Which businesses get interest reduction and delayed debt payment due to Covid-19?
Enterprises that have suffered losses due to the Covid-19 pandemic and are able to repay their debts after restructuring will have their interest rates waived and their debt repayment deadlines extended for up to 12 months.
According to Circular 01 recently issued by the State Bank, commercial banks have the right to decide on restructuring for customers affected by Covid-19, based on general principles.
Customers whose revenue has decreased due to Covid-19, have loans or financial leases that must pay principal and/or interest from January 23 to the day immediately following 3 months from the date the Prime Minister announced the end of the epidemic and cannot pay the debt on time, are eligible for restructuring.
Banks will restructure the repayment period for up to 12 months for loans that are within due date or 10 days overdue, or for loans overdue from January 23 to March 29.
Mr. Dao Minh Tu - Deputy Governor of the State Bank said that banks are the ones who decide to lend, so they will proactively decide on the debt repayment period structure for customers. However, the maximum debt repayment extension period is 12 months from the last day the customer must pay off all principal and interest.
In addition, commercial banks decide on the exemption and reduction of interest and fees for loans subject to restructuring.
Loans with restructured repayment terms or interest exemptions will also be kept in the same debt group by the bank. For interest receivables of these outstanding loans, the bank does not have to account for accrued interest but monitors the off-balance sheet to urge collection, accounting for income when collected.
The State Bank leader said that Circular 01 creates the most favorable conditions for banks to proactively restructure due debts for businesses, but must also ensure support for the right subjects suffering losses.
The risk management director of a state-owned bank said that the State Bank's Circular does not limit the sectors that receive support. Due to the interconnected impact between sectors, most sectors are affected, and the determination of affected enterprises will essentially be based on the assessment of the decline in revenue and customer demand when compared to the previous months, the same period last year or compared to the set plan. The bank will also assess the enterprise's ability to repay debt after restructuring to decide on restructuring for them.
