Central bank lowers interest rate caps

HCMC – The State Bank of Vietnam (SBV), the country’s central bank, has once again lowered the maximum deposit interest rate for tenors below six months, the second reduction within nearly a month.

Effective from June 19, the new cap for deposits of six months or shorter will be lowered by 0.25 percentage point to 4.75% per year. The highest rate for demand deposits and those with tenors of less than one month remains unchanged at 0.5% per year.

The interest rates for overnight interbank electronic payments and compensatory lending for capital shortfall will also be reduced to 5% per year from 5.5%.

The refinancing interest rate will be adjusted from 5.0% to 4.5% per year, while the rediscount interest rate will be reduced to 3% per year from 3.5%.

Furthermore, the maximum interest rate for short-term loans in priority sectors and areas provided by People’s Credit Funds and microfinance institutions will be capped at 4% per year. The interest rate cap for short-term loans offered by these institutions will be lowered from 5.5% to 5% per year.

The SBV has revised down the maximum deposit rates three times in the first half of the year. The recent reductions aim to guide commercial banks in lowering their lending rates, according to the SBV.

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