The State Bank of Vietnam has just issued circulars that further lowered the deposit and lending interest rates of foreign credit institutions and branches beginning June 28.
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| Lowered rates will encourage lending activities |
The annual USD deposit interest rate cap for individuals will be lowered from 2% to 1.25%, and from 0.5% to 0.25% for businesses.
At the same time annual VND deposit rates for non-term and less than one month term accounts will be reduced to 1.2% and this will reduce from 7.5% to 7% for deposits for terms from one to six months.
The SBV allows credit institutions and branches of foreign banks to fix their own rates for deposits with terms of over six months based on the customers' demand.
It has been requested from credit institutions to make public their rates. They have also been banned from providing illegal promotion or discount programmes that may tamper with the listed rates. Customers of fixed term deposit accounts, who deposited money before the circular went into effect, can still enjoy the higher rates until the term's end.
Short-term lending interest rates for VND will also be cut from 10 to 9% per year for prioritised sectors including agriculture, export, supporting industry, and small and medium-sized enterprises and high-tech firms.
Customer must show collateral for loans, while credit institutions are forbidden from taking any unnecessary additional fees.