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Local banks slash interest rates
A number of commercial banks have slashed their lending interest rates, promptly reacting to the State Bank of Vietnam ’s decision to reduce the prime interest rate.
This move, made in the context of the global economic crisis having a direct impact on export markets, is a measure designed to stimulate consumption and give a boost to domestic production.
The Bank for Investment and Development of Vietnam (BIDV) was the first to follow suit by reducing its annual lending rate to 13 percent immediately after the central bank’s decision, easing businesses’ access to credit.
Following BIDV, a number of large banks, including the Bank for Foreign Trade of Vietnam (Vietcombank), the Agricultural and Rural Development Bank (Agribank) and the Vietnam Industrial and Commercial Bank (Vietinbank) offered even more attractive rates of 12 percent per year, 4.5 percent lower than the ceiling rate stated by the SBV.
This rate will be extended to their special clients, including exporters, agro-forestry-fishery producers and other prestigious clients.
In addition to the reduction in lending rates, state-owned commercial banks also cut their deposit interest rate by 2-3 percent per year.
Not being left out, several joint stock banks also announced a decrease in their lending rates, though their reductions were more modest, with cuts of between 0.5-2 percent per year.
The Sai Gon Thuong Tin Bank offered lending rates ranging from 14-16 percent per year, the Lien Viet Bank – 14.5 - 16.5 percent and the An Binh Bank is offering interest rates of between 15.5-16.25 percent.
However, pundits say that these new rates are not radical enough to stimulate domestic consumption and production, suggesting that they make further cuts to deposit interest rates to 10 percent and reduce their lending rates to 12-14 percent.
Tran Hoang Ngan, Vice Rector of the Ho Chi Minh City Economics University , said that the SBV should consider reducing the level of compulsory reserves for commercial banks, helping them to lower interest rates and attract more borrowers.
VNA
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