New State Bank action - a basis for commercial banks to reduce lending rates

DNHN - The State Bank has decided to reduce a series of operating interest rates by 0.25 percent to 0.5 percent beginning on June 19, paving the way for commercial banks to reduce deposit and lending interest rates.

According to BIDV Training and Research Institute, expert Can Van Luc, this reduction in interest rates will assist credit institutions in gaining access to capital from the State Bank via instruments such as renewable loans. discount, refinancing, and interbank transactions. This will assist financial institutions in continuing to reduce deposit and lending rates.

In addition to bolstering credit institutions, a reduction in interest rates is expected to spur credit expansion. The State Bank's Department of Statistical Forecasting predicts that credit will increase by 4% in the second quarter and by over 13% for the entire year, although these projections are lower than the initial target. Banks will need to reduce lending rates to meet the needs of businesses to promote credit.

The State Bank also emphasized the significance of decreasing VND deposit interest rates for terms ranging from one month to less than six months. This reduces input costs for commercial banks and creates favorable conditions for lowering lending interest rates, thereby reducing financial costs for customers.

Dao Minh Tu, deputy governor of the State Bank, stated that the State Bank has operated interest rate policy flexibly, lowered operating interest rates, and instructed the Association of Commercial Banks to encourage interest rate reduction. To help businesses overcome their current difficulties, lending rates should be decreased.

This time, the credit institution's decision to reduce the interest rate cap on short-term loans in VND will make it possible for businesses and individuals to access low-cost loans, thereby supporting production and business in various industries and material sectors. This is also consistent with the government's economic growth promotion policy.

The reduction of the State Bank's operating interest rate not only confirms the trend of future interest rate reductions but also encourages credit institutions to strengthen their resolve to reduce lending interest rates. This accompanies businesses and individuals, fostering economic expansion and recovery.

Additionally, experts believe that lowering interest rates will assist businesses and borrowers in reducing financial expenses. Enterprises can raise new capital at lower interest rates, thereby increasing their debt repayment capacity, decreasing bad debt risks, lowering input costs, and facilitating corresponding output price reductions. All of these factors stimulate consumption simultaneously, generating momentum for economic growth.

PV (t/h)