The State Bank of Vietnam (SBV) on March 18 lowered the interest rate cap on bank deposits of up to six months by 1 percentage point to 6 percent as part of efforts to boost credit growth.
The maximum interest rate for non-term and under-one-month term bank deposits will drop by 0.2 percent to 1 percent per year, while the rate will reduce from 7 percent to 6 percent per year for deposits left between one and six months.
The SBV will also apply a reduction from 1.25 percent to 1 percent per year to deposits in USD made by individuals and will retain the rate of 0.25 percent for businesses and organisations.
At the same time, the annual interest rate for longer-term deposits from six months and over will be fixed by credit organisations based on the demand and supply of the capital market.
The short-term lending interest rate for five priority areas, namely agriculture, export, supporting industry, small and medium-sized enterprises and high-tech firms will be cut from 9 to 8 percent per annum.
According to leaders of many banks, the interest cut will not have significant impact on capital mobilisation because long-term rates are expected to be more attractive to customers, making the bank capital more stable.
“The cut is supported by factors including inflations being controlled (less than 6 percent in February) and loan demand from both enterprises and individuals remains modest,” said HSBC Vietnam Deputy General Director Pham Hong Hai.
Mobilisation by commercial banks might fall but there will be no significant changes, he said though admitting that investors might now consider other investment channels.
Le Quang Trung, Deputy General Director of the Vietnam International Bank (VIB), said he believes that credit growth will benefit from the cut and the growth target of 12-14 percent for this year is now feasible.-VNA
The maximum interest rate for non-term and under-one-month term bank deposits will drop by 0.2 percent to 1 percent per year, while the rate will reduce from 7 percent to 6 percent per year for deposits left between one and six months.
The SBV will also apply a reduction from 1.25 percent to 1 percent per year to deposits in USD made by individuals and will retain the rate of 0.25 percent for businesses and organisations.
At the same time, the annual interest rate for longer-term deposits from six months and over will be fixed by credit organisations based on the demand and supply of the capital market.
The short-term lending interest rate for five priority areas, namely agriculture, export, supporting industry, small and medium-sized enterprises and high-tech firms will be cut from 9 to 8 percent per annum.
According to leaders of many banks, the interest cut will not have significant impact on capital mobilisation because long-term rates are expected to be more attractive to customers, making the bank capital more stable.
“The cut is supported by factors including inflations being controlled (less than 6 percent in February) and loan demand from both enterprises and individuals remains modest,” said HSBC Vietnam Deputy General Director Pham Hong Hai.
Mobilisation by commercial banks might fall but there will be no significant changes, he said though admitting that investors might now consider other investment channels.
Le Quang Trung, Deputy General Director of the Vietnam International Bank (VIB), said he believes that credit growth will benefit from the cut and the growth target of 12-14 percent for this year is now feasible.-VNA
