Central bank to 'take measures' against lenders that raise interest rates

Central bank governor Nguyen Thi Hong said in a statement Thursday that banks need to reduce their expenses and administrative procedures to create room for lowering loan interest rates.

He said that credit should be prioritized for the rural agriculture, exports, investment and consumer goods. Loans should go to small and medium-sized enterprises, supporting industries and high-tech companies.

The central bank had earlier this month required banks to make weekly reports concerning their adjustments on deposit and loan interest rates.

Deposit interest rates at banks surged to as much as 12% per year in the first two weeks of this month, which pushed loan interest rates up to 15-16% a year for individual customers and 11-12% for businesses.

After a meeting with the Vietnam Banks Association (VNBA) last week, banks lowered their deposit interest rates to 9.5% per annum.

The rate cuts came after banks agreed to a VNBA proposal to bring deposit interest rates down in order to reduce lending interest rates and provide more businesses with access to credit to help boost Vietnam's post-Covid economic recovery.

The SBV also ordered banks to tightly control credit on sectors with underlying risks such as stocks and property investment.