State Bank of Vietnam to continue to reduce the interest rates in Vietnam from May 25, 2023

State Bank of Vietnam to continue to reduce the interest rates in Vietnam from May 25, 2023 (Image from the Internet)

Reduction of refinancing interest rate to 5.0%/year from May 25, 2023

The State Bank of Vietnam issued Decision 950/QD-NHNN on May 23, 2023, regarding refinancing interest rates, rediscount interest rates, overnight lending rates in interbank electronic payments, and capital deficit compensation lending rates in clearing settlements of the State Bank of Vietnam for credit institutions and foreign bank branches.

Specifically, from May 25, 2023, the related key interest rates will be adjusted as follows:

- The refinancing interest rate is 5.0%/year.

(Currently, the refinancing interest rate is 5.5%/year, which means it has been reduced by 0.5% compared to Decision 574/QD-NHNN dated March 31, 2023)

- The rediscount interest rate is 3.5%/year.

(Remains unchanged compared to Decision 574/QD-NHNN dated March 31, 2023)

- The overnight lending rate in interbank electronic payments and capital deficit compensation lending rate in clearing settlements of the State Bank for credit institutions is 5.5%/year.

(Currently, according to Decision 574/QD-NHNN dated March 31, 2023, the overnight lending rate in interbank electronic payments and capital deficit compensation lending rate in clearing settlements of the State Bank ò Vietnam for credit institutions is 6%/year)

Decision 950/QD-NHNN is effective from May 25, 2023, and replaces Decision 574/QD-NHNN dated March 31, 2023.

State Bank of Vietnam to reduce the maximum interest rate for deposits in Vietnamese Dong from May 25, 2023

On May 23, 2023, the State Bank of Vietnam issued Decision 951/QD-NHNN regarding the maximum interest rates for deposits in Vietnamese Dong of organizations and individuals at credit institutions and foreign bank branches as prescribed in Circular 07/2014/TT-NHNN.

The maximum interest rates for deposits in Vietnamese Dong from May 25, 2023, are as follows:

- The maximum interest rate for non-term and term deposits of less than 1 month is 0.5%/year.

- The maximum interest rate for term deposits from 1 month to less than 6 months is 5.0%/year.

(Currently, according to Decision 575/QD-NHNN, the maximum interest rate for term deposits from 1 month to less than 6 months is 5.5%/year, which means it has been reduced by 0.5%/year)

- The maximum interest rate for deposits in Vietnamese Dong at people's credit funds and microfinance institutions is 5.5%/year.

(Reduced by 0.5%/year compared to Decision 575/QD-NHNN)

Note: For term deposits in Vietnamese Dong of organizations and individuals at credit institutions and foreign bank branches arising before May 25, 2023, the established terms shall continue to apply until maturity;

If the agreed term expires and the organization or individual does not reclaim the deposit, the credit institution or foreign bank branch shall apply the deposit interest rate as prescribed in Decision 575/QD-NHNN.

Decision 951/QD-NHNN is effective from May 25, 2023, and replaces Decision 575/QD-NHNN.

* Some regulations on deposit interest rates according to Circular 07/2014/TT-NHNN

- Credit institutions and foreign bank branches shall apply deposit interest rates in Vietnamese Dong of organizations and individuals not exceeding the maximum interest rates for non-term deposits, term deposits of less than 1 month, and term deposits from 1 month to less than 6 months as decided by the Governor of the State Bank of Vietnam from time to time and for each type of credit institution.

- Credit institutions shall apply Vietnamese Dong interest rates for term deposits of 6 months or more of organizations and individuals based on the market supply-demand for capital.

- Deposits include non-term deposits, term deposits, savings deposits, deposit certificates, promissory notes, bills, bonds, and other forms of receiving deposits from organizations (excluding credit institutions) and individuals as prescribed in Clause 13, Article 4 of the Law on Credit Institutions 2010.

- The maximum interest rate for deposits prescribed in Circular 07/2014/TT-NHNN includes promotion costs in any form, applies to end-term interest payment methods, and other interest payment methods converted to the end-term interest payment method.

- Credit institutions shall publicly list deposit interest rates in Vietnamese Dong at deposit-receiving locations as prescribed by the State Bank of Vietnam.

It is strictly prohibited for credit institutions to offer promotions in any form (by money, interest rate, or other forms) that do not comply with the provisions of law and Circular 07/2014/TT-NHNN.

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