Banks to support interest rates for borrowers

VietBusinessNews - The State Bank of Vietnam on February 4 and 5 will hold a meeting on credit activities and instructing implementation of Decision 131/QD-TTg of the prime minister on supporting interest rates for bank loan borrowers who will use loans for business and production activities in HCM City and Hanoi. The central bank on February 3 will issue a circular instructing compensation of interest rates for clients.

PhD. Cao Sy Kiem, member of the National Monetary Policy Consultancy Council, said that Decision 131 clarifies the policy and ways of interest rate compensations. Accordingly, commercial banks will meet demand on working capital for business and production in accordance with the normal credit mechanism. Upon collecting loan interest from clients, commercial banks will deduct interest which is equal to 4% a year of actual loans based on the real term incurred in 2009. After that, the central bank will refund this deducted amount to commercial banks. Thus, with the ceiling lending interest rate of 10.5% a year, the maximum actual interest rate that clients have to pay will be 6.5%. The lending time that is entitled to the interest rate compensation is eight months for credit signed and disbursed between February 1 and December 31, 2009. Total amount set aside for credit support is about 17 trillion dong.

Under Decision 131, commercial banks are required to submit applications and plans on supporting interest rates to the central bank within the first 10 days of February and commercial banks have to immediately support interest rates for borrowers. However, there has not yet been any circular instructing the decision. (NLD)