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| Bank tellers work in a branch of the VietinBank in Ha Noi. A circular on asset classification was delayed to help enterprises access credit in light of continued economic hardships. — VNA/VNS Photo Tran Viet |
HA NOI (VNS) — Governor of the State Bank of Viet Nam Nguyen Van Binh temporarily delayed the application of a circular on asset classification in a move to help enterprises access credit in the context of continued economic hardships.
Currently 5-6 per cent of loans are non-performing loans (NPLs). If the circular went into effect as planned, another 10 per cent (roughly VND272 trillion worth of loans) would become NPLs, according to Binh.
"This would cause difficulties for both enterprises and credit institutions," he said.
During meetings with representatives from thousands of businesses and credit institutions in nearly 40 cities and provinces during the past month, the central bank governor was frequently asked to delay applying the regulation.
Nguyen Thi Dung, director of the Bank for Investment and Development of Viet Nam's Binh Duong branch, said that if the circular took effect, all the extended loans of enterprises would become NPLs and the Government's goal of helping enterprises access credit would fail.
The increase in NPLs would also force banks to increase their risk provisioning, eating up their profits.
General director of the Dong Tam Co Vo Quoc Thang said that the circular should go into effect when the economy and consumption rebounded in order to make the banking system gradually comply with international standards.
However, he said, enterprises would continue facing difficulties until at least the end of this year, so the ruling should be postponed.
"If the central bank insisted in applying the regulation, it would cause enterprises' production to stagnate," Thang said.
Binh said that the central bank still required credit institutions to report accurate NPL statistics to the central bank in order to help banks and enterprises become aware of their NPLs and take appropriate measures to deal with the problem.
The central bank will announce when the regulation will be applied. — VNS