To support businesses affected by the Covid-19 epidemic, the State Bank of Vietnam has issued Circular 01/2020/TT-NHNN and Circular 03/2021/TT-NHNN on amendments to some Articles of Circular 01/2020/TT-NHNN dated March 13, 2020 of the Governor of SBV providing instructions for credit institutions and foreign branch banks (FBB) on debt rescheduling, exemption or reduction of interest and fees, retention of debt category to assist borrowers affected by Covid-19 pandemic
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Vietnam: Conditions for considering rescheduling debt repayment terms for enterprises (Artwork)
According to the Circulars, enterprises affected by the Covid-19 epidemic and having difficulties in paying debts to the Bank will have the repayment term rescheduled for the outstanding balance of the debt (including outstanding debts under the scope of regulation of Decree 55/2015/ND-CP) when the following 08 conditions are fully satisfied:
1. The debt is a loan or finance lease before June 10, 2020.
2. The principal and/or interest arises during the period from 23/01/2020 to December 31, 2021.
3. The outstanding debt may be rescheduled in the following cases:
+ The outstanding debt is undue or up to 10 days overdue according to the loan/finance lease agreement, except in the cases specified in Point b and Point c of this Clause.
+ The outstanding debt is incurred before 23/01/2020 and becomes overdue during the period from 23/01/2020 to 29/03/2020.
+ The outstanding debt is incurred from 23/01/2020 and becomes overdue before 17/5/2021.
4. The credit institution or FBB determines that the borrower is unable to repay the principal and/or interest on schedule under the agreement due to decrease in revenue or income caused by Covid-19 pandemic.
5. The borrower applies for debt rescheduling and the credit institution or FBB has determines that the borrower is able to fully repay the principal and/or interest after the debt is rescheduled.
6. Debts that violate regulations of law shall not be rescheduled.
7. Rescheduling time (including repayment deadline extension) shall vary according to the impact of Covid-19 on the borrower and shall not exceed 12 months from the day on which the debt is rescheduled by the credit institution or FBB.
8. Debt rescheduling shall be carried out until 31/12/2021.
In addition, enterprises are also considered and decided by credit institutions and foreign bank branches to exempt or reduce interest and fees according to internal regulations for outstanding balances of debts incurred before October 6, 2020 from credit extension activities (except buying and investing in corporate bonds) if the obligation to repay principal and/or interest is due between January 23, 2020 and December 31, 2021 and the enterprise is unable to repay the principal and/or interest on time according to the contract or agreement due to the decrease in revenue and income due to the impact of the COVID-19 epidemic.
The consideration of debt repayment rescheduling, interest exemption or reduction is within the competence of the credit institution. Thus, businesses facing difficulties due to the complicated situation of the Covid-19 pandemic should actively contact credit institutions to be considered and handled in accordance with regulations.
Note: The implementation of debt repayment term restructuring, interest exemption, and reduction can only be done until December 31, 2021.
Bao Ngoc
