Speaking at the meeting of the State Bank of Vietnam (SBV) in the afternoon of March 12th, the SBV’s deputy Governor Dao Minh Ty said that in addition to the recent solutions, the agency is studying and will soon make a decision on operating rates in the near future, likely a reduction.
According to deputy Governor Tu, reducing operating rate is a policy and solution to help credit institutions (CIs) have abundant liquidity and better support businesses. Tu did not specify the time of the decision, but revealed that it will soon be launched with a relatively positive reduction level.
Around the world, many central banks of many countries have been considering cutting interest rates in response to the impact of the Covid-19 epidemic on their economies. On March 3rd 2020, the US Federal Reserves (Fed) unexpectedly lowered the basic interest rate by 0.5 percent per annum to one 1.25 percent without waiting for the official meeting to be held on March 17th 18th. The main reason given by the Fed is the concerns about the negative impact of the Covid-19 epidemic on the US and global economy.
On March 12th, the SBV issued a Circular regulating the restructuring of loan repayment term, exemption and reduction of lending interest rates to support business and people affected by Covid-19. This is considered an important document for commercial banks to have specific grounds to support and meet the legitimate needs of customers in this difficult period. The Circular takes effect on March 13th.
The Circular stipulates that the debts which are entitled for term restructuring is the amount of principal and/or interest (including the balance of the debts within the scope of Decree 55/ND-CP dated June 9th 2015 of the government on the credit policy for agriculture and rural development (amended and supplemented) meet the following conditions:
a. Arising from lending activities, financial leasing;
b. The obligation to repay the principal and/or interest incurs during the period from January 23rd 2020 to the next day after three months from the date the prime minister announces the end of the Covid-19 epidemic;
c. Customers are unable to pay the loan principal and/or interest rate on time due to a decrease in income due to the Covid-19 epidemic.
