Hanoi, Vietnam: Interest rates for credit extensions to clients in Vietnam from July 1, 2024

Interest rates for credit extensions to clients in Vietnam from July 1, 2024

To be specific:, in Article 12 of Circular 21/2024/TT-NHNN, the interest rates for Interest rates for credit extensions to clients in Vietnam are stipulated as follows:

• Banks and customers agree on the applicable interest rate for reimbursement and negotiation of payment letters of credit.

• The interest rate applied to overdue principal debt in the operation to reimburse and negotiate payment letters of credit is agreed upon by banks in the credit agreement but does not exceed 150% of the on-time lending rate at the time of transferring the debt to overdue.

• The interest rate applied to the amount banks pay on behalf in the operation of issuing, confirming, reimbursing letters of credit is in accordance with the credit agreement but does not exceed the highest overdue interest rate currently applied to overdue loans at that bank.

• The interest rate applied to late interest payments is agreed upon by banks in the credit agreement for the letter of credit business but does not exceed 10% per annum on the overdue interest payable corresponding to the late payment period.

• In the case the denomination for the letter of credit operation is foreign currency, the parties agree to charge interest in foreign currency or convert into Vietnamese Dong or other foreign currencies at the agreed exchange rate.

More details can be found in Circular 21/2024/TT-NHNN which takes effect from July 1, 2024.

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