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Tuesday, June 18, 2024

SBV urges reduction of lending rates

The Saigon Times

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HCMC – The State Bank of Vietnam (SBV), the country’s central bank, has urged commercial banks to further lower lending rates to drum up business and investment activities.

In accordance with Document 4985, commercial banks must strictly comply with the SBV’s regulations on deposit interest rates and take measures to reduce these rates. This will make room for lowering lending rates for clients.

Several commercial banks have recently made interest rate cuts. For example, Agribank now offers short-term lending rates starting from 5% per year and mid- to long-term lending rates from 8% per year for business production. This marks Agribank’s sixth interest rate reduction by 2 to 4 percentage points since the beginning of the year.

Similarly, BIDV has reduced interest rates by 0.5 percentage point for outstanding mid- and long-term loans that were not previously subject to competitive interest rates. This is the second time this year that the bank has lowered lending rates for existing loans.

BIDV has introduced a credit package worth VND20,000 billion for commercial housing project investors, with interest rates ranging starting from 8.5% per year. LPBank has rolled out a credit package of VND8,000 billion with incentive interest rates starting from 7.5% per year for individuals and businesses engaged in production activities.

While these lowered rates apply to new loan agreements, existing loans still carry high interest rates. Business lending rates typically range from 9% to 10% per year, while rates for individuals range from 13% to 15% per year. Some clients are considering repaying their outstanding loans to take advantage of more favorable interest rates for new loans. However, they may find it tough to meet the SBV’s eligibility requirements for the lower interest rate loans.

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