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Banks cut loan interest rates
Two leading domestic banks on Feb. 1 trimmed lending interest rates to as low as 8 percent per year, following the State Bank of Vietnam’s latest effort to open a flow of cheaper credit for the nation’s businesses by slashing the benchmark rate to 7 percent.
Effective on Feb. 2, the Bank for Investment and Development of Vietnam (BIDV) has cut preferential short-term lending rates from 8.5 percent to 8 percent per year for customers who have direct export contracts and have committed to sell hard currencies to the bank.
Common short-term rates were set at 9 percent for three-month loans and at 9-10 percent for longer-term rates that represent an average 0.5 percentage-point cut from previous rates.
Also effective on the same day,Vietcombank has announced common lending interest rates of 10 percent yearly, a cut of one percentage point. Preferential rates remained at 8.5 percent.
Regulations cap interest that can be charged on loans in Vietnamese dong to the maximum deposit interest rate for 12 months plus 3 percent, up to a maximum of 10.5 percent yearly.
In addition to the State Bank move to lower interest rates, the Government has approved an interest-rate subsidy of 4 percent for short-term loans made between February and December of this year, and it has been made compulsory for all banks to provide the subsidised interest rates to eligible borrowers – the latest effort to help the business community access capital to fund production and create jobs during the global economic crisis.
Credit institutions and their customers, starting on Feb. 2, will be allowed to negotiate interest rates on credit cards, pursuant to State Bank Circular No01/2009/TT/NHNN, with the aim of encouraging lower rates and higher consumer spending as a spur to economic growth.
Banks will decide rates based on supply and demand on the capital markets and on the creditworthiness of each borrower.
But the new regulation also urges banks to keep a close eye on credit limits and quality of credit.
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