The State Bank of Vietnam (SBV) has decided to lower interest rates in the banking system by 1%, effective from December 24.
Short-term deposit interest rates cut to 8% per year
This will bring the cap for short-term deposit interest rates at commercial banks to 8%.
Annual interest rates on refinancing services and the overnight rate will also be cut by 1%, to 9% and 10% respectively.
Interest rates on rediscounted loans will be cut to 7% per year, from the previous 8%.
The SBV issued Circular 32 /2012/TT-NHNN on the new caps on deposit interest rates, that says the maximum interest rates for demand and term deposits of less than one month will be maintained at 2% per year. Deposit interest rates with terms from one month to 12 months will be lowered to 8% per year.
For People’s Credit Fund, the 1% reduction will require lowering deposit interest rates, with terms from one to 12 months, to 8.5% per year.
Financial institutions and branches of foreign banks are allowed to set interest rates for deposits with terms of more than a year based on market demand. The regulation is expected to help banks attract more capital in the last month of the year.
The SBV also issued Circular 33/2012/TT-NHNN, on the new caps for lending interest rates for VND at bank accounts and financial institutions.
The cap of 12% for lending interest will be applied to four industries, including agriculture and rural development, production and trade in exports, production and trade for small and medium-sized enterprises, and supporting industry development.
Local People’s Credit Funds and microfinance institutions will be allowed to apply a ceiling lending interest rate in VND for these industries, at 13% per year, the SBV said.
Together with several measures applied by the Government and ministries in 2012, tightened monetary policies and regulations of interest rates at banks have considerably helped curb inflation.
The country’s inflation rate in November increased by 0.47% from October, and was up 6.52% from the same period last year.
The national inflation rate has been estimated to be reduced by around 7% by the end of this year.
