The State Bank of Viet Nam yesterday, May 31, announced that it planned to keep the prime interest rate unchanged at 8 per cent for at least one month.

The interest rate for refinance and electronic payment on the interbank market is 8 per cent, while the discount rate will be unchanged at 6 per cent. Meanwhile, the central bank is continuing to allow banks to negotiate commercial interest rates.

In a bid to stabilise the monetary market, Nguyen Van Giau, the central bank’s governor, said several measures would be applied to support banks unable to comply with the Government’s direction to cut lending interest rates to no more than 12 per cent per year to help businesses access credit.

Meanwhile, market pressures are continuing to push rates upwards and a number of banks have been forced to raise interest rates to avoid losses and boost profits.

"In the middle of last month, lending interest rates averaged 13.3 per cent per year. However, under new Government directions, I think we need time to cut rates," Giau told reporters late last week.

The central bank is investigating banks that are offering more than 12 per cent per annum on deposits, while the Viet Nam Banks Association (VNBA) is encouraging members to stabilise interest rates.

"The State Bank not only checks interest rates but also thoroughly investigates what they are doing," Giau said. "The chaos in the market has been caused by 13 small banks that have shifted from rural to urban models."

The governor said it was crucial to lower the consumer price index to cut interest rates.

According to statistics from the State Bank, credit growth in May was 1.7-1.86 per cent. The growth rate for the first five months of the year was about 8 per cent. Coupled with credit from budget and State treasury notes, the economy’s total credit growth was about 10 per cent.

"In comparison with the target of 25 per cent for the entire year, that rate seems rather low. However, the central bank has measures to ensure the economy has sufficient capital," he said.

Outstanding property loans reached VND192 trillion (US$10.16 billion), up 4.54 per cent on the same period last year, while loans for securities was VND14 trillion ($740 million), up 13.6 per cent.

Meanwhile, consumer loans reached VND122 trillion ($6.45 billion), nearly the same as the same period last year.

Rol.vn - Source: Vietnam Net