Savings interest rate ceiling reduced to 7%

The State Bank also reduced the highest USD deposit interest rate from 2% to 1.25% per year and will remove the ceiling on deposits with terms of over 6 months.

In addition to reducing the ceiling interest rate for VND savings by 0.5% instead of the current 7.5%, the State Bank may remove the ceiling interest rate for deposits over 6 months. In addition, the operator will reduce the ceiling interest rate for USD deposits for individuals from 2% to 1.2% per year. The highest interest rate for organizations will also be reduced from 0.5% to 0.25%.

The ceiling interest rate for mobilizing VND for terms of 12 months or less has been reduced to 7%. In addition, the State Bank will also remove the ceiling interest rate for terms of 6 months or more.

This information was announced by Mr. Tien at the Government's online conference on the first 6 months of the year with localities that is taking place. According to Mr. Tien, the reason for this adjustment is the ability to control inflation and the room to use interest rate tools.

"The Governor is chairing a meeting with the authorities and in the coming time, or tomorrow, the lending interest rate for 5 priority sectors will be reduced from 10% to 9% per year. The mobilization interest rate may have certain adjustments, under one year it is 7.5% and may be reduced to 7% and there may be no ceiling for deposits over 6 months," he added.

In parallel with the above statement, the State Bank has just officially issued Circulars confirming the reduction of VND and USD deposit interest rates and the removal of the deposit ceiling for terms over 6 months. Previously, at the banking industry summary conference on June 17, Governor Nguyen Van Binh also said that he expected to further reduce USD deposit interest rates to strengthen people's confidence in VND.

"But this is almost the final adjustment limit, because inflation is around 7% while interest rates have dropped to 7%. Whether or not there will be further reductions depends largely on inflation control," Deputy Governor Nguyen Dong Tien said at the Government Conference.

According to him, the sharp reduction in lending interest rates has significantly affected the income of credit institutions, many units are no longer profitable. The difference between input and output interest rates without provisioning is only 3%, while with provisioning it is only 1.93%, according to the Deputy Governor.

This is the seventh adjustment of the deposit interest rate by the State Bank since the beginning of 2012, from 14% per year. The lending interest rate level has also decreased significantly since then. Interest rates are still considered one of the main tools used by the State Bank to hopefully stimulate credit for the economy. By June 20, credit growth in the entire economy had reached 3.31%.

Also at this online meeting, Prime Minister Nguyen Tan Dung directed the State Bank on gold market management. Accordingly, the Prime Minister requested that by June 30, banks must close their accounts and not extend the deadline for any bank. In response to this request, the Deputy Governor said he is monitoring daily to ensure the correct implementation of the roadmap.

According to VnExpress - TH