SBV SEEKS TO EXTEND DEBT RESTRUCTURING TO SUPPORT ECONOMIC RECOVERY

The State Bank of Vietnam (SBV) is proposing an extension of the debt restructuring policy until the end of 2024, in a bid to continue supporting the country’s sluggish economic recovery.

On May 15, the SBV announced it is seeking feedback on a draft amendment to Circular 02/2023/TT-NHNN, which is designed to help mitigate the rise in non-performing loans on banks’ balance sheets and to allow banks to continue assisting customers facing financial difficulties.

The current regulation facilitates banks and foreign bank branches in restructuring repayment terms and maintaining debt classifications to support struggling customers. The proposed six-month extension of this policy would shift the deadline from June 30, 2024, to December 31, 2024.

This move is based on an assessment of the policy’s effectiveness in bolstering the economy and stabilizing banks. Despite stable macroeconomic conditions observed in the early months of 2024, the recovery has been slow, with ongoing challenges anticipated through the end of the year.

Under Circular 02, banks are required to account for provisions for all customer debts as if the special debt classification rules were not applied, and they must fully establish these additional provisions by the new deadline of December 31, 2024.

Source: The Saigon Times