Banks requested to cut rates to support economic recovery
Governor of the State Bank of Vietnam (SBV) Nguyen Thi Hong has directed banks to continually reduce input costs with an aim to cut loan interest rates.
The headquarters of the State Bank of Vietnam (Photo: sbv.gov.vn).
Hanoi (VNS/VNA) - Governor of the State Bank ofVietnam (SBV) Nguyen Thi Hong has directed banks to continually reduceinput costs with an aim to cut loan interest rates.
Under a document issued recently, banks have been required to cutoperating costs and unnecessary expenses, as well as administrative procedures,so as to have room for lending interest rate reduction to support the economicrecovery and development.
Banks have been also instructed to continually promote the implementationof the Government’s interest rate support programme for loans of enterprises,cooperatives and business households according to the Government's Decree31/2022/ND-CP dated May 20, 2022.
“The SBV will monitor banks, which continue to raise interestrates, and take measures to deal with the violation cases,” the Governor noted.
At a recent meeting, the Vietnam Bankers Association (VNBA) calledon its members to keep deposit interest rates at 9.5% or below to reducelending interests and boost economic recovery. The move was made after manybanks raised their rates to up to 11.5% per year for a 12-month term.
According to VNBA Chairman Nguyen Quoc Hung, the rise createdintense competition in mobilising money, which caused instability amongdepositors and borrowers.
Rising deposit interest rates means rising costs, which makes itmore difficult to lower loan interest rates to support businesses, Hung said.
Bank representatives at the meeting agreed with the proposal tokeep deposit interest rates at 9.5% maximum.
Some banks have started to lower their deposit interest rates. Ithas been reported that the interest rate race has stalled, with no banksincreasing their rates over the past week after a flurry of activity in thepast few months.
According to experts, in order to make banks feel secure inagreeing to lower deposit interest rates, the SBV has made efforts to supportliquidity for banks through the open market operation (OMO) channel.
Under the newly issued document, the SBV also directs banks togive loan priority to agriculture, export, small- and medium-sized enterprises,supporting industries, high-tech enterprises, industrial park construction andsolvent real estate projects for low income people.
Banks must strictly control credit risks for investment activitiesin corporate bonds, securities and real estate sectors, according to the document./.
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The headquarters of the State Bank of Vietnam (Photo: sbv.gov.vn). 
