What is Bank Interest Rate? What is the Current Bank Interest Rate as Regulated?
What is the Bank Interest Rate?
Currently, our country's laws do not define what a bank interest rate is. However, we can understand that a bank interest rate is the ratio between the money we deposit in the bank and the interest earned over a certain period, as determined by the bank or agreed upon between the bank and the borrower or depositor.
Based on Article 12 of the Law on the State Bank of Vietnam 2010, it is stipulated as follows:
Interest Rates
1. The State Bank announces refinancing rates, basic interest rates, and other rates to manage monetary policy and combat usury.
2. In case of abnormal monetary market developments, the State Bank regulates the interest rate mechanism applicable to relations between credit institutions with each other and with customers, as well as other credit relations.
The State Bank will announce refinancing rates, basic interest rates, and other rates to manage monetary policy and combat usury.
Additionally, Article 91 of the Law on Credit Institutions 2010 also stipulates bank interest rates as follows:
- Banks have the right to set and publicly post the interest rates on capital mobilization and service provision fees in their business activities.
- Banks and customers have the right to agree on interest rates and credit fees in the bank's activities according to legal regulations.
- In case of abnormal banking activities, to ensure the safety of the banking system, the State Bank has the right to regulate the fee and interest rate determination mechanism in the bank's business operations.
What is the bank interest rate? What is the current bank interest rate percentage?
What is the Current Bank Interest Rate?
- For the interest rate when saving
Pursuant to Decision 1729/QD-NHNN 2020 which stipulates the maximum interest rate for deposits in VND by organizations and individuals at present as follows:
- The maximum interest rate for demand deposits and term deposits under 1 month is 0.2%/year.
- The maximum interest rate for term deposits from 1 month to under 6 months is 4.0%/year; for People’s Credit Funds and Microfinance Institutions, the maximum interest rate for term deposits from 1 month to under 6 months is 4.5%/year.
- For the interest rate when the bank lends
Pursuant to Circular 39/2016/TT-NHNN regulating the loan interest rates as follows:
- Credit institutions and customers agree on loan interest rates according to market capital supply and demand, loan demand, and the customer's creditworthiness, except where the State Bank of Vietnam stipulates the maximum loan interest rates in clause 2 of this Article.
- Credit institutions and customers agree on short-term loan interest rates in VND but not exceeding the maximum loan interest rates decided by the Governor of the State Bank of Vietnam from time to time to meet some capital needs:
+ For agricultural and rural development under the Government of Vietnam's credit policies for agricultural and rural development;
+ To implement business plans for exporting goods according to the Commercial Law and its guiding documents;
+ To serve the business of small and medium enterprises as prescribed by the Government of Vietnam on supporting the development of small and medium enterprises;
+ For the development of supporting industries according to the Government of Vietnam's regulations on supporting industry development;
+ To serve the business of high-tech enterprises as stipulated in the Law on High Technology and its guiding documents.
The loan interest rate will be agreed upon by the bank and the borrower according to market capital supply and demand, loan demand, and borrower's creditworthiness. For short-term loan interest rates in VND, credit institutions and customers will negotiate but not exceed the maximum level decided by the Governor of the State Bank of Vietnam.
In Decision 1730/QD-NHNN 2020, the maximum short-term loan interest rate in VND is stipulated as follows:
- Credit institutions, foreign bank branches (except for People’s Credit Funds and Microfinance Institutions) apply a maximum short-term loan interest rate in VND of 4.5%/year.
- People’s Credit Funds and Microfinance Institutions apply a maximum short-term loan interest rate in VND of 5.5%/year.
What Conditions Must Be Met to Borrow from a Bank?
Based on Article 7 of Circular 39/2016/TT-NHNN, it stipulates as follows:
Loan Conditions
Credit institutions consider and decide to lend when the customer meets the following conditions:
1. The customer is a legal entity with civil legal capacity as prescribed by law. The customer is an individual from 18 years old with full civil act capacity as prescribed by law or from 15 to under 18 years old who is not deprived or restricted in civil act capacity as prescribed by law.
2. The loan purpose is for legitimate use.
3. There is a viable capital usage plan.
4. Has the financial capacity to repay the debt.
5. In case the customer borrows from the credit institution at the loan interest rate specified in clause 2 of Article 13 of this Circular, the customer is assessed by the credit institution as having transparent, healthy financial status.
Thus, organizations and individuals must ensure they meet all the above conditions to be eligible for bank loans.
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