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Central bank cuts interest rate to aid economy

The State Bank of Vietnam (SBV) will cut the benchmark interest rate from Thursday to support the national economy amid difficulties posed by the COVID-19 pandemic.

The refinancing interest rate will be cut to 4 per cent per annum from 4.5 per cent, while the rediscount interest rate will go down to 2.5 per cent from 3 per cent.

The overnight electronic interbank rate and rate of loans to offset the capital shortage in clearance between the SBV and credit institutions will be lowered to 5 per cent annually from 5.5 per cent.

The central bank also decided to cut the interest rate of bids of valuable papers through open market operations from 3 per cent to 2.5 per cent.

Regarding the maximum interest rate for deposits in the Vietnamese đồng by organisations and individuals at credit institutions and foreign bank branches, the maximum interest rate applicable to demand deposits and those of less than one month is 0.2 per cent per annum.

The maximum interest rate for deposits with terms from one month to less than six months will fall to 4 per cent per annum from 4.25 per cent.

The maximum rate for deposits with terms of one month to less than six months at people’s credit funds and microfinance institutions will be cut to 4.5 per cent per annum from 4.75 per cent, while interest rates on deposits with a term of six months or more will be determined by credit institutions based on market capital supply and demand.

Notably, loans to borrowers in several regulated fields and economic sectors have been cut to 4.5 per cent per annum from 5 per cent. The maximum short-term lending interest rate in đồng at people’s credit funds and microfinance organisations for these capital needs is now down from 6 per cent per annum to 5.5 per cent. — VNS

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