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Compulsory reserves rate lowered
The State Bank of Viet Nam announced yesterday that the compulsory total of dong that commercial banks must hold in reserve will be trimmed from 5 to 3 per cent from March 1.
The lower reserves are yet another bid to provide the shrinking economy with more capital.
They will apply to non-term deposits and less-than-12 month deposits at State-owned banks - except Agribank - joint stock, joint venture and foreign banks; branches of foreign banks and finance companies.
The compulsory dong reserves at Agribank, rural joint stock banks and the central people's credit fund will be halved to 1 per cent.
The compulsory reserves for deposits of more than 12 months with all banks, finance companies and the central people's credit fund will be 1 per cent.
Compulsory reserves are the amount of capital that banks must deposit with the central bank.
The reduction in the percentage of compulsory reserves is the central bank's second adjustment of the monetary market to boost the domestic economy so far this year.
The Government has targeted economic growth of about 6.5 per cent for next two years - down from 8.5 per cent last year.
Prime rate steady
The central bank has also decided to maintain the prime rate unchanged at 7 per cent with lenders still not be allowed to charge more than 10.5 per cent interest for dong loans.
The previous limit was 12.75 per cent.
The refinancing rate, discount rate and overnight interest rates for electronic and compensation payments at the inter-bank market were not included in the decision.
The SBV raised its benchmark rate several times early last year - from 8.5 per cent to 14 per cent; the refinancing rate from 6.5 to 15 per cent and the discount rate from 4.5 to 13 per cent to tame inflation.
VietNamNet, Viet Nam News
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