SBV postpones debt standards   Poor households in Ha Noi's Hoai Duc District get preferential loans from the city's Bank for Social Policies. The newly issued circular allows commercial banks to have one more year to apply new strict debt classification standards. - VNA/VNS Photo Tran Viet HA NOI  (VNS) - The State Bank of Viet Nam has issued a circular allowing commercial banks an additional year before applying new, strict debt classification standards. According to the circular (Circular No. 09/2014/TT-NHNN), dated March 18, 2014, banks can continue to restructure existing loans and keep them in the same debt group until April 01, 2015 instead of reclassifying them using more rigorous standards by June 1, 2014 as planned previously. In Viet Nam, debts are classified into five groups based on their risk status: Standard Debt, Debt Needing Special Attention, Subprime Debt, Doubtful Debt, and Potentially Irrecoverable Debt. The postponement comes as a big relief for commercial banks and businesses. If the new debt classification standards were to be applied next month, all debt balances and value of off-balance sheet commitments (OBS) of a customer with a credit institution would be placed in the same debt group. If these were already placed in different groups based on varying risk levels, they would now have to be put into the group which has the highest risk level in the customer's credit portfolio. The central bank decided to allow deferment after the banks expressed their concern that bad debt would surge and stifle credit, causing major businesses to collapse and triggering a financial crisis. However, Circular 09, which took effect on Thursday (March 20, 2014), still requires banks to manage their debts more stringently. It says banks must issue internal regulations on controlling and supervising the restructuring of loans in order to keep them in their current group. It also says that restructuring of a loan and keeping it in the same debt group (instead of downgrading it) can only be done once. If a customer fails to adhere to the repayment schedule of the restructured loan, it would have to be downgraded and placed in a higher risk category. The new circular also stipulates that credit institutions and foreign bank branches set aside risk provisions when they purchase special bonds issued by the Viet Nam Asset Management Company (VAMC), which was set up by the central bank to buy bad debts. In calculating the risk provision, credit institutions and foreign bank branches must periodically assess the value of relevant collateral to ensure that it corresponds to their current market value, the circular says. - VNS