Establishing reasonable interest rates helps businesses access capital.

On May 24th, Deputy Prime Minister Le Minh Khai chaired a meeting with ministries, agencies, and several state-owned commercial banks to discuss solutions to improve access to capital and reduce interest rates.

Deputy Prime Minister Le Minh Khai establishes a reasonable interest rate floor to support businesses in accessing capital (Figure 1). — Deputy Prime Minister Le Minh Khai emphasized: Banks and businesses "must walk the same path".

According to the State Bank of Vietnam's report on solutions to improve access to credit and reduce interest rates: as of May 16, 2023, capital mobilization by credit institutions reached over VND 12.4 million billion, an increase of 2.1% compared to the end of 2022 and an increase of 6.28% compared to the same period in 2022. Outstanding loans in the entire economy reached over VND 12.25 million billion, an increase of 2.72% compared to the end of 2022 and an increase of 9.32% compared to the same period in 2022.

Regarding interest rates, in line with the National Assembly 's policy and the Government and Prime Minister's directives on reducing lending interest rates to alleviate difficulties for the economy, businesses, and people, in March, April, and May 2023, the State Bank of Vietnam continuously adjusted the policy interest rate down three times by 0.5-1.5%.

Speaking at the meeting, Deputy Prime Minister Le Minh Khai emphasized that banks and businesses "must walk the same path." However, banks are particularly important institutions, so they must ensure the safety of the system; the operation of the monetary market must also comply with market laws…

The Deputy Prime Minister requested the State Bank of Vietnam to take into account the feedback, continue reviewing regulations and procedures, and immediately remove any subjective obstacles to best serve the borrowing needs of businesses and individuals, especially small and medium-sized enterprises.

Deputy Prime Minister Le Minh Khai establishes a reasonable interest rate floor to support businesses in accessing capital (Figure 2). — A view of the work session.

Deputy Prime Minister Le Minh Khai requested the State Bank of Vietnam to conduct a more in-depth analysis of factors related to providing credit to businesses, especially small and medium-sized enterprises; thoroughly assess the capital absorption capacity of different business groups; review policy mechanisms to amend, supplement, or propose amendments and improvements for competent authorities to consider and decide upon;…

Regarding interest rate management, while appreciating the positive actions taken by banks in responding to the Prime Minister's directives on implementing solutions to lower lending interest rates, Deputy Prime Minister Le Minh Khai requested the State Bank of Vietnam and the banking system to continue implementing solutions to reduce operating costs and lower deposit interest rates, in order to establish a reasonable interest rate level to support businesses in accessing capital, overcoming difficulties, and developing production and business.

Establishing a reasonable level for deposit interest rates is essential for appropriate lending rates. Businesses develop, and banks develop. The Deputy Prime Minister requested the State Bank of Vietnam, based on the resolutions of the Government and the Prime Minister, to continue implementing solutions to manage credit growth, interest rates, exchange rates, and connect banks and businesses; to review, improve, and create a comprehensive legal environment for credit institutions to operate openly and transparently; and to facilitate businesses' access to credit, ensuring the stability of the currency value, macroeconomic stability, exchange rates, and the safety of the commercial banking system.

Deputy Prime Minister Le Minh Khai establishes a reasonable interest rate floor to support businesses in accessing capital (Figure 3). — The Deputy Prime Minister emphasized that establishing a reasonable level for deposit interest rates is essential for ensuring appropriate lending interest rates.

Deputy Prime Minister Le Minh Khai requested the State Bank of Vietnam and relevant ministries and agencies to "respond more quickly to policy changes," providing timely information to ensure public understanding and consensus during the implementation of monetary policies; strengthening inspection and supervision, and resolutely handling cases of harassment, inconvenience, corruption, negative practices, and group interests in accordance with the law.

Ministries and agencies, in accordance with their assigned functions and tasks, especially the Ministry of Planning and Investment, will continue to research and propose policies to improve the institutional framework and create a common environment for businesses to develop and manage effectively.

Responding to the directives of Deputy Prime Minister Le Minh Khai, Deputy Governor Dao Minh Tu stated that in the coming period, the State Bank of Vietnam will continue to direct the commercial banking system to reduce operating costs in order to further lower interest rates and share profits with businesses; review and reduce various fees; create uniformity among banks; restructure debts, and "more urgently"... The State Bank of Vietnam will also amend some points of Circular 39/2016/TT-NHNN regulating lending activities of credit institutions and branches of foreign banks to customers in a way that is "more open but not lowering standards".

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