In the era of digital finance, obtaining bank loans is no longer a privilege reserved for large enterprises - it has become a flexible tool accessible to individuals and organizations alike. However, not everyone fully understands the mechanism of the five debt classification groups used by banks - an essential factor that determines whether your business can access capital or be denied credit. Even a single delay in repayment could place you in the non-performing loan group, potentially derailing your entire investment plan.
So, what exactly are the 5 bank debt groups? How do they affect your business and financial credibility? And how can appraisal services help you restructure or resolve problem debt? Let’s break it down in this comprehensive guide with Hoang Quan Appraisal.
Understanding the 5 groups of bank debt
The State Bank of Vietnam mandates that all credit institutions classify debts into 5 groups to manage risk. This classification directly influences lending eligibility, interest rates and overall creditworthiness.
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Group 1 – Standard Debt: Loans are on time and expected to be fully repaid in both principal and interest. Borrowers in this group are deemed low-risk and benefit from favorable loan terms.
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Group 2 – Debt Needing Attention: Loans overdue between 10 to 90 days or restructured once. Though not yet classified as bad debt, this group signals rising financial risk.
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Group 3 – Substandard Debt: Loans overdue from 91 to 180 days or restructured a second time. These borrowers face restricted access to new capital and are closely monitored by banks.
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Group 4 – Doubtful Debt: Loans overdue from 181 to 360 days or restructured a third time. Banks are required to set aside higher provisions for potential losses.
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Group 5 – Potential Loss Debt: Loans overdue for more than 360 days and deemed unlikely to be repaid. This is the most critical category, often leading to legal debt recovery actions.
How debt groups impact businesses and investors
Debt classification is more than an internal score - it’s your business’s passport to financial credibility. Companies with group 1 or 2 debt enjoy strong reputations, better access to funding and confidence from partners and investors.
In contrast, being in group 3 - 5 can cause immediate damage:
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Denial of working capital or investment loans.
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Erosion of investor trust.
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Lost M&A and partnership opportunities.
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Higher interest costs due to penalty rates.
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Lower CIC (Credit Information Center) scores.
Even businesses with valuable collateral may be rejected if classified under group 3. That’s why understanding and actively managing your debt group is vital for financial survival.
What to do if youre in group 2 - 5:
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Repay all overdue amounts as soon as possible
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Contact your bank to restructure loans where needed
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Monitor your CIC report every 3 months
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Prepare strong financial statements and a professional appraisal to improve your profile
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Consider asset and debt appraisal before applying for new loans to avoid automatic rejection
Debt appraisal: A strategic tool for debt resolution
As non-performing loans rise, both banks and businesses are turning to debt appraisal services to better manage risk. Debt appraisal helps assess the true value of collateral, determine recoverability and guide legal or financial restructuring decisions.
Common scenarios needing debt appraisal include:
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Restructuring negotiations between banks and businesses
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Banks handling asset foreclosure or liquidation
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Debt sales or transfers between third parties
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Asset appraisal for auctions or enforcement
Proper debt appraisal ensures all parties understand the true value of a loan and its collateral - making it an essential step in minimizing losses and enabling informed decision-making.
Hoang Quan Appraisal – Trusted partner in debt appraisal
For over 23 years, Hoang Quan Appraisal has been a pioneer in asset and debt appraisal, helping banks and businesses navigate complex financial risks.
With a team of finance and banking experts deeply familiar with debt classification and legal frameworks, we provide end-to-end solutions for:
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Appraisal of collateral assets: real estate, machinery, vehicles, land-use rights
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Appraisal of problematic debts: restructured loans, group 3 – 5 debts
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Business appraisal for loans, IPOs or mergers
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Asset appraisal for auctions, debt sales and legal support
Our methodology combines market data with quantitative analysis to deliver accurate, transparent and timely appraisals - enabling banks to recover capital and reduce risk.
Why banks choose Hoang Quan Appraisal?
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Fast, precise and confidential service.
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Nationwide branch network, available across all provinces.
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Trusted by major banks such as BIDV, Vietcombank, ACB, VIB and others.
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Clear, audit-ready reports suitable for credit approval and debt resolution.
⋙ Contact Hoang Quan Appraisal today for free consultation and support in developing a tailored debt appraisal plan for each type of bank debt group.
Hoang Quan Appraisal Co., Ltd.
Address: Hoang Quan Appraisal System
Phone: 0934.252.707
Email: contact@sunvalue.vn
Facebook: Hoang Quan Appraisal
Website: hqa.com.vn
Conclusion
Understanding and managing your bank debt group is the first step toward building financial resilience. But navigating debt classification and resolution is not something you have to do alone.
Hoang Quan Appraisal is your reliable partner-helping you unlock capital, rebuild trust and move forward with confidence.
