"Stimulus" to reduce lending interest rates

Before the move to reduce operating interest rates just approved by the State Bank of Vietnam, people and businesses in Ha Tinh hope that commercial banks will soon lower lending interest rates to support the economy in the context of many difficulties.

Reduce operating interest rates for the third time this year

Recently, the State Bank of Vietnam (SBV) has decided to reduce some operating interest rates by 0.5%/year, effective from May 25, 2023. The State Bank's third reduction in operating interest rates in the past 3 months is expected to create a "push" to promote credit growth and reduce lending interest rates.

On May 23, 2023, the State Bank of Vietnam decided to reduce some operating interest rates by 0.5%/year.

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

At the same time, the State Bank also informed that the maximum interest rate applied to non-term deposits and deposits with terms of less than 1 month remains at 0.5%/year; the maximum interest rate applied to deposits with terms from 1 month to less than 6 months decreases from 5.5%/year to 5.0%/year.

The maximum interest rate for deposits in VND at people's credit funds and microfinance institutions is reduced from 6.0%/year to 5.5%/year; the interest rate for deposits with terms of 6 months or more is determined by credit institutions based on market supply and demand of capital.

Borrowers in Ha Tinh hope that commercial banks will have solutions to soon lower interest rates.

It is known that this is the third time in 2023 that the State Bank of Vietnam has reduced operating interest rates. In the context of world interest rates continuing to increase and remain at high levels, and the domestic economy still facing many difficulties, the adjustment of operating interest rates by the State Bank of Vietnam shows its proactiveness and flexibility in directing and operating monetary policy.

Economic experts said that the move to reduce the operating interest rate by the State Bank of Vietnam is one of the important bases to facilitate credit institutions to reduce deposit interest rates and lending interest rates; continue to orientate to reduce the market interest rate level, contributing to removing difficulties for businesses and the economy.

Waiting for banks to reduce lending rates

According to the sharing, currently, the business community in Ha Tinh is experiencing challenges such as: increased production costs, decreased orders, increased input material prices, increased electricity prices... Therefore, the biggest wish of businesses and production facilities is that credit institutions create favorable conditions for accessing capital associated with reducing lending interest rates, creating new growth momentum.

Recently, Ha Tinh Pharmaceutical Joint Stock Company has faced many difficulties when the market declined while many costs for production and business lines increased, leading to a decrease in the company's revenue of 10-15% 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, businesses are borrowing tens of billions of VND from 3 major banks in the area, namely Vietcombank, VietinBank and BIDV. Although compared to 2-3 months ago, the current lending interest rate has decreased, the reduction is not as expected by businesses. Compared to 2022, the lending interest rate is currently 2% higher. We hope that banks will research and continue to reduce lending interest rates to support the business community and cooperatives (HTX)”.

In the collective economic sector, many cooperatives and groups are facing the pressure of lack of funds to rebuild production. According to a representative of Loan Hoan Aquaculture, Purchasing, Import-Export Cooperative (Loc Ha), 2023 is a year of loss for the cooperative when nearly 400 tons of commercial clams died en masse at harvest time. Meanwhile, the unit has outstanding debt of nearly 5 billion VND at banks with interest rates of 10 - 11%/year. What the cooperative is waiting for most is a strong interest rate reduction from banks to really create a "boost" for production.

Loan Hoan Aquaculture, Purchasing, Import and Export Cooperative is facing many difficulties due to both losses in production and having to pay bank interest.

According to records, not only businesses and production facilities but also the move to reduce operating interest rates from the State Bank is being "looked forward to" by the people. Ms. Tran Thi Huong (Thach Ha town) said: "We are borrowing more than 400 million VND from the bank in the medium-term package to build a new house. However, the lending interest rate is at a high level, so my family's difficulties are even more difficult because of the additional monthly interest payment costs. If the lending interest rate is reduced, we will be able to relieve some of the economic pressure."

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

Thu Phuong

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