Year-end is usually an important time when businesses are in very desperate need of capital to increase investment scales, conduct marketing campaigns, and offer salaries and Tet bonuses to their employees. Fully aware of this fact, many Vietnamese commercial banks nationwide have lowered their lending interest rates for their Vietnamese dong loans. Such a much-hailed move aims to help businesses run their production and trade operations in a smoother way in light of globally complicated COVID-19 crisis.

The bank interest rate reduction aims to support businesses at year-end when the demand for capital increases. In the photo are workers at the Da Nang Rubber JSC.

Director of the Da Nang-based An Phu Duong Farm Company Limited Hien Tu eagerly said his company accessed bank loans offered at low interest rates to make the timely storage of goods for supplies at the upcoming Tet Festival. He highly lauded the interest rate cut for partly assisting businesses in reducing their input costs, thereby enhancing their competitiveness.

In mid-December, Vietcombank announced to reduce lending interest rates to support businesses across Viet Nam. This is the fifth time that the bank has cut its interest rates since the beginning of 2020.

A lending interest rate cut of 1% is now applied on Vietcombank-offered loans for current and new corporate borrowers from 15 December 2020 to 15 March 2021, Director of the Da Nang Branch of Vietcombank Nguyen Quang Viet said.

In particular, projects which prove its high effectiveness are totally eligible to the minimum interest rate for short-term loans at at least 6% per annum. Of special note, this interest rate reduction is not applicable to loans benefiting from the current Vietcombank's preferential interest rate policies.

Besides, Vietcombank has officially implemented restructuring loan repayment period and keeping the debt group for customers affected by the coronavirus crisis.

Like Vietcombank, many other banks have also slashed interest rates in tandem with launching preferential credit packages for businesses at the end of the year.

BIDV has just lowered interest rates for the third time on loans for its individual customers. Accordingly, interest rates are fixed at 5% or 5.5% per annum, depending on types of loans.

Agribank has offered many preferential credit packages for different its potential corporate borrowers. Specifically, small and medium-sized enterprises now have the chance to access a preferential credit package worth 30,000 billion VND in total with short-term interest rates from 4% per annum, and medium and long terms from 7.5% per annum provided the disbursement must run for 6 – 12 months starting from 1 October 2020.

Previously, Agribank had extended repayment deadlines and cut interest rate for debts totaling nearly 30,000 VND for nearly 15,000 customers facing COVID-19 pandemic-sparked difficulties.

Domestic commercial banks are reducing their lending rates in December so that businesses can access more preferential loans. Transaction activities are seen at the Da Nang branch of Vietcombank in this illustration.

Director of the city-based Dinco Construction Engineering JSC Le Truong Ky expressed his joy at seeing his business’s bank loans enjoy an interest rate cut of 0.5 - 1% per annum. In contrast to previously years, 2020 is witnessing a plunge in lending interest rates at year-end, a positive signal to supplement the corporate capital.

In addition to the lowering of lending interest rates, the expansion of loan packages by domestic commercial banks in terms of both sizes and terms, really enable businesses to secure an easier access to preferential credits enhance their production and business activities.

Since beginning of 2020, the State Bank of Viet Nam (SBV) has cut the benchmark  interest rates thrice with a total reduction of 1.5 -2% per annum in a bid to facilitate credit institutions nationwide to access more affordable capital from the SBV, hereby enabling them to improve liquidity and keep market interest rates stable.

The refinancing interest rate has been cut to 4% from 6% per annum, while the rediscount interest rate has dropped to 2.5% from 4% per annum

The overnight electronic interbank rate and rate of loans to offset capital shortage in clearance between the SBV and credit institutions has dipped to 5% from 7% per annum

Data publised by Da Nang Department of Statistics show that since the start of this year till 30 November, the total mobilised capital of credit institutions in Da Nang has reached 138,500 billion VND, up by 6.9%, compared to the same period last year.

Outstanding loans recorded from all economic sectors reached 184,500 billion in total, up by 7.8% versus the year-ago period.

By MAI QUE – Translated by A.T