HA NOI — The State Bank of Viet Nam is considering reducing the ceiling interest rate for dong term deposits – of a year and under – to 9 per cent from the current 11 per cent within the next few months in a bid to boost credit growth.
Bank officials said at a meeting of the 14 largest commercial banks late last week the adjustment, if implemented, might be the final one for deposit rates this year.
Lending interest rates for short-term loans could be cut to 12-13 per cent per year compared to 14-15 per cent now.
The officials said the nation's total lending had declined 0.2 per cent since December 31 last year so an adjustment was needed to assure credit growth in accordance with the Government's targets.
The central bank also planned to establish a debt trading company to clean up commercial banks' bad debt situation and this company was expected to buy a debt value of about VND100 trillion (US$4.81 billion) from banks. It would pump the money back into the economy after making banks' balances healthy, they said.
The SBV would continue to prioritise lending to agriculture and rural development, while asking lending institutions to adjust lending rates already fixed in existing contracts and loosen lending conditions to ease pressure on clients. The bank would possibly petition the Government to establish a fund to finance people on average incomes to buy homes, which would help stimulate the residential real estate market and benefit social welfare.
Eximbank general director Truong Van Phuoc told Thoi bao Ngan hang (Banking Times) he expected the measures mentioned by the SBV to gradually encourage banks to lend to enterprises.
He said the central bank was making monetary policies more relevant to market developments while commercial banks were joining hands to "share difficulties" with companies.
Thoi bao Kinh te Viet Nam (Viet Nam Economic Times) quoted a director of a commercial bank branch as saying it was important that banks and enterprises recover confidence, the lack of which was an obstacle to activities between them.
As long as confidence was curbed, market players would continue to be immovable, the director said.
Last Monday, the SBV trimmed the ceiling rate for dong deposits with terms of one month or more from 12 per cent to 11 per cent a year, and the ceiling lending rate from 15 per cent to 14 per cent per year for several prioritised sectors, to encourage production and business activities.
It noted the decline in loan interest rates was slow and, together with rising credit risks, was still a significant challenge to businesses in the face of falling purchasing power and increasing inventories. — VNS