Ensuring the correct nature of bad debt when restructuring the repayment term

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Credit institutions must ensure credit quality, following the nature of bad debts. Photo: Internet

The Governor of the State Bank of Vietnam has just signed and promulgated Directive No. 02/CT-NHNN on strengthening credit work and implementing the policy of restructuring the repayment term and maintaining the debt group to support customers in difficulty as prescribed in Circular 02/2023/TT-NHNN dated April 23, 2023.

The directive stated that the difficult economic situation, making it difficult for people and businesses in production and business activities, lack of orders, and output markets, leading to decreased revenue and income, affecting the situation and the ability to repay loans at credit institutions.

Therefore, to achieve the goals set out at the beginning of the year and effectively implement Circular 02/2023/TT-NHNN, the Governor of the State Bank of Vietnam requires the units of the State Bank, credit institutions and cooperative associations organizations in the industry are determined with the best efforts to achieve the set goals; focusing on implementing solutions to control inflation, maintaining stability in the currency and foreign exchange markets, and stabilize the macroeconomy.

These units need to focus credit on priority areas, production and business sectors and growth drivers to promptly meet the capital needs of people and businesses, contributing to the recovery and development of manufacturing business. In addition, reforming administrative procedures increases access to credit capital and further cuts costs to reduce lending interest rates.

Credit institutions must proactively implement policies to restructure debt repayment terms and maintain debt groups synchronously and uniformly. The implementation process ensures close and timely coordination between the State Bank, credit institutions and the unanimity and coordination of borrowers to improve the effectiveness of policy implementation.

Units must ensure compliance with current legal regulations on lending activities of credit institutions to customers, regulations on debt rescheduling and maintaining debt groups according to Circular 02 and other relevant legal provisions, and ensure credit quality and objectivity and the true nature of bad debts.

The directive also requires credit institutions to continue drastically implementing the program of interest rate support from the state budget for loans of enterprises, cooperatives and business households according to Decree 31/2022/ND-CP, do not let any enterprises, cooperatives, and business households that are subject to interest rate support and need it without being supported on time.

Credit institutions must continue to reduce costs to reduce lending interest rates and fees to support businesses and people to recover and develop production and business.

The Governor of the State Bank requested to inspect and supervise the observance of regulations on debt rescheduling and to maintain the same debt group in the locality; take measures to strictly and promptly handle cases of non-compliance with the Government's guidelines and regulations of the State Bank of Vietnam, evading, slow handling, deliberately causing difficulties and troubles, refusing to implement time restructuring. The repayment term and keep the same debt group for customers who meet all conditions. Simultaneously, supervise, monitor and handle cases of taking advantage of debt rescheduling and keeping the same debt group for policy gain.

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Regarding the implementation of Circular 02, the Governor requested the credit institutions to immediately implement the internal regulations on restructuring the repayment term and keeping the debt group unchanged; it is strictly forbidden to act that cause difficulties or troubles or to promulgate additional conditions and procedures different from regulations. Credit institutions must strictly handle units and individuals that deploy slowly, deliberately cause difficulties, lack responsibility, and do not comply with regulations. At the same time, it is necessary to classify debts, make provisions for risks and record accrued interests following the law.