Customers conduct transactions at the Viet Nam Bank for Agriculture and Rural Development in Bac Ninh Province. Rates have been slashed by up to 0.5 percentage points from today. — VNA/VNS Photo Thai Hung

The State Bank of Viet Nam on Tuesday decided to slash many rates by up to 0.5 percentage points for the second time in 30 days in a bid to get the economy back on track after the COVID-19 pandemic.

The rate cuts take effect today (May 13).

Under Decision No 918/QD-NHNN, the refinance rate was cut from five per cent per year to 4.5 per cent and the rediscount rate from 3.5 per cent to 3 per cent. In addition, overnight lending rates for electronic interbank payments and loans to offset capital shortages in clearance between the central bank and domestic banks were cut from 6 per cent to 5.5 per cent per year.

The offering rate for valuable papers through the open market was reduced from 3.5 per cent to 3 per cent per year.

On the same day, the central bank also issued Decision No 919/QD-NHNN about the maximum rates for deposits in Vietnamese dong at credit institutions and foreign banks.

Accordingly, the rates for demand deposits and deposits with terms of one month or less were cut from 0.5 per cent per year to 0.2 per cent. For deposits with terms from one month to less than six months, the rate was cut from 4.75 per cent to 4.25 per cent, and from 5.25 per cent to 4.75 per cent for deposits with terms from one month to less than six months at micro-finance institutions and public credit funds.

Under Decision No 920/QD-NHNN, lending rates for economic sectors regulated in Circular No 39/2016/TT-NHNN were also reduced. The maximum lending rate for short-term loans in Vietnamese dong was slashed from 5.5 per cent per year to 5 per cent, while the rate for short-term loans provided by public credit funds and micro-finance insitutions were cut from 6.5 per cent to 6 per cent.

The cuts aim to aid the country's recovery as the COVID-19 pandemic continues to hit the global economy forcing many central banks to cut rates and launch unprecedented stimulus packages to prop up weakening domestic economies and global markets.

On March 16, the State Bank of Viet Nam also cut a series of rates by up to 0.5 percentage points which took effect from March 17.

Governor of the State Bank of Viet Nam Le Minh Hung met with Prime Minister Nguyen Xuan Phuc and the business community last Saturday and said that efforts would be made to ensure adequate capital for the economy.

Hung also added that the central bank might consider allowing raising credit growth targets for credit institutions from the plan of 14 per cent set at the beginning of this year.

The central bank’s statistics showed that as of April 28, credit growth had risen 1.32 per cent since the end of 2019. — VNS