Extending debt repayment period gives businesses another stepping stone to recovery

With 6 months of continued extension and postponement of bank loan repayment deadlines, businesses will have an additional stepping stone to recover, "nurture" and strengthen their internal strength, continue to maintain operations and have conditions to accumulate and repay loans.

Illustration photo: VNA

According to the State Bank of Vietnam, credit growth from the beginning of the year until now has been quite low compared to recent years. The reason is that the demand for credit capital and the economy 's capital absorption capacity are still low, many businesses have to reduce or stop operations... In order to create favorable conditions for credit institutions to supply capital to the economy, since the end of 2023, the State Bank has assigned all credit growth targets for 2024 to credit institutions and publicly announced the principles for credit institutions to proactively implement credit growth. However, the results obtained do not seem to meet expectations. Based on this, the State Bank has decided to extend the application period of Circular 02/2022/TT-NHNN on restructuring debt repayment terms and maintaining debt groups until the end of 2024.

This policy has received approval and support from the business community, immediately meeting the aspirations and urgent proposals from many associations and commercial banks. With 6 months of continued extension and postponement of the bank loan repayment period, businesses will have more stepping stones to recover, "nurture" and strengthen their internal strength, continue to maintain operations and have conditions to accumulate and repay loans.

Expressing his agreement, Mr. Do Thanh Son, Deputy General Director in charge of VietinBank , said that the extension of Circular 02 is necessary in the context that many customers are facing many difficulties in the period of 2024 - 2025. Borrowers have more time to fulfill their debt obligations while waiting for the economy to fully recover at the appropriate time. With the extension of Circular 02, it can also help reduce the pressure on bad debt handling for banks and create favorable conditions for businesses even if it is only extended for 6 more months.

Mr. Tran Bao Toan, leader of the Hao An Phat, Phu An Phat and Bao An Phat business chains, said that the pressure of interest rates and bank debt repayments is always a concern for businesses. The consequences of the COVID-19 pandemic "paralyzing" the economy are still unresolved challenges and difficulties for most businesses. Now, the negative impacts from the global economic situation on the consumer market continue to cause businesses to have headaches facing the situation of steel inventory and outstanding debts because their own customers are also facing financial difficulties.

Currently, businesses are struggling to find many financial resources, including from investment credit funds, but borrowing to repay debts is a last resort. Therefore, the extension and postponement of loan repayment deadlines that the State Bank has just announced will certainly be very useful, helping businesses have more time to find orders, bring revenue to the company and have more finance to cover debts.

Currently, the business situation is quite complicated. According to Mr. Toan, the company has not dared to make any major decisions but has been implementing production and business plans very cautiously. The company hopes to have a loan to do business well, suitable for the current conditions of the company because many of the current credit sources being offered for re-lending are for new projects; meanwhile, the company is in need of credit to supplement its business capital and capital turnover.

Do Thanh Aluminum Joint Stock Company is one of the enterprises with export products, still having to pay a regular interest of 10 billion VND per month. Currently, it is also facing a situation of inventory, piling up, unsold, 50% of the production line has to stop production due to lack of orders; production is limited just to keep workers. Now, according to the new decision, the extension and postponement of debt repayment deadline will be very good information to help businesses overcome this difficult period.

According to Mr. Nguyen Thai Son, Deputy General Director of Do Thanh Aluminum, Do Thanh Aluminum's revenue and output are decreasing by 40%, which greatly affects the cash flow and working capital of the business. Currently, the company is having to borrow at an interest rate 1% higher than before. The business hopes to soon reduce interest rates, reduce financial costs and, like many other small and medium enterprises, accessing loans is not easy due to the lack of collateral. Currently, some banks have offered preferential loan packages and unsecured loans, but not many, mainly for large and reputable businesses. Therefore, Do Thanh Aluminum and many other businesses are looking forward to Circular 02 being implemented soon, promoting effectiveness in practice and bringing direct benefits and timely support to businesses.

According to VNA

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