Not much room for further falls of interest rates: Thanh
Although banks actively carried out reducing interest rates for old loans to under around 15 percent and gave many incentives for new customers, many enterprises, especially exporters still claimed that for a stable and sustainable development, the lending interest rate needs to be reduced to under 10%/year.
Not long ago, Nguyen Van Binh, governor of the State Bank of Vietnam (SBV) has recently said that, if the inflation rate this year is controlled at under 7%, at the end of 2012 the deposit interest rate could decrease to 8%/year and lending interest rate at about 10%/year.
However, about further falls of interest rate, the local newswire Dien Dan Doanh Nghiep (Business Forum) on August 2, 2012 quoted Vo Tri Thanh, deputy director of Central Institute for Economic Management (CIEM) as saying that there is not much room left for SBV to further reduce interest rates because the difference between lending and mobilising interest rates of credit institutions was not so high as to be seen.
Thanh also said that with a too high bad debt rate in banking history like that, credit institutions find it difficult to pull down the gap between two kinds of interest to a low rate as expected.
Meanwhile, the local newswire Bao dau tu (Vietnam Investment Review) on August 01, 2012, quoted member of National Financial and Monetary Policy Advisory Council (NFMPAC) as saying that the lending interest rate can be reduced to 10 percent per year if macro economy is stabilised well and inflation is controlled.
The reason is that when the deposit interest rate cap decreases deeply, other investment channels could become more attractive for those who have idle money. Especially, in the situation of low real estate price presently, people will tend to withdraw their savings to buy houses.
Tran Du Lich, member of NFMPAC also said that by the end of 2012, inflation rate could decrease to 8 percent but the deposit interest rate at 9%/year is suitable and it should not be further cut.
Category: Finance
