From March 15, 2023, the State Bank of Vietnam will reduce interest rates on short-term loan denominated in Vietnamese dong to 5%/year?
- SBV lowers interest rates on short-term loan denominated in Vietnamese dong from March 15, 2023?
- On what basis is the loan interest rate between a credit institution and its customer agreed upon?
- What is the maximum percentage of late payment interest if a customer fails to fully repay the agreed amount of loan interest at the payment due date?
SBV lowers interest rates on short-term loan denominated in Vietnamese dong from March 15, 2023?
On March 14, 2023, the State Bank of Vietnam issued Decision No. 314/QD-NHNN in 2023 reducing the maximum interest rates on short-term loan denominated in Vietnamese dong of credit institutions for borrowers.
See details of Decision No. 314/QD-NHNN: Download.
Decision No. 314/QD-NHNN issued by the State Bank of Vietnam on the maximum interest rates on short-term loan denominated in Vietnamese dong of credit institutions for borrowers to meet capital needs for a number of economic sectors and fields according to the provisions of Circular No. 39/2016/TT-NHNN dated December 30, 2016.
According to that, the maximum interest rates on short-term loan denominated in Vietnamese dong of credit institutions for borrowers to meet capital needs for a number of economic sectors and fields will be reduced from 5.5%/year to 5.5%/year;
The maximum interest rates on short-term loan denominated in Vietnamese dong of People's Credit Funds and Microfinance Institutions for these capital needs decreased from 6.5%/year to 6.0%/year.
The adjustment to reduce the top of the maximum interest rates on short-term loan denominated in Vietnamese dong for priority sectors to 5.0%/year creates favorable conditions for businesses and people to access loans at a lower cost in the priority fields according to the policy of the Government.
This move of the State Bank took place after the resolution of the National Assembly, the direction of the Government, the Prime Minister, and the State Bank of Vietnam to administer monetary policy and banking operations firmly, proactively, flexibly, effectively, harmoniously, reasonably and closely with fiscal policy and other macroeconomic policies in order to contribute to controlling inflation, stabilizing the macro-economy, money market, strive to reduce loan interest rates for businesses and people to support the recovery of economic growth.
From March 15, 2023, the State Bank of Vietnam will reduce interest rates on short-term loan denominated in Vietnamese dong to 5%/year?
On what basis is the loan interest rate between a credit institution and its customer agreed upon?
Pursuant to the provisions of Clause 1, Article 13 of Circular No. 39/2016/TT-NHNN as follows:
Loan interest rate
1. A credit institution and its customer shall agree on the interest rate depending on capital demands and supplies on the market, loan demands and creditworthiness of customers, unless otherwise stipulated by the State Bank's regulations on the maximum interest rate set forth in Clause 2 of this Article.
2. A credit institution and customer shall agree on the interest rate on short-term loan denominated in Vietnamese dong but shall not allow it to exceed the maximum interest rate decided by the State Bank’s Governor over periods of time in order to meet certain demands for borrowed fund as follows:
a) Loans taken out to support the agricultural and rural development sector under regulations of the Government on credit policies for agricultural and urban development;
b) Loans taken out to implement the export business plan in accordance with the Law on Commerce and other instructional directives thereof;
c) Loans taken out to finance business activities of small and medium-sized enterprises under the Government’s regulations on support for development of small and medium-sized enterprises;
d) Loans taken out to develop ancillary industries under the Government’s regulations on development of ancillary industries;
dd) Loans taken out to finance business operations of high technology application enterprises under the provisions of the Law on High Technology and other instructional directives thereof.
Thus, a credit institution and its customer shall agree on the interest rate on short-term loan denominated in Vietnamese dong depending on capital demands and supplies on the market, loan demands and creditworthiness of customers, but shall not allow it to exceed the maximum interest rate decided by the State Bank’s Governor over periods of time in order to meet certain demands for borrowed fund as follows:
- Loans taken out to support the agricultural and rural development sector under regulations of the Government on credit policies for agricultural and urban development;
- Loans taken out to implement the export business plan in accordance with the Law on Commerce and other instructional directives thereof;
- Loans taken out to finance business activities of small and medium-sized enterprises under the Government’s regulations on support for development of small and medium-sized enterprises;
- Loans taken out to develop ancillary industries under the Government’s regulations on development of ancillary industries;
- Loans taken out to finance business operations of high technology application enterprises under the provisions of the Law on High Technology and other instructional directives thereof.
What is the maximum percentage of late payment interest if a customer fails to fully repay the agreed amount of loan interest at the payment due date?
Pursuant to Clause 4, Article 13 of Circular No. 39/2016/TT-NHNN, if a customer fails to repay or fully repay the agreed amount of loan principal and/or interest at the payment due date, the customer shall be obliged to repay loan interest as prescribed hereunder:
- The amount of interest on principal is charged at the agreed interest rate in proportion to the period during which repayment of that principal due has not been made;
- If a customer fails to make due payment of interest as prescribed by Point a of this Clause, that customer must pay late payment interest charged at the interest rate agreed upon between the credit institution and customer which is not allowed to exceed 10%/year interest rate on the outstanding balance of late payment interest in proportion to the period of late payment;
- Where a debt has become delinquent, the customer owing a delinquent debt must pay interest on the outstanding amount of principal which is overdue in proportion to the period of late payment for which the interest rate charged is not allowed to exceed 150% of the interest rate charged on due repayment that is determined upon the date of such debt becoming delinquent.
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