As of July 17, as many as 20 credit institutions have reduced the lending interest rate to 15 percent per year for old loans, accounting for about 90 percent of the market share in credit operation of the banking industry, the local Newswire Bao Dau Tu (Vietnam Investment Review) on July 26 reported, citing Cat Quang Duong, deputy head of Credit Department under the State Bank of Vietnam (SBV), as saying.
According to Duong, other credit institutions such as foreign banks and small banks are also subject to the central bank’s policy to lower the lending interest rate to 15 percent per year for old loans.
“The purpose of lending interest rate reduction is to share difficulties with customers. In the current market context, it requires having a synchronisation, even from commercial banks as saving enterprises is also the rescue for banks” Duong stressed.
Relating to this interest rate reduction issue, leader of many banks like Asia Commercial Joint Stock Bank (ACB), Orient Commercial Joint Stock Bank (OCB) or Vietnam Development Bank (VDB) said that they cannot immediately lower the lending interest rate to 15 percent per year for all old credit contracts but they have to review and select customers.
In fact, banks will not adjust down the lending interest rate to 15 percent per year for medium and long old loans for individual customers.
Deputy director cum director of individual customer division of a HCM City-based commercial bank said that the lending interest rate reduction for old loans will lead to a considerable decline in profit of banks.