Central bank asks lenders to lower lending rates by 1.5-2%

As part of the initiative to support businesses and individuals in their recovery and development of production and business, the regulator has sent a document to local credit institutions and foreign banks asking them to continue adopting measures to cut interest rates.

Additionally, the SBV mandates that credit institutions declare their intention to lower lending interest rates in 2023 for both new and outstanding loans by August 25.

Additionally, they were required to provide a report to the State Bank by January 8, 2024, detailing how the introduction of lower lending interest rates in 2023 affected both new loans and outstanding loans.

Prior to this, Prime Minister Pham Minh Chinh requested the SBV in Resolution No. 105/NQ-CP of the Government's regular meeting in June 2023 to continue lowering interest rates, particularly lowering lending interest rates (striving to lower at least about 1,5%–2% to study and apply for both new and outstanding loans).

According to experts, Vietnam still has high loan interest rates when compared to the global average. In particular in this challenging environment, this is one of the key reasons why firms don't want to borrow money from banks, which results in very little credit growth in the first half of the year.

According to economist Le Xuan Nghia, interest rates have to be 2% higher than the rate of inflation. The interest rate for a 12-month period should be 6% per year, assuming an inflation rate of 4%.