SBV issued Circular No. 01/2020/TT-NHNN directing credit institutions and foreign bank branches to restructure the repayment periods, waive and reduce the interest and fees, maintain the debt classification to support the customers affected by COVID-19 pandemic. The circular took effect from March 13, 2020. Additionally, SBV has released a set of questions and answers (Q&A) to ensure uniform implementation of the Circular. SBV also issued Directive No. 02/CT-NHNN on urgent solutions of the banking industry to address the impact of the COVID-19 pandemic. Additionally, SBV held an online conference, in April 2020, for all State Bank branches in provinces and cities across the country on enhancing bank credit to support businesses and people, with aim of addressing the impact of the COVID-19 pandemic.
The Circular No. 01/2020/TT-NHNN consists of 03 Chapters and 10 Articles, including the following:
- Regarding the scope of debt repayment restructuring and criteria for determining debts affected by COVID-19 epidemic—Article 4 of the Circular stipulates that debts subject to rescheduling are the outstanding amounts of principal and/or interest that fully satisfy certain conditions mentioned in the Circular. The credit institutions and foreign bank branches shall be responsible for providing guidance on the criteria to determine the outstanding debt of customers affected by COVID-19 pandemic, in which there must be criteria for customers whose revenues and incomes are reduced because of COVID-19 epidemic.
- Regarding the waiver and reduction of interest and fees—Article 5 of the Circular stipulates that credit institutions and foreign banks branches will decide on waiving and reducing their interest and fees according to the internal regulations for the outstanding loans arising from credit extension operations (except for activities of buying and investing in corporate bonds).
- Regarding maintaining the debt classifications—Article 6 of the Circular stipulates that credit institutions and foreign bank branches are entitled to maintain classified debt groups in accordance with the provisions of SBV with regard to the debt balances subject to loan repayment rescheduling, interest and fee waiver, and reduction as prescribed in the Circular.
The key solutions presented in the Directive No. 02/CT-NHNN include the following:
- Provide refinancing loans to credit institutions to implement programs under the direction of the Government, and supporting restructuring credit institutions
- Closely monitor market movements, manage the central exchange rate, and continue to use synchronous measures and monetary policy instruments to stabilize the foreign exchange market
- Manage interest rates in accordance with market movements and monetary policy targets and closely supervise the implementation of interest rate reduction by credit institutions
- Regularly monitor and evaluate the impact of COVID-19 on the ability of credit growth of the whole industry to consider adjusting credit targets for credit institutions to fully meet the capital requirements
- To continue working with the Board of Directors of credit institutions to promote the effective implementation of solutions to overcome difficulties for customers affected by the pandemic
- Proactively review and reduce operational expenses, strengthen effectiveness of internal inspection and control, and enhance coordination and information-sharing among credit institutions
Related Links (in English and Vietnamese)
- Press Release on Circular No. 01/2020/TT-NHNN
- Press Release on Directive No. 02/CT-NHNN
- Press Release on Online Conference
- Press Release on Q&A
- Q&A (PDF)
- Circular No. 01/2020/TT-NHNN
- Directive No. 02/CT-NHNN (PDF)
Keywords: Asia Pacific, Vietnam, Banking, COVID-19, Loan Moratorium, Q&A, Governance, Credit Risk, Operational Risk, SBV
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