Hanoi (VNA) – The State Bank of Vietnam (SBV) hasdecided to reduce regulatory interest rates from June 19, the fourth cut in arow since mid-March in efforts to aid economic recovery.

OnJune 16, the central bank issued Decision No 1123/QD-NHNN adjusting the refunding interest rate, rediscount interest rate, overnightlending rate in interbank electronic payments, and interest rate for loans to offset capital shortages inclearance between the SBV and credit institutions. 

Accordingly,the overnight lending rate for interbankelectronic payments and the interestrate for loans to offset capital shortages in clearance between the SBV and creditinstitutions will be brought down from 5.5% per year to 5% per year, the refunding interest rate from 5% per year to 4.5% peryear, and the rediscount interest rate from 3.5% per year to 3% per year.

The SBV also issued Decision No 1124/QD-NHNN, which regulatesthe maximum interest rates for Vietnam dong (VND) deposits of organisationsand individuals at credit institutions.

In particular, the maximum rate for non-term and under-one-monthdeposits in VND will be kept at 0.5% per year, while the ceiling interest rates for deposits withone-month to under-six-month terms is cut down from 5% per year to 4.75% per year, and for deposits at people’s credit funds and micro-financial institutions - from 5.5%per year to 5.25% per year. Meanwhile, interest rates for deposits of a six-monthterm or over will be set by credit institutions on the basis of capital supplyand demand in the market.

According to another newly issued decision, No 1125/QD-NHNN, themaximum interest rate for short-term loans in VND for some economicsectors will be decreased from 4.5% per year to 4% per year. For loansprovided for those sectors by people’s credit funds and micro-financialinstitutions, the ceiling interest rate will be reduced from 5.5% per year to 5% per year.

The SBV said under the National Assembly’s resolution and theGovernment and Prime Minister’s directions, it has been governing the monetarypolicy and banking activities in a firm, proactive, flexible, timely andeffective manner, and harmoniously combining the monetary policy with otherfiscal and macro-economic policies so as to cool down lending interest rates tosupport economic recovery and development.

The SBV earlier reduced regulatory interestrates on March 14, March 31, andMay 23.

Experts held that the cut will pave the way for interestrates to go down, helping businesses reduce their capital costs and improve theirperformance while people can spend more on consumption. This will helpstimulate economic growth and increase orders placed on businesses./.