In a document dated October 18 on banking operations, the State Bank of Vietnam told credit institutions not to compete by raising deposit rates in ways that could destabilize the money market. Banks must first cut listed savings rates for terms of six months or longer by at least 0.5 percentage points.
For lending, banks must cut rates by 1.5–2% a year for manufacturing, business and priority sectors.
The State Bank said lenders that do not comply with the rate-cutting requirement may have their remaining credit limit for this year reviewed, receive a lower allocation next year or be required to apply a higher safety ratio.
The directive came as deposit rates remained high and borrowing costs for companies and households stayed elevated. Since late April, the highest listed rate in the banking system, excluding large deposits and VIP customers, has risen to 7.6–7.8% a year. Actual preferential rates at many banks range from 8.5% to 9.5% a year.
According to State Bank data, the average lending rate reached 10.7% a year in August, up 0.2 percentage points from the previous month. It was about 3 percentage points higher than the rate on loans disbursed a year earlier. In practice, lending rates can reach 12–13%, depending on the term, purpose, collateral and credit history.
The directive followed a monetary-policy meeting on October 16. Deputy Prime Minister Nguyen Van Thang said high lending rates were raising the cost of capital, affecting production and business, and making it harder for companies and residents to access credit.
He said complex global developments were putting pressure on interest-rate, exchange-rate and inflation management, while bad debts and banking risks remained present.
The deputy prime minister asked the State Bank to review the results of earlier measures to stabilize rates and move faster to lower borrowing costs. Lending rates for manufacturing, business and priority sectors should fall by 1.5–2% to support residents and companies.
“The governor must personally direct the measures to stabilize rates, reduce lending rates and ensure bank liquidity, and take responsibility for their effectiveness,” the deputy prime minister said.
After directions from the government and the State Bank, state-owned banks BIDV, Vietcombank and Agribank announced lending-rate cuts of up to 2% a year to support companies and households.
BIDV launched a system-wide preferential lending program on October 15, with rates starting at 6% a year, up to 2 percentage points below normal rates. The program covers short-term Vietnamese-dong loans focused on priority industries and sectors.
Vietcombank Chairman Nguyen Thanh Tung said the bank would cut lending rates by at least 2% a year through the end of the year to help companies access funding.
Agribank said it would cut lending rates by up to 2% a year from October 19 compared with normal rates. The program focuses on priority sectors and production and business customers. The bank plans to set aside about VND 2 trillion to reduce customers’ capital costs.
Sources: Dân Trí
