The boost from lower lending interest rates.

Following the recent reduction in the policy interest rate approved by the State Bank of Vietnam, people and businesses in Ha Tinh hope that commercial banks will soon lower lending rates to support the economy amidst numerous difficulties.

The policy interest rate was cut for the third time this year.

Recently, the State Bank of Vietnam (SBV) decided to reduce several key interest rates by 0.5% per annum, effective from May 25, 2023. This third reduction in key interest rates within the past three months is expected to provide a boost to credit growth and lower lending rates.

On May 23, 2023, the State Bank of Vietnam decided to reduce several key interest rates by 0.5% per annum.

Accordingly, the overnight lending interest rate for interbank electronic payments and the interest rate for compensating capital shortages in clearing payments by the State Bank of Vietnam to credit institutions decreased from 6.0%/year to 5.5%/year; the refinancing interest rate decreased from 5.5%/year to 5%/year; and the rediscount interest rate remained unchanged at 3.5%/year.

At the same time, the State Bank of Vietnam also announced that the maximum interest rate applied to demand deposits and time deposits with a term of less than 1 month remains unchanged at 0.5%/year; the maximum interest rate applied to time deposits with a term from 1 month to less than 6 months has decreased from 5.5%/year to 5.0%/year.

Specifically, the maximum interest rate for VND deposits at people's credit funds and microfinance institutions has been reduced from 6.0%/year to 5.5%/year; interest rates for time deposits of 6 months or more are determined by credit institutions based on market supply and demand for capital.

Borrowers in Ha Tinh province are hoping that commercial banks will find solutions to lower interest rates soon.

This is reportedly the third time in 2023 that the State Bank of Vietnam has reduced its policy interest rates. In the context of continuously rising and high global interest rates, and ongoing domestic economic difficulties, the State Bank of Vietnam's decision to lower its policy interest rates demonstrates its proactive and flexible approach in directing and managing monetary policy.

Economic experts believe that the State Bank of Vietnam's latest move to lower the policy interest rate is one of the important foundations for facilitating credit institutions to reduce deposit and lending interest rates; continuing to guide the reduction of market interest rates, contributing to alleviating difficulties for businesses and the economy.

Waiting for banks to lower lending interest rates.

According to reports, the business community in Ha Tinh is currently facing challenges such as: increasing production costs, declining orders, rising input material prices, and increased electricity prices. Therefore, the biggest desire of businesses and production facilities is for credit institutions to create favorable conditions for accessing capital coupled with reduced lending interest rates, thereby creating new impetus for growth.

Recently, Ha Tinh Pharmaceutical Joint Stock Company has faced numerous difficulties as the market declined while many costs related to production and business operations increased, leading to a 10-15% decrease in revenue compared to the same period in 2022.

Production activities at Ha Tinh Pharmaceutical Joint Stock Company.

Mr. Le Quoc Khanh, General Director of Ha Tinh Pharmaceutical Joint Stock Company, said: “Currently, the company is borrowing tens of billions of VND from three major banks in the area: Vietcombank, VietinBank, and BIDV. Although interest rates have decreased compared to 2-3 months ago, the reduction is not as much as the company expected. Compared to 2022, current interest rates are 2% higher. We hope that banks will study and continue to reduce interest rates to support the business community and cooperatives.”

Within the collective economic sector, many cooperatives are facing pressure from a lack of funds to rebuild production. According to a representative of the Loan Hoan Aquaculture, Procurement, and Export-Import Cooperative (Loc Ha), 2023 was a year of losses for the cooperative when nearly 400 tons of marketable clams died simultaneously. Meanwhile, the cooperative has outstanding debt of nearly 5 billion VND at banks with interest rates ranging from 10-11% per year. What the cooperative is most hoping for is a significant reduction in interest rates from banks to truly create a boost for production.

The Loan Hoan Aquaculture, Purchasing, and Export-Import Cooperative is facing considerable difficulties, experiencing both production losses and the need to pay bank interest.

According to reports, not only businesses and production facilities but also the public are eagerly awaiting the State Bank of Vietnam's move to lower the policy interest rate. Ms. Tran Thi Huong (Thach Ha town) said: "We are borrowing over 400 million VND from the bank on a medium-term loan to build a new house. However, the lending interest rate is currently high, making things even more difficult for my family because of the additional monthly interest payments. If the lending interest rate is lowered, it will ease some of the economic pressure on us."

According to the State Bank of Vietnam's Ha Tinh Provincial Branch, credit institutions in the area are currently applying common short-term VND lending interest rates ranging from 4.5% to 10.5% per year, and medium- and long-term lending interest rates ranging from 10.2% to 13.5% per year. Short-term USD lending interest rates are commonly between 2% and 4.5% per year; medium- and long-term rates are commonly between 5.5% and 6.5% per year.

Thu Phuong

Source: https://baohatinh.vn/kinh-te/cu-hich-giam-lai-suat-cho-vay/249054.htm