Banks Share Hardships with Businesses in Epidemic Time

9:41:02 AM | 15/9/2020

The COVID-19 epidemic has caused serious impacts on the economy since the start of 2020 and pushed businesses into difficulty. In that context, the banking sector of Binh Dinh province has adopted consistent solutions like lowering interest rates, restructuring debt repayment terms, exempting or reducing lending interests, keeping debts, and reducing fees, thus helping the local business community to overcome negative effects of the epidemic.

As of May 31, 2020, outstanding loans, affected by the COVID-19 epidemic, reached more than VND7,200 billion, accounting for about 9.4% of outstanding loans, thus posing potential risks to banking operations in Binh Dinh province.

In addition, the plague congested commodity movements and stalled production and business operations. Companies were unable to import enough inputs for production, while they could not sell their products because of lockdowns, resulting in increased overdue debt and bad debt. Companies engaged in import, export, accommodation services, food, beverage, transportation, apparel, footwear, refrigeration and tourism were heavily hurt by the epidemic. They account for a quite high share of customers at banks, hence posing the risk of increasing bad debt.

Before these hardships, following instructions of the Government, the State Bank of Vietnam (SBV) and the Provincial People’s Committee, SBV Binh Dinh directed commercial banks to actively apply solutions to prevent and control the epidemic and support customers by reducing operating costs to offer lower interest rates on existing loans and new loans, supporting and accompanying businesses and people to live through the epidemic time; advised the Provincial People's Committee to establish an interagency working group to work with trade associations and businesses to understand current situations and difficulties and propose their recommendations to have timely support; set up a telephone hotline and a standing panel at SBV Binh Dinh to receive and promptly handle recommendations, suggestions and problems of local people, businesses and trade associations as related to Circular 01/2020/TT-NHNN.

Local commercial banks have deployed many consistent solutions to cooperate with and support customers in the fight against the COVID-19 epidemic and minimize damages suffered by customers. They actively informed customers of policies under Circular 01 via telephone, messages, emails and other means to work with banks to review epidemic impacts and carry out procedures to enjoy policies on debt structure, interest exemption and reduction. At the same time, lenders launched preferential credit packages for customers with relative business advantages in the COVID-19 pandemic as well as enterprises active in key economic sectors. They continue to maintain credit limits to support enterprises affected by COVID-19.

As of May 31, 2020, commercial banks in Binh Dinh province restructured repayment terms for 345 customers. Restructured outstanding loans reached VND892 billion. They exempted and reduced interest rates for 13 customers with a combined loan of VND99 billion. They offered new loans of VND11,365 billion (from January 23, 2020 to May 31, 2020) to 5,798 customers. They discounted some service fees for customers affected by COVID-19 epidemic. In addition, local commercial banks actively reduced interest rates by 0.1-1.8% on credit contracts worth VND6,211 billion for 1,374 customers.

Mr. Nguyen Tra Duong, Deputy Director of SBV Binh Dinh, said, the banking sector of Binh Dinh province will further implement solutions to help borrowers in difficulty to have sufficient capital for business operations and economic development, further support people and businesses to overcome difficulties caused by COVID-19. “But, beside the support from commercial banks, enterprises themselves need to build and implement really feasible business plans and projects, focus resources for effective projects, balance resources to repay debts. Doing so, they will restore and stabilize business operations while helping commercial banks ensure credit quality and performance and avoid bad debts”, he recommended.

Source: Vietnam Business Forum