The Government has ordered the State Bank of Vietnam to take action to lower interest rates in order to improve access to credit and boost stalled credit growth.
In a resolution issued late last week, the Government set a target of lending interest rates of no higher than 12 percent and deposit interest rates of no more than 10 percent.
Credit grew by just 5.58 percent between December and April, and just 1.73 percent in April alone, against a formal target for the year of 25 percent, causing the National Assembly Economic Committee to declare that tight monetary policies during the first four months of the year had discouraged enterprises from seeking bank credit, with negative impacts on production and economic growth.
US dollar-denominated loans grew by a slightly faster 3 percent in April, according to the State Bank, with such loans carrying interest of an average of 6-8 percent per year. The loans had also become more attractive due to a more stable exchange rate and the closure of the gap between dollar-dong exchange rates on the black market and those at commercial banks.
Meanwhile, central bank measures in March have helped commercial banks lower lending interest rates on dong-denominated loans from an average of 16 percent per year down to 13-15 percent, but many enterprises were still finding loans at such terms onerous.
To help alleviate the pressures on borrowers, the State-owned Bank for Investment and Development of Vietnam (BIDV) and Lien Viet Bank have cut interest rates this month to 12.5-13 percent, down 1.5 percentage points from last month, on loans to enterprises in the fields of agricultural production, fisheries, forestry, salt production, and exports, as well as to small-and medium-sized enterprises.
Vietinbank, Vietcombank and Agribank were also all reportedly preparing to further cut lending rates to comply with the call last week from the Vietnam Banking Association for lending interest rates no higher than 13 percent.
Total deposits at credit institutions, meanwhile, were up 2.8 percent in April, compared to the previous month, with dong deposits up 3.3 percent and dollar deposits up just 0.78 percent, according to the central bank. Banks were offering an average of 11.5-11.9 percent per year on dong deposits and just 3.3-4.8 percent on dollar deposits./.
In a resolution issued late last week, the Government set a target of lending interest rates of no higher than 12 percent and deposit interest rates of no more than 10 percent.
Credit grew by just 5.58 percent between December and April, and just 1.73 percent in April alone, against a formal target for the year of 25 percent, causing the National Assembly Economic Committee to declare that tight monetary policies during the first four months of the year had discouraged enterprises from seeking bank credit, with negative impacts on production and economic growth.
US dollar-denominated loans grew by a slightly faster 3 percent in April, according to the State Bank, with such loans carrying interest of an average of 6-8 percent per year. The loans had also become more attractive due to a more stable exchange rate and the closure of the gap between dollar-dong exchange rates on the black market and those at commercial banks.
Meanwhile, central bank measures in March have helped commercial banks lower lending interest rates on dong-denominated loans from an average of 16 percent per year down to 13-15 percent, but many enterprises were still finding loans at such terms onerous.
To help alleviate the pressures on borrowers, the State-owned Bank for Investment and Development of Vietnam (BIDV) and Lien Viet Bank have cut interest rates this month to 12.5-13 percent, down 1.5 percentage points from last month, on loans to enterprises in the fields of agricultural production, fisheries, forestry, salt production, and exports, as well as to small-and medium-sized enterprises.
Vietinbank, Vietcombank and Agribank were also all reportedly preparing to further cut lending rates to comply with the call last week from the Vietnam Banking Association for lending interest rates no higher than 13 percent.
Total deposits at credit institutions, meanwhile, were up 2.8 percent in April, compared to the previous month, with dong deposits up 3.3 percent and dollar deposits up just 0.78 percent, according to the central bank. Banks were offering an average of 11.5-11.9 percent per year on dong deposits and just 3.3-4.8 percent on dollar deposits./.
