State Bank: Lending interest rates will continue to decrease

The State Bank of Vietnam has just issued a document responding to the petition of Thanh Hoa province voters sent before the 5th Session of the 15th National Assembly, transferred by the People's Petition Committee.

Accordingly, voters of Thanh Hoa province requested the State Bank to direct the banking system to reduce operating costs to continue striving to reduce lending interest rates to support and accompany businesses and people to overcome difficulties. At the same time, implement solutions to remove difficulties for businesses, especially private enterprises.

Responding to voters, the State Bank said that many monetary and credit policies have been issued by this agency and synchronously implemented programs and solutions to remove difficulties, creating favorable conditions for businesses, especially small and medium enterprises, to access capital. The State Bank has also continuously adjusted down the operating interest rates 4 times from 0.5-2 percentage points in the context of world interest rates continuing to increase and remain at high levels.

Thereby, continuing to orientate the reduction of the market lending interest rate, increasing the ability of businesses and people to access capital. The ceiling interest rate for short-term loans for some priority sectors, including small and medium enterprises, is at 4%/year.

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According to the State Bank, lending interest rates will continue to decrease in the coming time.

The State Bank also works directly with credit institutions, requiring measures to reduce deposit interest rates and cut costs, thereby creating room to reduce lending interest rates for customers; coordinates with the Vietnam Banking Association to mobilize the consensus of member banks to further reduce lending interest rates.

The State Bank has directed credit institutions to innovate processes, simplify loan procedures, develop appropriate credit programs and packages for small and medium enterprises, and improve the efficiency of appraisal and assessment of the creditworthiness of borrowers. Thereby, enhancing the ability to lend without collateral.

By the end of June 2023, the average deposit and lending interest rates of new transactions in VND of commercial banks decreased by about 1 percentage point compared to the end of 2022. Commercial banks have proactively adjusted and implemented preferential credit programs and packages to reduce lending interest rates by about 0.5-3 percentage points depending on the customer for new loans.

"Banks are committed to reducing lending rates by about 0.2-2.5 percentage points in the last 6 months of 2023, depending on the customer and sector. With the impact of policy lag and interest rate reduction commitments, it is expected that lending interest rates for the economy will continue to decrease in the coming time" - the State Bank affirmed.

To support small and medium enterprises, the State Bank also submits to competent authorities/under its authority to issue and implement specific credit programs for a number of industries and fields with many preferential mechanisms on interest rates, collateral, and specific debt handling mechanisms.

Guide and direct credit institutions to coordinate with the Credit Guarantee Fund in lending to small and medium-sized enterprises with guarantees from the Credit Guarantee Fund in localities and the Small and Medium Enterprise Development Fund to lend to this group of subjects.

By the end of June 2023, outstanding loans to businesses reached over 51% of the total outstanding loans of the economy. Of which, credit for small and medium enterprises (mostly private enterprises) reached nearly 2.3 million billion VND, an increase of nearly 3.5% compared to the end of 2022, accounting for 18.4% of the total outstanding loans of the economy.

"Credit and interest rate policies for small and medium enterprises are being fully implemented by the banking sector through many credit channels at commercial banks, preferential credit at social policy banks and credit at banks with guarantees from the Small and Medium Enterprise Guarantee Fund" - the State Bank informed.

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