COVID-19 Update | Banking Policies Amid Covid-19 | Vietnam

Update on banking policies to support borrowers affected by the Covid-19 pandemic

Dear Clients and Friends,

On January 23, 2020, the Prime Minister announced Covid-19 as a national pandemic.  The situation caused by Covid-19 and the magnitude of containment measures to limit its spread approved by the authorities are having negative impacts on businesses.

In response to such impacts, the State Bank of Vietnam (“SBV”) issued Circular No. 01/2020/TT-NHNN on March 13, 2020 providing guidance on debt rescheduling and bank provisioning to support borrowers affected by the Covid-19 pandemic (“Circular 01”) and Directive No. 02/CT-NHNN on March 31, 2020 regarding immediate measures of banks to deal with impacts of the Covid-19 pandemic (“Directive 02”).

Although those measures are not mandatory, banks are advised to take measures recommended by the SBV and in exchange are entitled to certain benefits on debt provisioning.

Key takeaways from Circular 01 and Directive 02 are summarized as below:

Debt rescheduling

  • Borrowers affected by the Covid-19 pandemic are entitled to request banks to consider rescheduling of principal and interest (including exemption or reduction of interest) (*).
  • Banks must issue internal guidance for the debt rescheduling policy under Circular 01.
  • Banks and borrowers will agree on specific terms and conditions for debt rescheduling on a case-by-case basis.
  • Debts could generally be rescheduled up to a maximum 12-month period.

(*) According to Circular 01, debt rescheduling could be requested when:

  • debt obligations arise from lending and finance lease (other forms of credits are excluded);
  • the payment obligations are not overdue for more than 10 days and hence it is important for borrowers to request banks to consider debt rescheduling before the end of this 10-day period;
  • borrowers are obligated to pay debts within a period from January 23, 2020 to the day after the date falling three (3) months from the end of the Covid-19 pandemic as announced by the Prime Minister; and
  • borrowers are unable to pay due to impacts of the Covid-19 pandemic.

Bank provisioning  

  • Banks are entitled to maintain provisioning based on their debt classification applied prior to January 23, 2020 with respect to rescheduled debts.

Other policies

  • Banks are recommended to extend loans to businesses operating in the sectors most affected by the Covid-19 pandemic (**).
  • Banks are requested to cut operation costs and expenses (especially wages and remunerations) and suspend distribution of cash dividends to enable reduction of lending rates.
  • Banks are requested to reduce fees for cashless transactions to encourage such transactions.

(**) The SBV has worked with banks to offer credit support packages worth a total of VND285,000 billion to borrowers affected by the Covid-19 pandemic.  See

We want you to know that the safety and wellbeing of our clients and our teams are very important to us.  If you have any questions or concerns, we encourage you to reach out to your contact partner or you can email us at

Stay safe.

YKVN Covid19 Taskforce

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