For the first time, the interest rate for short-term loans in Vietnamese dong for five priority sectors has been reduced to 4% per annum.
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>> The central bank asks the credit institutions to lower interest rates
Commercial banks have announced an interest rate of 4% per annum for short-term loans granted to the following five priority sectors: exports, agriculture, rural and farmers, small and medium enterprises, ancillary industries, enterprises using high technology. This is the lowest level since 2016, and this downward trend will continue in the second half of the year.
| The banks have lowered the interest rate on savings massively. |
| Photo: VNA/CVN |
According to estimates by Nguyên Duc Lênh, deputy director of the branch of the State Bank of Vietnam in Ho Chi Minh City, this is the result of successive reductions in the policy rates applied by the central bank. Almost all commercial banks have thus reduced the interest rate on bank deposits with a maturity of one to six months to 4.1-4.75%.
In its latest report on Vietnam’s economic growth in the second quarter of 2023, Singapore’s United Overseas Bank (UOB) predicted that Vietnam will continue to cut statutory interest rates in the third quarter of this year to boost the economy. UOB said weak export activity with its potential impact on domestic demand, the halt in rate hikes by the US central bank (Fed) in June and a possible further rate cut in 2024, as well as confidence in the stability of stock market interest despite previous rate cuts fuel the outlook to a further rate cut in Vietnam this year. A further rate cut of 100 basis points is expected in the third quarter of 2023, bringing the refinancing rate to 3.5% before the State Bank of Vietnam assesses the effects.
Tendency for interest rates to fall at 3 o’clocke quarter
The State Bank of Vietnam (BEV) has issued a document to credit organizations as well as branches of foreign banks and BEVs in central-level cities and provinces regarding interest rate reduction.
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| The reduction in loan interest rates promotes business production. |
| Photo: VNA/CVN |
The document clearly states that in accordance with the directives of the Government and the Prime Minister and taking into account the latest market and interest rate developments, the BEV requests all credit organizations and branches of foreign banks to strictly comply with their deposit interest rules. They should publicly display deposit rates at designated deposit venues in accordance with BEV requirements and continue to take steps to reduce deposit rates, thereby creating the conditions for lower lending rates for customers.
They are strongly encouraged to continue their cost-cutting efforts to achieve further reductions in lending rates to help businesses revive production and trade and stimulate economic growth, as demanded by the National Assembly and the government. They are also on a mission to raise awareness of corporate initiatives through mass media so that customers are well informed and have access to supportive policy.
BEV departments in provinces and cities should closely monitor interest rate movements in their respective areas. By doing so, they will be able to propose appropriate solutions to ensure the implementation of the policy defined by the BEV.
Linh/CVN
