In order to contribute to managing inflation, stabilizing macro economy, and supporting for business and economic growth, Governor of the State Bank of Vietnam (SBV) decided to reduce by 0.25 percentage points for annual refinancing rate (from 6.5%p.a to 6.25%p.a), rediscount rate (form 4.5%p.a to 4.25%p.a), overnight electronic interbank rate and rate of loans to offset capital shortage in clearance between the SBV and credit institutions (from 7.5%p.a to 7.25% p.a) from July 10, 2017.
In addition, the maximum short-term interest rate for loans in dong currency (VND) by credit institutions in some sectors would also be cut by 0.5 percentage points from July 10.
In order to implement the Resolution of National Assembly and Government on solutions on socio – economic development for 2017, the SBV has conducted several synchronous measures to accelerate the liquidity of credit institutions to supply sufficient demand of capital for the economy, stabilize interest rates, foreign exchange and forex market, contributing to curb inflation, maintaining macro economy and support for economic growth at an appropriate level.
The Government and Prime Minister also instructed relevant ministries and industries to implement synchronous solutions to accelerate economic growth in line with the set objective. On the basis of assessing macroeconomic situation and money market, SBV Governor issued decision to cut official rates by 0.25 percentage point p.a; reduce annual maximum short-term interest rate in VND by credit institutions by 0.5 percentage point to meet capital demand of certain sectors and industries.
Specifically, Decision No.1424/QĐ-NHNN dated July 7th 2017 on reducing by 0.25 percentage points for official interest rates including annual refinancing rate (from 6.5%p.a to 6.25%p.a), rediscount rate (form 4.5%p.a to 4.25%p.a), overnight electronic interbank rate and rate of loans to offset capital shortage in clearance between the SBV and credit institutions (from 7.5%p.a to 7.25% p.a).
Decision No.1425/QĐ-NHNN dated July 7th 2017 on reducing maximum short-term interest rate for loans in VND provided by credit institutions by 0.5 percentage points applied to some sectors and industries as stipulated in Circular No.39/2016/TT-NHNN dated December 30, 2016. Accordingly, maximum short-term interest rate will be reduced from 7% p.a to 6.5% p.a for loans in VND provided by credit institutions to meet the capital demand of agricultural production and rural areas, export, supporting industry, SMEs, and high tech enterprises; Maximum short-term interest rate will be reduced from 8% p.a to 7.5% p.a for loans loans in VND provided by People Credit Funds and Micro finance institutions to meet the capital demand of agricultural production and rural areas, export, supporting industry, SMEs, and high tech enterprises.
Concurrently, for the aim of effectively implementing the Guidance of Government and Prime Minister, SBV Governor required credit institutions, foreign bank branches, SBV municipal branches to decisively conduct the solutions on monetary policy and banking operations in line with Directive No 01/CT-NHNN dated January 10, 2017 of the SBV; to strictly comply credit solutions defined in Document No.4060/NHNN-TTGSNH dated May 29, 2017 and to concentrate on further solutions as follows:
For credit institutions and foreign bank branches:
- To strictly implement regulations and guidance of the SBV on saving interest rates applied to organizations and private depositors; to strictly comply the guidance on short term lending rates applied to borrowing customers to effectively supply capital to certain sectors and industries.
- To proactively balance between capital mobilization resource and capital usage to ensure the liquidity; efficiently implement various solutions to reduce operational cost, improve business effectiveness to create foundation for cutting lending rates of priority sectors, production and business; to apply proper fees to share difficulties with customers.
For SBV municipal branches
- Proactively guide and direct local credit institutions to synchronous and effectively conduct SBV solutions on monetary policies, credit and banking operations
- Accelerating banking supervision and inspection of credit institutions in the locations on their conduction of monetary policy and credit solutions, and banking performance.
SBV Governor requires General Directors (Directors) of Credit institutions, foreign bank branches; Directors of SBV municipal branches are responsible for guidance and monitoring the implementation of this Document and make periodical report on implementation results as well as the application of new interest rate mechanism to SBV starting from report period of July 2017.
VMH