The State Bank of Vietnam is willing to provide liquidity to credit institutions to sustain their payment capability, especially at the end of the year when demand for funds often peaks, its deputy governor Dao Minh Tu has said.

“The central bank will ensure liquidity for all commercial banks, including small ones, under all circumstances,” Tu said at a meeting last week.

The current monetary policy ensures capital supply, liquidity and inflation control both this year and next year, he said.

Tu has ordered credit institutions to ensure operational safety indicators comply with the SBV’s stipulations.

The central bank recently raised the credit growth cap for banks by 2 percentage points from its earlier target of 14 per cent, allowing banks to lend an additional VND240 trillion (US$9.7 billion).

The move comes after property and financial markets faced a credit crunch in recent weeks following interest rate hikes.

Tu said credit institutions meeting liquidity requirements and offering low credit interest rates are prioritised for the increase in credit caps.

Sixteen commercial banks have committed to reduce interest by 0.5-3 percentage points per year with the amount of about VND3.5 trillion to support businesses. They included the big four - Agribank, Vietcombank, VietinBank and BIDV - and some smaller ones such as SHB, HDBank and SeABank.

BIDV has lowered interest rates by 0.5-2.5 percentage points for priority borrowers, including those affected by COVID-19, in foreign trade, foreign businesses, and retail lenders.

Vietcombank has slashed interest rates by 1 percentage point for 175,000 borrowers with total loans of VND500 trillion ($21.1 billion).

Deposit rate cap proposed

Nguyen Quoc Hung, general secretary of the Vietnam Bankers Association, said it is important to keep deposit rates low to cut lending rates.

The Vietnam Banks Association has proposed a cap not exceeding 9.5 per cent for deposits.

As of December 14, deposit rates for terms of six months to less than 12 months prevailed from 6.1 per cent to 8.3 per cent per year (some banks even offered depositors rates of up to 11 per cent for the saving of VND1 billion or more). The deposit rates have increased by about 3-4 per cent compared to the end of last year.

Prime Minister Pham Minh Chinh recently has ordered the SBV to ensure adequate capital in the banking system to foster economic recovery and growth and called on credit institutions to cut costs to be able to reduce loan interest rates.

Credit will be given to priority sectors such as consumption, investment, exports, industrial property development, and social and workers’ housing development. — VNS