Enterprises want to prolong time of delaying debt payment

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Banks also need to ensure safety when implementing debt restructuring and reducing interest rates for businesses. Photo: ST

Recommend extending the repayment period more than 12 months

From the beginning of the year, the lending interest rate has decreased sharply, however, the credit demand of the economy is still low compared to many years ago.

With the Covid-19 pandemic, not only banks have to carefully analyze the economic situation and the health of enterprises to come up with an appropriate credit policy, but also enterprises themselves must consider to borrow.

After contacting many businesses on this issue, Pham Thi Trung Ha, Deputy General Director of Military Commercial Joint Stock Bank (MB), said business owners themselves thought more than banks. They always consider where to invest, when to borrow, and how much money to borrow. Therefore, thanks the combination of the two parties, it will ensure better loan efficiency.

The representative of MB's leaders also said that the solution of extending the debt repayment period according to Circular 01 has been very effective, while many of MB’s customers who have received interest rate reductions and debt deferrals have begun to pay their debts from the second and third quarters without waiting until next year.

However, the implementation of policies in Circular 01 have caused many difficult for businesses, so they look forward to the revised plan announced by management agencies.

Pham Van Viet, General Director of Viet Thang Jeans, said according to many forecasts, the pandemic impact would continue for 6-12 months, meaning that businesses could recover by the end of next year, while Circular 01 provides for debt rescheduling for 12 months only.

Therefore, he suggested the bank should extend the debt deferral time for enterprises not to exceed 24 months, facilitating banks and enterprises to restructure their debts.

According to a representative of Hoang Ha Company Limited (an enterprise specializing in commercial services, import and export), in the remaining months of 2020, the company is promoting the export of backlogged goods to recover capital and repay bank debts.

Furthermore, to minimize financial costs, the company will focus on solving inventory, balancing available cash flows for upcoming plans, so they will not borrow new loans at the current interest rate of about 9% per year, which is quite high. Therefore, Hoang Ha Company wanted the bank to extend debt rescheduling and reduce interest rates for their existing loans.

A company producing and exporting agricultural products stated that its sales have decreased because it previously had exported goods in South Korea, China and Taiwan (China) but now it could not export to these markets and the domestic trade was also very slow. Therefore, if the interest rate is not reduced or the debt rescheduling is not allowed, the company could face bankruptcy.

However, the revised Circular should specify the interest rate reduction, because the current regulation is that the interest rate reduction depends on the policies of commercial banks, so it is quite high for many businesses.

Expect revised Circular to be issued soon

In spite of controversies, the effectiveness of Circular 01 is undeniable since its implementation from mid-March 2020. According to the State Bank, as of September 14, 2020, credit institutions have rescheduled the repayment terms for more than 271,000 customers with a loan balance of VND321 trillion; have exempted, reduced the interest rates for nearly 485,000 customers with outstanding debt of VND1.18 trillion; especially credit institutions have given new loans at preferential interest rates (commonly 0.5-2.5% lower than before the pandemic) with accumulated sales from January 23 to now reaching VND1.6 trillion for 310,000 customers.

However, according to experts, the number of enterprises that have restored their production and gained profit to repay bank loans compared to the number of enterprises that have borrowed and are in need of loans is very low.

Therefore, to promote the effectiveness of the support, experts and businesses all want the revised Circular to be issued soon. In particular, it must be in the direction of expanding the target group, supporting and extending the deferred and rescheduling period, and considering the appropriate time to change the debt group to reduce difficulties and to avoid a spike in bad debt for credit institutions. An economic expert said that in addition to increasing the time to support enterprises, Circular 01 needs support for banks as well.

For example, the State Bank can promote refinancing loans, helping to reduce input costs for the banking system, thereby increasing the potential to handle NPLs and lend more.

Regarding this issue, Tran Dang Phi, Deputy chief inspector of the Banking Inspection and Supervision Agency, under the State Bank, said that the State Bank was cooperating with ministries, including the Ministry of Finance to complete the legal framework and guidance to amend Circular 01.

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However, he also noted that the bank is a business, so when extending, exempting or reducing interest fees for businesses, financial pressure must also be taken into account to ensure their operations. Therefore, the State Bank's study to amend Circular 01 also helps to ensure safety for banks.