Government calls for further interest rates reduction

By Phuong Dung   January 8, 2024 | 04:59 pm PT
Government calls for further interest rates reduction
An employee carries Vietnamese banknotes at a bank in Ho Chi Minh City. Photo by VnExpress/Thanh Tung
The government has directed banks to lower costs and further reduce loan interest rates in an effort to expand credit access.

Despite a decrease of 2 percentage points in loan interest rates from the previous year, Vietnam's credit growth at 13.71% fell short of the annual target range of 14-15%.

The government is now pressing banks to further reduce rates to stimulate economic capital flow and combat predatory lending practices.

Police in the central province of Nghe An recently busted a usury ring of nearly VND20 billion ($821,524) by charging interest rates of up to 2,400% a year.

Another ring that demanded 550% a year was also busted earlier this year in Ho Chi Minh City. Thousands of similar cases have been uncovered in recent years.

Throughout 2023, banks have slashed interest rates as a response to prevailing economic headwinds, a move that contrasts sharply with the latter half of 2022. Vietcombank, for example, has set its one-month interest rate to an all-time low of 1.9% per annum and its 12-month term deposit rate to 4.8%.

This is in stark contrast to the situation in late 2022 when banks were elevating their deposit interest rates to between 11-12% annually for 12-month deposits.

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