In the context of the complicated developments of the Covid-19 pandemic causing global recession, many Governments and central banks worldwide have cut down key interest rates and introduced stimulus packages, support fiscal policies on a large scale. Implementing the directions of the Prime Minister on implementing several urgent tasks and measures to address the difficulties of the production and business establishments, as well as to ensure social security in order to cope with the Covid-19 pandemic, as stated in Directive No.11/CT- TTg dated March 4, 2020, and Decree No.41/NQ-CP dated April 9, 2020, to be in line with the macro-economic developments and the international financial markets, the State Bank of Vietnam (SBV) has decided on new adjustments to the key interest rates, which take effect from May 13, 2020, specifically as follows:
1. Decision No. 918/QD-NHNN dated May 12, 2020 on the refinancing interest rate, the rediscounting interest rate, the overnight rate for the inter-bank electronic payments, and the interest rate of loans to finance short-term balances in the clearing transactions between the SBV and the commercial banks. Accordingly, the refinancing rate is cut down from 5.0% to 4.5% p.a.; the rediscounting rate is reduced from 3.5% to 3.0% p.a.; the overnight rate for the inter-bank electronic payments and the rate of loans to finance short-term balances in the clearing transactions between the SBV and the commercial banks is lowered from 6.0% to 5.5% p.a.
2. The interest rate of bids of valuable papers through the open market operations is cut down from 3.5% to 3.0% p.a.
3. Decision No. 919/QD-NHNN dated may 12, 2020 stipulating the caps for VND mobilization interest rates applied for organizations’ and individuals’ deposits at the credit institutions and the foreign bank branches as stipulated in Circular No. 07/2014/TT-NHNN dated March 17, 2014. Accordingly, the maximum VND mobilization interest rate for demand and below 1-month terms is reduced from 0.5% p.a to 0.2% p.a.; the maximum VND mobilization interest rate for time deposits of 1-month to below 6–month terms decreases from 4.75% p.a. to 4.25% p.a.; the maximum VND mobilization interest rate for time deposits of 1-month to below 6–month terms at the People’s Credit Funds and the Micro Finance Institutions is lowered from 5.25% p.a. to 4.75% p.a.
4. Decision No. 920/QD-NHNN dated May 12, 2020 on the cap for VND short-term lending rate charged by the credit institutions and the foreign bank branches to borrowers to meet the capital demand in a number of specific fields and economic sectors in line with Circular No. 39/2016/TT-NHNN dated December 30, 2016, which is reduced from 5.5% p.a. to 5.0% p.a.; the maximum VND short-term lending rate for those areas at the People’s Credit Funds and the Micro Finance Institutions is lowered from 6.5% p.a. to 6.0% p.a.
Le Hang