Nghe An: Will consumer and installment loan borrowers receive bank support during Covid season?

Difficult situation

Ms. Nguyen Thu Hien works as a food vendor in Vinh City, with a pho porridge shop earning about 15 million VND per month. She is taking out a bank loan to buy an apartment in the city, with a term of 15 years, and she has to pay the bank 8 million VND per month. Previously, she had to save money every month to pay the bank, but since the beginning of the year, when the Covid-19 pandemic broke out, there were no breakfast customers, she had to close the shop and could not find a job, which meant she was in a difficult situation when it came time to pay the principal and interest to the bank.

For the past three months, she has had to borrow money from relatives to pay off her bank debt. Ms. Hien said that if this situation continues, she does not know what to do.

Many customers who buy cars on installments are having difficulty repaying their debts during the Covid-19 pandemic. Photo: Document

Banks also face difficulties during the Covid pandemic. Photo: Tran Chau

Mr. Cao Thai Duy in Hung Phuc ward rented a coffee shop to sell goods. Before, he had a revenue of nearly 2 million VND per day. After deducting monthly expenses, including 10 million VND/month for the shop rent, he had about 10-15 million VND in profit. However, since the Covid epidemic, he had to close the shop. It was very difficult to repay the bank loan to do business and buy a car on installments.

The above is a fairly common situation of customers who borrow money from banks to buy cars, houses, appliances, etc. in installments and have difficulty repaying bank loans because they are directly "hurt" during the Covid epidemic, which is unknown how long it will last. They share that they really hope that banks will reduce loan interest rates or extend or delay debt repayment. According to incomplete statistics, currently about 60% of cars in Vinh city are purchased in installments.

Will the bank lower interest rates?

Banks are also businesses and have been heavily affected by poor business performance during the Covid season. Doing business from borrowed money, lowering interest rates is an issue that banks always consider to preserve capital.

To join hands with the community to fight the pandemic, many banks have taken the first steps to accompany customers.

For example, a bank in the city has supported its customers with many solutions. This is one of the first banks to deploy a support package for customers affected by Covid.

For individual customers:To encourage and promote cashless payments, this bank makes all fast money transfers on its mobile banking or Internet Banking application free of charge for transactions worth less than VND500,000. For transactions from VND500,000 to under VND2,000,000, the bank reduces fees.
The bank also offers 0.1% interest rate for most terms when saving online compared to saving at the counter.
Notably, practical incentives to help customers prevent the epidemic include cashback when using credit cards to spend at pharmacies; giving away up to 1.5 million VND and giving away antibacterial hand sanitizer when opening a new credit card (the program to give away antibacterial hand sanitizer ended on March 17, 2020).

Mr. Le Thanh Tung, Head of Personal Loans at a bank branch in Vinh City, said: The branch has more than 1,000 individual customers with outstanding loans of 330 billion VND. The impact of the Covid epidemic has slowed down the debt repayment speed, many customers only paid their debts after 3-4 days after the due date. Customers who buy freight vehicles, passenger transport vehicles, private cars, and trade in commercial services are most affected.

For business customers:From April 1, 2020, the above bank will apply a 0.5% to 2% interest rate reduction for existing businesses that are borrowing medium and long term. The bank will automatically reduce interest rates without requiring businesses to request support or prove any difficulties encountered.
According to the bank's estimates, about 9,500 customers with about VND10,000 billion in outstanding debt will immediately receive support. After this package, the bank will study other support packages depending on the development of the epidemic.
Previously, from January 23, 2020, this bank also implemented a support package to reduce interest rates by 0.5% - 1.5% applied to new loans, including short-term loans and working capital loans. Initially, more than 600 businesses were supported on a total outstanding loan balance of VND 2,500 billion.

Some banks have customer support packages. Photo: Tran Chau

With the latest support mentioned above, it can be seen that for individual customers, there is no significant policy, their expectations are still just expectations. But according to a reliable source from the above bank office, there may be a support policy for individual customers in the next few days.

For another large joint stock commercial bank, to accompany customers during the Covid epidemic, it has also had timely packages, restructuring debt repayment terms; exempting and reducing interest and fees; maintaining debt groups to support customers affected by the Covid-19 epidemic, reducing up to 2%/year (for loans in VND) for corporate customers. The specific reduction level depends on each field, industry and the level of impact of the Covid-19 epidemic of the enterprise.

This commercial bank reduces up to 1%/year (for loans in VND) for individual customers who borrow unsecured consumer loans to repay with salary due to the impact of the Covid-19 epidemic affecting their income. In particular, in the case of unemployed workers who are entitled to a subsidy of 1.8 million VND according to the Government's direction, the bank will reduce the interest rate by 2%, and at the same time, defer the collection of principal and interest due from these customers during the epidemic period.

For new loan needs to support customers to restore production and business activities affected by the Covid-19 epidemic. The specific reduction level depends on each field, industry and the level of impact of the Covid-19 epidemic on customers. This bank also offers credit packages to support businesses with new loan needs with interest rates reduced by up to 2% compared to the same type of loan interest rate on December 31, 2019; Credit package of 5,000 billion for short-term loans to individual customers with a term of up to 6 months.

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