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Market sees positive response as benchmark interest rate drops
Domestic commercial banks have all made immediate response to reduce lending interest rates and announce expanded lending programmes right after the State Bank of Vietnam decided to lower the benchmark interest rate, the refinancing rate, the rediscount rate and the reserve requirement.
Under SBV's decisions, from November 5, the prime interest rate in Vietnamese dong will be reduced from 13% a year to 12% a year. Thus, the maximum lending interest rate offered by credit organisations will drop from the current 19.5% a year to 18% a year.
The refinancing rate has been reduced to 13% per year from 14% per year, the rediscount rate to 11% per year from 12% per year, and the overnight rate in the inter-bank electronic payment and the rate of loans to finance short balances in clearing transactions between SBV and commercial banks to 13% per year from 14% per year.
The SBV also lowered the required reserve ratios for deposits in both VND and foreign currencies by 1% and 2% respectively.
The SBV also issued a document requesting credit organisations to adjust trading interest rates in VND in conformity with current regulations and ensuring their capacity for capital mobilisation and effective and prudent business activities. Credit organisations are also asked to pour credits to production, agricultural and rural sectors, particularly farmers, to enterprises involving in import and export of essential commodities, small and medium-sized enterprises, production and trading investment projects, including feasible and effective real estate investment projects which are likely to return due payments.
In addition, the SBV also urges credit organisations to restructure the time of payments for overdue loans due to the impacts of the world financial crisis.
The above-mentioned measures aim to facilitate credit institutions to further enable their capacity for mobilisation and liquidity, to conduct effective and prudent business and to reduce their lending rates, thereby contributing to the promoting investment, production and economic growth.
Right after the SBV's decisions were announced, State-owned commercial banks have released their new lending interest rates which are 1-1.5% a year lower for loans in VND.
The Bank for Investment and Development of Vietnam was the first bank to reduce both lending and mobilising interest rates with sharp reduction.
With short-term loans, BIDV offers a maximum rate of 16% a year for all of its customers, down 1.2%.
For those customers that are producing and trading products with stable consumption markets; producing essential commodities for the economy such as energy, petrol, steel, cement, fertiliser and medicine; small and medium-sized enterprises, and those who want to borrow to promote exports or buy rice for exports, the bank even offer a lower lending interest rate of only 15% a year, down 1.2% to 1.5% a year compared to the old rates.
For medium and long-term loans in VND, the maximum lending interest rate listed by BIDV is 16.8% a year, down up to 2.1% a year.
The lending interest rates for short-term loans in USD are also down by 0.5% a year. Specifically, loans with terms of below two months, the lending interest rate is 5.5% a year; from over two months to 3 months: 6% a year and from over three months to six months, 6.5% a year.
This has been the sixth reduction of lending interest rates by BIDV within the past three months.
The Bank for Agriculture and Rural Development of Vietnam also announced its new maximum lending interest rates of 15% to 16% a year to different types of customers. Other banks such as Vietcombank and Vietinbank are also preparing to lower their interest rates with average reduction of 1% to 1.5% a year.
Following the adjustment in interest rates by major banks, in the coming time, it is very likely that other banks will also release their new rates. The new lending interest rates will be around 15-16% a year.
For mobilising interest rates, BIDV said its new interest rates for deposits in VND, the interest rate for one-month term is 11.5% a year (down 3.5% a year); from over one month to nine months: 13.5% a year (down 1.5% a year); over nine months: 12.5% a year (down 3-3.5% a year).
The mobilising interest rates for deposits in USD are also down by 0.5% a year with the highest rate for over 12-month term deposits of 4.2% a year.
LienvietBank announced from November 5, its lowest lending interest rate is 15.5% a year (down 1.5% a year). The mobilising interest rates are also down by 1% a year for deposits of all terms.
According to Lienvietbank General Director Nguyen Duc Huong, the reduction of prime interest rate and the reserve requirement is of significant importance. On one hand, it would help enterprises to have easier access to bank loans. On the other hand, it would help increase the available capital of commercial banks, especially the available capital in foreign currencies as the required reserve ratio for deposits in foreign currencies is down by 2% compared to the old figure.
This has been a good move to promote production and trading, consumption and preventing the possibility of a deflation, Mr Huong said.
Nhan Dan
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