Central bank to push commercial banks against interest rate hikes on loans

By Minh Son September 23, 2022 | 07:08 PT

Dao Minh Tu, deputy governor of the State Bank of Vietnam, during a press briefing on September 23, 2022. Photo courtesy of SBV

The State Bank of Vietnam will encourage commercial banks to cut costs to keep interest rates on loans unchanged, a deputy governor said on Friday.

The bank would not regulate interest rates on loans as they depend on negotiations between lenders and their customers, Deputy Governor Dao Minh Tu said.

On Thursday, for the first time in two years, the central bank increased a series of statutory interest rates, including deposit, rediscount and redemption rates. On Friday, commercial banks announced new deposit interest rates.

Higher deposit interest rates will help banks increase their liquidity, but usually also lead to higher loan interest rates. Earlier this year, the central bank pledged to cut interest rates on loans over the 2022-2023 period.

Tu said the central bank raised statutory interest rates to control inflation, stabilize the exchange rate and foreign exchange markets, and ensure the safety of the banking system.

He has so far kept credit growth target at around 14% this year, but there will be adjustments based on actual situations, he added.

By mid-September, Vietnam’s credit was up 10.47% from the end of 2021 and 17.19% from the same period last year. Bank loans were mainly used for production and business.

Comments are closed.