The interest rate that Vietnamese banks charge each other for under-12 month term loans in dong and US dollars dropped last week by up to 1.17 percentage points.— File Photo

HA NOI (Biz Hub)— The interest rate that Vietnamese banks charge each other for under-12 month term loans in dong and US dollars dropped last week by up to 1.17 percentage points.

The change came amid a redundancy of cash in the banking system and at a time where finding a sound borrower is still challenging.

The State Bank of Viet Nam's report, released yesterday, showed that loan terms for both dong and the greenback were mostly overnight and one week, totalling VND64.98 trillion (US$3.26 billion) and VND30.1 trillion ($1.4 billion), respectively.

The overnight rate for the dong was 2.42 per cent, one-to-three week loans for 2.84-3.82 per cent, one-to-six month loans for 4.17-6.34 per cent and 8.72 per cent for 12 months.

Loans in US dollars were charged 0.19 per cent for an overnight term, 0.37-0.27 per cent for one to three weeks, 0.44-1.59 per cent for one to six months, and 2.8 per cent for 12 months.

Interest rates that banks can charge their customers have also been slashed to 7-11.5 per cent, 3-5 percentage points against last month, to stimulate businesses and achieve low and stable inflation.

However, outstanding loans of the system are not expected to grow because of the current economic turmoil.

While large companies can access credit easily despite the sluggish consumer market, many small- and medium-sized enterprises don't have assets as a mortgage to borrow money. — VNS