The OMO interest rate decreased from 3.5% to 3% / year, the ceiling interest rate for terms of 1 month to less than 6 months decreased from 4.75% to 4.25% / year, etc.
The State Bank of Vietnam (SBV) has just announced the reduction of operating interest rates, applicable from May 13, 2020. According to SBV, in the context of the complicated developments of COVID-19 causing the global economic depression, the governments and central banks in several nations have cut the operating rates and implemented multiple large-scale economic stimulating and fiscal assisting measures.
Implementing the guidelines and direction of the Government and the Prime Minister on implementing missions and measures aiming to tackle production and trade difficulties, ensuring social security to deal with COVID-19 in the Directive 11 / CT-TTg of March 4, 2020, and Resolution 41 / NQ-CP of April 9, 2020, and matching with the microeconomic developments and the domestic and foreign markets, the SBV has decided to adjust the interest rates. The decision will be applicable on 13th May 2020.
The Bank has issued Decision No. 918 / QD-NHNN dated 12th May 2020 on the refinancing, rediscounting, and overnight lending interest rates in inter-bank electronic payment and lending to compensate for the capital shortage in inter-bank electronic payment and lending to make up for the shortage of capital in SBV's clearing for banks. Accordingly, the refinancing interest rate will be reduced from 5.0% / year to 4.5% / year; the rediscount interest rate will be reduced from 3.5% / year to 3.0% / year; the overnight lending interest rate in inter-bank electronic payment and lending to compensate for capital shortage in clearing from the SBV to banks will decrease from 6.0% / year to 5.5% / year.
The offering interest rate of valuable papers through the open market operation (OMO interest rate) will decrease from 3.5% / year to 3.0% / year.
The State Bank has also issued 3. Decision No. 919 / QD-NHNN dated 12th May 2020 on the maximum interest rate for VND deposits of organizations and individuals at foreign credit institutions and branches of banks in accordance with the provisions of Circular No. 07/2014 / TT-NHNN dated 17th March 2014. Accordingly, the maximum interest rate for non-term deposits and deposits with terms of less than 1 month will decrease from 0.5% / year to 0.2% / year; The maximum interest rate for deposits with terms from 1 to less than 6 months will drop from 4.75% / year to 4.25% / year; The maximum interest rate for deposits with terms from 1 to less than 6 months at People's Credit Funds (PCF) and Microfinance Institutions (MFIs) will decrease from 5.25% / year to 4.75%.
According to Decision No. 920 / QD-NHNN dated 12th May 2020 on the maximum short-term lending interest rate in VND of credit institutions for borrowers looking to meet capital needs to serve a number of sectors and economic sectors in accordance with the provisions of Circular No. 39/2016 / TT-NHNN dated 30th December 2016, this interest rate will decrease from 5.5% / year to 5.0% / year; The maximum short-term loan interest rate in VND of PCFs and MFIs for these funds needs will drop from 6.5% / year to 6.0% / year.
This has been the second reduction in interest rates in less than 2 months. Earlier, on 17th March, the SBV also sharply reduced the interest rates by a maximum of up to 1 percentage point. The decisions have just been published this afternoon 12/5 after the Prime Minister's Meeting with businesses on 9th May when SBV Governor Le Minh Hung made a speech remarks that "In the coming time, the SBV will consider to further reduce the operating rates such as refinancing rate, discount rate, open market interest rate, etc.; drastically direct the credit institutions to reduce costs and profits to reduce the sustainable lending rates”.
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