Another six months for debt restructuring but need to manage bad debt risks
Be careful with bad debt risks and ensure capital adequacy |
Allowing debt repayment term to be restructured and debt group kept intact according to Circular 02 until the end of 2024. Photo: Internet |
The State Bank (SBV) has issued Circular 06/2024/TT-NHNN (Circular 06) amending and supplementing a number of articles of Circular 02/2023/TT-NHNN dated April 23, 2023 (Circular Circular 02) regulates credit institutions and foreign bank branches to restructure debt repayment terms and maintain the same debt group to support customers in difficulty.
Circular 06 has allowed an extension of six months to implement the solution to restructure the debt repayment period and maintain the debt group according to Circular 02 until December 31, 2024.
According to the State Bank, in the first months of 2024, the economy will show signs of recovery but there are many potential risks and challenges. Production and business activities in some industries and fields are difficult, the economy's demand is weak, and credit growth is slow.
Therefore, the State Bank believes that extending the implementation time of the policy to restructure debt repayment periods and maintain the same debt group according to Circular 02 until December 31, 2024 will continue to contribute to solving difficulties for businesses, and people, helping customers reduce debt repayment pressure, facilitate capital turnover and access new loans, have more investment resources, restore production and business, serve life and consumption, in line with the policy of the National Assembly and the Government to continue supporting in removing difficulties to promote economic growth and economic stability.
On the banks' side, extending the debt restructuring policy will help promote credit growth in the last six months of the year, while reducing bad debt pressure on the banking system.
According to data from the State Bank, as of mid-June 2024, credit growth increased by 3.79% compared to the end of 2023. Although the credit growth rate gradually improved over the months, the credit sales that banks Credit institutions have provided more to the economy in the first six months of 2024 than the sales of the same period three years ago.
However, the State Bank said that there are still some localities with low credit growth, and some credit institutions with credit growth lower than the general credit growth rate, even negative growth.
Information from some commercial banks shows that credit growth is not high, such as Vietcombank increased by 2.1% as of June 17, VPBank increased by 1.91% as of the end of May, VIB only increased by 1.14%. % as of May 31…
Although it will bring many benefits, experts note that banks need to carefully evaluate the subjects applied in the direction that businesses with the ability to recover will find all solutions, but for businesses weak businesses should not restructure debt, need to convert to bad debt and handle security assets.
In particular, banks must also be careful with bad debt "hidden" in the form of debt structure and keeping the debt group intact. Credit rating organization VIS Rating predicts that the capital adequacy ratio of the banking industry will still be low, about 11-12% in 2024. In particular, the bad debt coverage ratio of private banks lower than the industry average as it takes longer to improve provision ratios after a sharp decline in asset quality in 2023.
SSI Securities Company's report predicts that the bad debt ratio at the end of 2024 may only increase slightly compared to the end of 2023 (estimated from 1.63% to 1.68% of total outstanding debt), because the bank will promote bad debt write-off and the economy is forecast to recover stronger by the end of this year. However, according to SSI, problem debts (including group 2 debts, restructured loans, overdue corporate bonds, old loans) need to be closely monitored.
According to financial expert Associate Professor, PhD. Dinh Trong Thinh, the extension of Circular 02 is a positive solution for both businesses and banks. To promote, businesses must restructure and use capital effectively to meet debt and interest repayment goals.
Banks must also carefully check and monitor businesses, properly evaluate businesses' ability to recover and repay debt...
The regulatory agency needs to require banks to manage risks, make appropriate provisions, and not let bad debt increase, causing risks to the whole system.
Related News
Stipulate implementation of centralized bilateral payments of the State Treasury at banks
09:29 | 29/10/2024 Finance
An Giang Customs announces businesses with tax arrears
14:51 | 24/10/2024 Anti-Smuggling
How does the Fed's interest rate cut affect Vietnam?
11:56 | 05/10/2024 Headlines
Bank profits improve but there are no expectations
09:48 | 20/07/2024 Import-Export
Latest News
Continue to handle cross-ownership in banks
10:35 | 02/11/2024 Finance
Striving for average CPI not to exceed 4%
16:41 | 01/11/2024 Finance
Delegating the power to the government to waive, lower, or manage late tax penalties is suitable
16:39 | 01/11/2024 Finance
Removing difficulties in public investment disbursement
09:30 | 31/10/2024 Finance
More News
State-owned commercial banking sector performs optimistic growth, but more capital in need
09:28 | 31/10/2024 Finance
Rush to finalize draft decree on public asset restructuring
09:28 | 29/10/2024 Finance
Inspection report on gold trading activities being complied: SBV
14:37 | 28/10/2024 Finance
Budget revenue in 2024 is estimated to exceed the estimate by 10.1%
10:45 | 28/10/2024 Finance
Ensure timely and effective management and use of public asset
11:31 | 27/10/2024 Finance
Accelerating decentralization in public asset management
11:26 | 26/10/2024 Finance
Difficulty in finding banks eligible to receive compulsory transfers
15:49 | 25/10/2024 Finance
Businesses can choose a suitable electronic invoice model generated from the cash register
14:18 | 25/10/2024 Finance
State budget revenue estimate 2025 assessed as positive level despite potential challenges
14:49 | 24/10/2024 Finance
Your care
Continue to handle cross-ownership in banks
10:35 | 02/11/2024 Finance
Striving for average CPI not to exceed 4%
16:41 | 01/11/2024 Finance
Delegating the power to the government to waive, lower, or manage late tax penalties is suitable
16:39 | 01/11/2024 Finance
Removing difficulties in public investment disbursement
09:30 | 31/10/2024 Finance
State-owned commercial banking sector performs optimistic growth, but more capital in need
09:28 | 31/10/2024 Finance