Extension of Circular 02: Need to carefully consider and evaluate the subjects eligible for debt deferral and postponement

ANTD.VN - Experts believe that the extension of Circular 02 needs to be carefully considered and evaluated for the subjects to be applied. Enterprises with the ability to recover need to find all solutions to resolve the problem. Enterprises with no ability to recover and weak financial capacity must resolutely not restructure debt, transfer bad debt and handle collateral to recover debt.

Bad debt will increase sharply if Circular 02 expires

According to records, most banks are facing a rapidly increasing bad debt situation. The total bad debt of banks at the end of the third quarter of 2023 increased by 61% compared to the end of the previous quarter, to VND 196,755 billion.

However, experts say that this figure does not fully reflect the reality of bad debts of banks, because many bad debts are still "hidden in debts with restructured repayment terms, keeping the same debt group according to Circular 02 of the State Bank of Vietnam (SBV).

"Bad debts of banks are not yet accounted for including debt rescheduling, deferral, and debt group transfer, but if they are added together, they will at least double," said economic expert Le Xuan Nghia.

The State Bank's report also shows that the ratio of bad debt on the balance sheet plus debt sold to the Vietnam Asset Management Company (VAMC) that has not been processed and potential bad debt of the entire credit institution system is 6.16%.

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Bad debt of banks tends to increase due to general difficulties of the economy.

While bad debts are rising, banks are struggling to deal with the frozen real estate market. According to statistics, the total value of mortgaged real estate at banks currently accounts for about 70% of total assets securing loans, and this ratio at some banks is even up to 80-90%.

Therefore, real estate is often the asset that banks auction off the most, but recently, many banks have had to lower the price of collateral assets much lower than the value of the debt but still cannot sell them.

In that context, experts and banks have expressed concern that the bad debt situation will become much more serious when Circular 02 expires. This will force banks to reduce lending to focus on risk management.

Need to carefully evaluate the extension object

Given the above situation, many opinions suggest that the State Bank should consider extending Circular 02 to create favorable conditions for both banks and businesses to have time to recover.

“The State Bank of Vietnam should continue to extend Circular 02 to support banks and businesses. At the same time, there should be support for bad debt settlement for banks,” Mr. Nguyen Duc Vinh, General Director of VPBank, suggested.

Economist, Dr. Le Xuan Nghia, also said that it is possible to consider extending Circular 02 for a maximum of 1 year - until June 2025, when the real estate market is expected to recover.

"In the context of the still difficult economy, extending the effective period of the Circular aims to delay the debt settlement process, helping banks to gradually set up risk provisions without significantly affecting the financial foundation. At the same time, businesses have more resources and conditions to regenerate and rotate business capital sources," he said.

Sharing the same view, Vice Chairman and General Secretary of the Vietnam Banking Association Nguyen Quoc Hung agreed that Circular 02 should be considered for another year, creating conditions for businesses with the ability to recover to have the opportunity to overcome difficulties.

“However, if Circular 02 is extended, it is necessary to carefully consider and evaluate the subjects to be applied in the direction: for businesses that are capable of recovery, all solutions need to be found, not only debt deferral but also new loans. However, that alone is not enough, but there needs to be support from all levels and sectors to help businesses overcome difficulties.

In case the enterprise is unable to recover and has weak financial capacity, it is absolutely not necessary to restructure debt, transfer bad debt and handle collateral to recover debt, and the shortfall will be handled by the credit institution's risk reserve fund" - Mr. Hung suggested.

According to him, this is an opportunity to restructure the economy and businesses. We cannot let businesses that are no longer able to recover become a burden on the economy.

In addition, the representative of the Banking Association also said that it is time to study and consider amending and supplementing the Bankruptcy Law, so that businesses (including commercial banks) that cannot recover must be forced to be handled according to the Bankruptcy Law.

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