Firms look to reshuffle the deck

To cut down bad debts, BIDV just came up with diverse measures to help firms revive operations and boost payment capacity.

“BIDV will reschedule loans through extending payment deadline for firms. Besides, our bank will scale up medium and long-term lending to assist customers with restructuring their money flows and render interest reductions to firm committed to paying off debts,” said the bank’s deputy director Pham Quang Tung.

“Firms could enjoy at least 4-5 per cent interest rate reduction once they pay off the loans. Besides, they can take on new loans with just 14-15 per cent, per year interest rates,” said BIDV’s chairman Tran Bac Ha, adding that the bank accepted lower profits to help firms weather the current storm.

“BIDV expects to see a drop of VND1,200-VND1,500 billion ($57.1-$71.4 million) in its profits against the projection,” said Ha.

In fact, in April 10, 2012 the State Bank issued Document 2056/NHNN-CSTT requiring credit institutions to reschedule timing of debt payment for firms and join efforts with customers to enhance payment capacity and enable firms to access new loans once having good business plans.

However, besides some big banks in, most banks fear rising bad debt rates and are slow to rescheduling debts.

LienVietpostBank’s deputy chairman Nguyen Duc Huong assumed the State Bank should revise the circular superseding Decision 493/2005/QD-NHNN regulating and classifying debts of commercial banks, paving the way for banks to accelerate debt rescheduling process.

Deputy director Nguyen Van Tan at a firm producing animal feed said one bank asked his firm to pay off a VND1.2 billion ($57,000) debt with interest rate of 20 per cent, per year and the bank would offer his firm a new loan with just 16.5 per cent, per year interest rate.

“Borrowing quick cash at high interest rates to pay off bank debt is ok,  but we do not know whether the bank will keeps its promise to give us a new lower-cost loan or not. We would rather accept a fine on our matured loan,” said Tan.

Winter Wool Textile Company chairwoman Tran Ngoc Phuong said a 15 per cent, per year interest rate was affordable for firms.