The areas comprise agricultural and rural development, export, supporting industry and small and medium-sized enterprises.
The State Bank of Vietnam will cap the annual lending interest rate for VND at 13% from June 11
In May, the bank cut the ceiling for lending interest rates for these sectors to 15%.
The SBV said, the move is aimed at encouraging the development of prioritised sectors. Those which are not on the priority list and face potential risks will be put under strict supervision by the Government and will be subject to higher lending interest rates.
The SBV has also decided to slash ceiling deposit interest rate for VND from 11% to 9% per year. However, the rate is only applied to non-term loans and those with terms of below 12 months; meanwhile, the rate for loans of one year or more will be regulated by credit organisations based on the market demand.
The lowered deposit interest rates will help businesses to access credit more easily and is seen by many to indicate the intention of the SBV to entirely remove the ceiling for deposit interest rates in the future.
Commercial banks follow the suit
Following the SBV’s decision, many commercial banks have reduced both deposit and lending interest rates. Deposit interest rates for loans with terms of more than 12 months range from 8-10% per year, while, several banks have reduced deposit interest rates by 0.5%-3% for almost all terms.
Vietcombank and ACB cut interest rates for loans of almost all terms. Military Bank and MaritimeBank officially applied a deposit interest rate of 9% per year on June 8.
A number of other banks, including BIDV, SHB and Tienphong Bank have also slashed lending interest rates.
Megumu Motohisha, TienPhong Bank’s Micro-finance Deputy General Director, said, “In Japan, deposit interest rates are close to 0%, and lending interest rates are around 2%. Vietnam has applied high interest rates over the past year to attract foreign investment.”
Each country has its own policies, depending its economic situation. However, high lending interest rates will cause difficulties for businesses. Vietnam’s lending interest rates have returned to a more reasonable level, he added.