Lending rates currently hover at 2005-06 levels, less than half the 2011 rates, according to the State Bank of Vietnam's Monetary Policy Department.

Lending interest rates in Vietnamese dong are currently at 8 percent for the five prioritised sectors (agricultural producers, exporters, small- and medium-sized enterprises, supporting industries and hi-tech businesses).

Other sectors are charged lending rates of 9-10.5 percent for short-term loans and 11-12.5 percent for medium- and long-term loans. Businesses with healthy and transparent financial positions and viable business plans can borrow at 6-7 percent per year.

Last year, SBV Governor Nguyen Van Binh called on credit institutions to cut lending rates below 13 percent for existing loans. Loans with rates of 13 percent, which are mainly for consumption, currently account for roughly 17-18 percent of banks' total outstanding loans, much lower than the rate of 31 percent from late June last year.

The Government asked the banking industry last month to further lower interest rates on existing loans to remove difficulties for enterprises.

SBV Deputy Governor Nguyen Phuoc Thanh said that the banking industry would follow this directive, trying to cut interest rates of existing loans to roughly 10 percent from the current 12-13 percent.

If lending rates remain as high as 13 percent, firms will not be able to repay loans and will be forced to close, Thanh said, so banks should cut rates to save not only firms but also themselves.-VNA