before April 24, 2023, and from lending and financelease.
Besides, the principal and/or interest have to be paid within the period fromApril 24, 2023 to June 30, 2024 and rescheduling time will be decided by thebanks and will not exceed 12 months from the due date of the outstanding debt tobe rescheduled.
The debt rescheduling according to Circular No 02/2023/TT-NHNN will beimplemented from April 24, 2023 to June 30, 2024, and the SBV authorises banksto proactively consider, assess borrowers' difficulties, and decide on therescheduling of their debts.
According to the SBV, the policy on the rescheduling of debt payment and debtcategory retention according to Circular No 02/2023/TT-NHNN prolongs the bankloan deferral periods that will directly contribute to partly removingdifficulties of people and enterprises.
The policy also enables enterprises and people to continue to reinvest andobtain new business loans and consumer loans, thereby contributing to thedevelopment of production and promoting economic development according to theGovernment’s set objectives of 2023 and the whole 2021-25 period.
Analysts from Viet Capital Securities Company (VCSC) said Circular 02 is basedon the debt restructuring mechanism that was used and demonstrated efficiencyduring the COVID-19 pandemic.
“Circular 02 aims to support all sectors of the economy as customers who arefacing difficulties can obtain access to other bank loans to maintain theirnormal business. However, we think the real estate sector could be one of thebiggest beneficiaries as it now has tools to spread out difficulties overseveral years to resolve issues, which will help to avoid the collapse ofcompanies — especially real estate developers — that could lead to systematicrisk. As for banks, the ease on pressure for customers — especially real estatedevelopers — will also help to ease the pressure on banks, which could lead tolower credit costs,” the analyst said in a recent report.
VNDirect Securities Company (VDSC) also said Circular 02 has a positive impacton both businesses and banks. Thanks to the circular, the pressure ofprovisioning will be minimised when the restructured debts are provisioned intwo years of 2023 and 2024.
The circular will positively influence the investors’ sentiment towards banks,such as Techcombank, Military Bank, VPBank and HDBank, which have a highproportion of real estate and consumer loans in their credit structure.
On the same day, the SBV also promulgated Circular No 03/2023/TT-NHNNsuspending the validity of Clause 11, Article 4 of Circular No 16/2021/TT-NHNNon corporate bond trading of credit institutions and foreign bank branches fromApril 24, 2023 to December 31, 2023.
Experts said the corporate bond market will be partially eased as Circular 03continually allows banks to buy unlisted corporate bonds.
The circular will allow banks to actively and flexibly buy back bonds fromindividual investors, which will help increase market liquidity, reduce bondmaturity pressure and increase the market-making role of banks, the expertssaid.
Nguyen Quang Thuan, chairman of financial data provider FiinGroup, said the newregulation makes the most sense for banks in the context that the pressure tobuy back bonds has recently increased when investors have requested to pay offbefore maturity.
The regulation will remove the pressure that some banks are facing because theydistributed the bonds to investors while the bond’s issuer faces difficultiesin cash flow and cannot redeem.
However, Le Hoang Chau, Chairman of HCM City Real Estate Association, said thatCircular 03 still does not allow banks to buy corporate bonds that firms issueto reverse debts.
In addition, the suspension period of the regulation is only eight months whichis too short and not enough for the corporate bond market to overcome difficulties,Chau said.
Therefore, Chau proposed the SBV to continue to abolish the regulation thatprohibits banks from buying corporate bonds issued with the aim of restructuringthe issuer’s debts./.
VNA
