Vietnam orders lending rates lowered by 1.5-2 percentage points

Vietnam’s central bank has been directed to bring down borrowing rates by 1.5-2 percentage points for priority sectors, production and business activities. Deputy Prime Minister Nguyen Van Thang issued the instruction to ease financing costs for households and enterprises.

Speaking at a monetary policy meeting, Thang said elevated rates were burdening businesses and restricting access to loans. He made the governor of the State Bank of Vietnam directly responsible for ensuring that action on rate stability, borrowing costs and banking liquidity delivers results.

Figures from the central bank put August’s average lending rate at 10.7 per cent. This represented an increase of 0.2 percentage points from July and was about 3 percentage points above the rate charged on loans disbursed a year earlier.

BIDV and Vietcombank, both state-controlled, reported averages of around 7.4-7.6 per cent. Among private-sector banks, Eximbank, KienlongBank and MBV reported rates between 8.4 per cent and 9.5 per cent.

Thang urged banks to support rate reductions by lowering expenses, speeding up digital transformation and operating more efficiently. He also required transparent rate disclosures that meet regulations and sought reasonably priced central bank refinancing for lenders taking part in the social housing loan programme.

He called for safeguards against new bad debts, especially in property, while preserving credit quality. Other instructions covered restructuring banks placed under special control, dealing with weak lenders, and tackling concealed affiliations, cross-ownership, undisclosed ownership and manipulation in banking.