State Bank of Vietnam has decided to continue reducing interest rates of short-term loans from June 19, 2023?
- State Bank of Vietnam will continue to reduce interest rates of short-term loans from June 19, 2023?
- Compared to the maximum interest rates of short-term loans in Vietnam Dong before June 19, 2023, how much will the new interest rate reduce?
- If a customer fails to repay the agreed amount at the payment due date, what is the maximum percentage of late payment interest?
State Bank of Vietnam will continue to reduce interest rates of short-term loans from June 19, 2023?
On June 16, 2023, the State Bank of Vietnam of Vietnam has just issued Decision No. 1125/QD-NHNN in 2023 prescribing maximum interest rates of short-term loans in Vietnamese Dong granted by credit institutions and foreign bank branches to meet borrowers' funding demand in certain business sectors according to Circular No. 39/2016/TT-NHNN.
According to that, in Article 1 of Decision No. 1125/QD-NHNN in 2023, it is clear that maximum interest rates of short-term loans in Vietnamese Dong (VND) according to Clause 2 Article 13 of the Circular No. 39/2016/TT-NHNN dated December 30, 2016 are as follows:
- Credit institutions and foreign bank branches (except for People's Credit Funds and microfinance institutions) shall grant short-term loans in VND with the maximum interest rate of 4,0%/year.
- People's Credit Funds and microfinance institutions shall grant short-term loans in VND with the maximum interest rate of 5,0%/year.
At the same time, Article 2 of Decision No. 1125/QD-NHNN in 2023 stipulates that this interest rate will take effect from June 19, 2023.
State Bank of Vietnam has decided to continue reducing interest rates of short-term loans from June 19, 2023?
Compared to the maximum interest rates of short-term loans in Vietnam Dong before June 19, 2023, how much will the new interest rate reduce?
Pursuant to Article 1 of Decision No. 576/QD-NHNN in 2023 as follows:
Maximum interest rates of short-term loans in Vietnamese Dong (VND) according to Clause 2 Article 13 of the Circular No. 39/2016/TT-NHNN dated December 30, 2016 are as follows:
1. Credit institutions and foreign bank branches (except people’s credit funds and microfinance institutions) shall grant short-term loans in VND with the maximum interest rate of 4,5%/year.
2. People’s credit funds and microfinance institutions shall grant short-term loans in VND with the maximum interest rate of 5,5%/year.
At the same time, Article 1 of Decision No. 1125/QD-NHNN in 2023 stipulates as follows:
Maximum interest rates of short-term loans in Vietnamese Dong (VND) according to Clause 2 Article 13 of the Circular No. 39/2016/TT-NHNN dated December 30, 2016 are as follows:
1. Credit institutions and foreign bank branches (except for People's Credit Funds and microfinance institutions) shall grant short-term loans in VND with the maximum interest rate of 4,0%/year.
2. People's Credit Funds and microfinance institutions shall grant short-term loans in VND with the maximum interest rate of 5,0%/year.
Thus, compared with the maximum interest rates of short-term loans in Vietnam Dong before June 19, 2023, the new interest rate will be changed as follows:
- Credit institutions and foreign bank branches shall grant short-term loans in VND with the maximum interest rate of 4,0%/year, reduced from 4.5%/year to 4.0%/year (ie 0.5% of reduction)
- People's Credit Funds and microfinance institutions shall grant short-term loans in VND with the maximum interest rate of 5,0%/year, reduced from 5.5%/year to 5.0%/year (ie 0.5% of reduction).
If a customer fails to repay the agreed amount at the payment due date, what is the maximum percentage of late payment interest?
Pursuant to Article 13 of Circular No. 39/2016/TT-NHNN stipulating 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.
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3. Terms and conditions of an agreement on the interest rate shall comprise interest rate levels and methods for calculating the interest rate on a loan. Where the interest rate is not converted into %/year and/or the method for calculating the interest rate based on the actual outstanding amount of debt and time length of maintenance thereof is not applied, the loan agreement must include terms and conditions of the interest rate converted into %/year (one year is calculated as three hundred and sixty five of days) according to the actual outstanding amount of debt and time length of maintenance thereof.
4. 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:
a) 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;
b) 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;
c) 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.
5. Where the variable interest rate is applied, a credit institution and customer must enter into an agreement on principles and factors for determination of the variable interest rate, and on the date of adjustment to the loan interest rate. In cases where referring to factors for determination of the variable interest rate results in different loan interest rates, the credit institution shall apply the lowest loan interest rate.
Thus, 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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