Reduced lending interest rate ceiling from July 10

DNUM_AIZAHZCABH 11:06

Based on suitable macroeconomic conditions, the State Bank of Vietnam (SBV) decided to reduce the operating interest rate by 0.25% and reduce the lending interest rate ceiling for priority sectors by 0.5%.

This is the important content in the announcement issued on the evening of July 7 by the State Bank of Vietnam regarding documents adjusting and reducing interest rates effective from July 10, 2017.

Đại diện lãnh đạo Ngân hàng Công thương Việt Nam phát biểu. Ảnh Thu Huyền
Lending activities are expected to be bustling when the ceiling interest rate is reduced. Photo courtesy of Thu Huyen

Firstly, the State Bank of Vietnam issued Decision No. 1424/QD-NHNN dated July 7, 2017 on refinancing interest rates, rediscount interest rates, overnight lending rates in interbank electronic payments and loans to cover capital shortages in clearing payments of the State Bank of Vietnam for banks. Accordingly, the refinancing interest rate is reduced from 6.5%/year to 6.25%/year; the rediscount interest rate is reduced from 4.5%/year to 4.25%/year; the overnight lending rate in interbank electronic payments and loans to cover capital shortages in clearing payments of the State Bank of Vietnam for banks is reduced from 7.5%/year to 7.25%/year.

Second, the State Bank of Vietnam issued Decision No. 1425/QD-NHNN dated July 7, 2017 on the maximum short-term lending interest rate in VND of credit institutions and foreign bank branches for borrowers to meet capital needs for a number of economic sectors and fields as prescribed in Circular No. 39/2016/TT-NHNN dated December 30, 2016.

Accordingly, the maximum short-term lending interest rate in VND for capital needs serving agriculture, rural areas, exports, supporting industries, small and medium enterprises, and high-tech enterprises will decrease from 7%/year to 6.5%/year; the maximum short-term lending interest rate in VND of people's credit funds and microfinance institutions for these capital needs will decrease from 8%/year to 7.5%/year.

Analyzing the reasons for lowering interest rates, Mr. Nguyen Duc Long, Deputy Director in charge of the Monetary Policy Department (SBV), said that since the beginning of 2017, the SBV has actively implemented monetary and bank credit solutions with the goal of controlling inflation, stabilizing the macro economy, supporting economic growth at a reasonable level, and ensuring liquidity of credit institutions and the economy.

Along with the synchronous management solutions of the Government and ministries and branches, in the first 6 months of the year, the macro economy continued to be stable, economic growth in the first 6 months of 2017 reached 5.73%, inflation tended to slow down (consumer price index increased by 0.2% compared to the end of 2016, increased by 2.54% compared to the same period, the average of the first 6 months compared to the same period increased by 4.15%), the liquidity of the system was guaranteed, the monetary and foreign exchange markets were relatively stable, and the State foreign exchange reserves continued to increase.

Recently, the National Financial Supervisory Commission also analyzed that the liquidity of the banking system has become abundant since May after signs of cyclical local tension until the end of April. The estimated lending/mobilization ratio of the entire credit institution system is 87%, an increase of 1.53 percentage points compared to the end of 2016. Interbank interest rates have decreased by 1.7-2.5 percentage points compared to the end of April (as of June 28, 2017), to 2.6-3.4%.

The leader of the Monetary Policy Department said that the State Bank's interest rate reduction is based on favorable conditions and developments in the macro economy and the money market, while implementing the direction of the Government and the Prime Minister in the recent Resolution and Directive in the spirit of accompanying businesses and supporting economic growth.

The reduction in lending interest rates since the last time more than 2 years ago has important significance in removing difficulties for businesses in a way that directs capital to priority sectors. Meanwhile, the reduction in operating interest rates helps reduce costs for credit institutions and indirectly contributes to reducing lending interest rates in the market.

According to Huy Thang/chinhphu.vn

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Reduced lending interest rate ceiling from July 10
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