VN Central Bank works to maintain stable interest rates
The State Bank of Vietnam (SBV) will work to maintain interest rate stability, enabling firms to access credit for their production and business, SBV Governor Le Minh Hung has said.
According to the central bank, outstanding loans for production and business activities made up about 80 percent of total in the banking system in the first quarter of 2017.
Currently, common lending rates for priority fields range from 6 percent to 7 percent per year for short term, and 9-10 percent for medium and long terms.
For ordinary loans, the rates were 6.8-9 percent for short term and 9.3-11 percent for medium and long terms. For good clients, short-term loan interest rates are 4-5 percent per annum.
Chairman of the Vietnam Construction Pottery Association Dinh Quang Huy said the Government and banks have adopted a number of preferential credit policies to help enterprises develop.
As a result, many companies have stabilised operations, addressed capital shortages and avoided dependence on black credit, he said.
Numerous banks have supported businesses, following Government directions and the SBV request to save expenses and reduce interest rates.
For example, the Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) has applied preferential interest rates from now to November 30, 2017.
The interest rates for short-term business production were reduced from 8.2 percent to 7.4 percent per year for nine-month loans, and 7.7 percent instead of 8.5 percent for 12-month loans.
Meanwhile, the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) currently maintains the lowest lending rate of 6.5 percent per annum for some sectors.
In the middle of February 2017, the currency market saw a number of commercial banks adjusting deposit rates, which fueled business concerns of rising interest rates.
However, the SBV Monetary Policy Department explained that the increases were insignificant a temporary measure from several small joint stock commercial banks.
Large State commercial banks will keep interest rates stable, the department said.
In a recent meeting between SBV Deputy Governor Nguyen Thi Hong and commercial banks, participants confirmed that there is no pressure on interest rates.
State banks like Vietcombank, VietinBank, BIDV, and Agribank have applied no interest rate adjustment since the end of 2016.
The US Federal Reserve’s move to further increase interest rates from now to 2018 could cause the US dollar to rise, exerting pressure on domestic inflation and the exchange rate.
To manage this, the SBV will devise measures to mitigate the impacts of domestic and international pressure on its monetary policies while striving to keep interest rates stable.