Resuming cash flow with credit support

With a wide range of policy beneficiaries, the implementation of Circular 02/2023/TT-NHNN on debt restructuring and maintaining debt groups to support customers in difficulty (Circular 02) is expected to resume cash flow for the production, business, and export processing sectors, while also reducing consumer financial pressure.

Immediately after the State Bank issued Circular 02, local banking systems actively took action to implement this policy in practice.

In Ho Chi Minh City and many southern provinces, the State Bank branches in the area have issued documents directing the credit institution system to immediately review customers, summarize loan needs, demand for debt repayment deferral and maintain debt groups to provide timely support.

Mr. Nguyen Duc Lenh, Deputy Director of the State Bank of Vietnam, Ho Chi Minh City Branch, said that the agency has issued a document directing the system of credit institutions in the area to immediately implement the provisions of Circular 02 and Circular 03/2023/TT-NHNN (Circular 03). Accordingly, the State Bank of Vietnam requires credit institutions to focus on disseminating to all branches and transaction offices, reviewing and making statistics on customer groups in accordance with the provisions of the support policy to implement debt restructuring, maintain the debt group, create conditions for customers to reduce the pressure of debt repayment and access new additional capital sources to maintain production and business.

In Ba Ria - Vung Tau and Dong Thap, all credit institutions in the area have been informed and required to immediately implement credit support policies according to Circular 02 and Circular 03.

According to the assessment of the State Bank of Vietnam's provincial branches, compared to the debt extension policies and maintaining the debt group during the Covid-19 pandemic, the beneficiaries of this policy of Circular 02 have a wider coverage, including individual customers borrowing capital for production and business and consumer customers facing difficulties due to objective reasons.

Therefore, Circular 02 has “coverage” for most of the economy’s borrowing purposes. Therefore, credit institutions will have to have time to review and synthesize for practical implementation. However, basically, most credit institutions have experience in debt restructuring and maintaining debt groups in the previous phase, so this implementation will not encounter any difficulties.

From the perspective of commercial banks, Mr. Nguyen Dinh Tung, General Director of OCB, said that currently, at many commercial banks, the outstanding debt that has been restructured according to previous regulations of the State Bank is no longer significant and has been provisioned. Therefore, continuing this policy is very appropriate and timely in the current context. Because after more than 3 years of being affected by the Covid-19 epidemic, many organizations and individuals borrowing capital for production and business activities are facing difficulties and have difficulty repaying debts on time.

“As soon as the debt restructuring policy comes into effect, the immediate debt repayment pressure of businesses will be eased, especially for businesses with large outstanding debts and a lack of backlog orders,” Mr. Tung commented.

According to the investigation of the Banking Times reporter, currently in many localities in the Southern region, many businesses have a need to extend debt and maintain the debt group to increase the opportunity to borrow additional working capital to purchase raw materials for export production, which is quite large.

In Dong Nai, Binh Duong, Ba Ria - Vung Tau, many enterprises in the fields of wood product export and agricultural and aquatic product processing have expressed their desire for banks to consider extending debt and providing additional loans for working capital. For example, Mr. Dinh Xuan Quang, Director of Dong Hung Company Limited (Dong Nai) said that the debt repayment pressure of this enterprise is currently quite large.

On the banking side, debt restructuring support activities have also begun to be implemented by commercial banks. Connecting and expanding lending to manufacturing and export enterprises is also being strongly promoted.

According to the assessment of some commercial bank branches in Bien Hoa City, with the implementation of debt restructuring policy, maintaining the debt group, in the months of the second and third quarters of 2023, outstanding loans to processing and export manufacturing enterprises will increase sharply, because the proportion of outstanding loans to this customer group in many banks is currently quite high and many enterprises are in dire need of additional working capital to maintain production, meet export orders when large markets such as China are resumed.

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