The State Bank of Vietnam, the country’s central bank, has cut 150 points of benchmark interest rate to 8.5 per cent effective from December 22 part of the packages to lift Vietnam’s economy out of recession, the SBV said in a statement.
This is the second cut by the SBV so far this month.
All credit institutions and banks in Vietnam are requested to lower lending rates to 12.75 per cent from 15 per cent per annum.
The SBV slashed refinancing rates to 9.5 per cent down from 11 per cent per annum, rediscount rates to 7.5 per cent from 9 per cent and overnight interbank rates to 9.5 per cent from 11 per cent.
The central bank also reduced interest rates of compulsory dong deposits at credit organizations to 8.5 per cent from 9 per cent per annum and t-bills of dong to 4.5 per cent from 13 per cent per annum.
Meanwhile, Vietnam’s central bank cut compulsory reserves of less than 12-month dong deposits of credit among commercial joint stock, joint venture banks, Vietcombank, branches of foreign banks as well as financial companies to 5 per cent from current 6 per cent, excluding Agribank and of more than 12-month deposits to 1 per cent.
The move by the SBV will help pump VND20 trillion (US$1.2 billion) into the economy out of the total mount of fund of VND40 trillion to be injected into the banking system in Vietnam as local banks would like to pull back their money invested into compulsory bills bought in March this year, local bankers estimated.
“This should be considered a blow to local banks as the average deposit rate of almost all banks is still 10 per cent to 13 per cent per annum,” Nguyen Hong Van, a member of the Vietnam Bank for Industry and Trade (Vietinbank) said.
“From now on, banks have to bear losses for any loans extended as the lending rate is not enough to cover costs,” Le Dac Son, VP Bank’s general director said.
The World Bank has forecast its statement that Vietnam’s economy will slow to 6.5 per cent this year and next year after the government has been taking stabilization packages to cool down hot-red growth rate of more than 8 per cent.
Meanwhile, IMF and the ADB have cut growth outlook to 5 per cent next year. (SBV)
Vietnamese
