The State Bank of Vietnam: To simultaneously increase interest rate by 1%/year

The State Bank of Vietnam: To simultaneously increase interest rate by 1%/year (Internet image)

The State Bank of Vietnam issued Decision 1809/QD-NHNN, Decision 1812/QD-NHNN, Decision 1813/QD-NHNN which stipulate a simultaneous 1%/year increase in the interest rates as follows:

1.  To increase refinancing rate, discount rate from October 25, 2022 in Vietnam

Decision 1809/QD-NHNN dated October 24, 2022 stipulates the refinancing rate, rediscount rate, overnight rate for inter-bank electronic payment, and interest rate for loans for covering the capital shortfall regarding clearing of the state bank of vietnam for credit institutions and branches of foreign banks.

In which, the SBV adjusted the refinancing rates and discount rates specifically as follows:

- The refinancing rate is 6.0%/year.

(Previously, in Decision 1606/QD-NHNN dated September 22, 2022, the refinancing rate was 5%/year.)

- The discount rate is 4.5%/year.

(Previously, the discount rate was 3.5%/year)

In addition, the interest rate for overnight loans in interbank electronic payments and loans to cover capital shortfalls in clearing payments by the SBV for banks increased to 7.0%/year.

(Previously, Overnight rate for inter-bank electronic payment and interest rate for loans for covering the capital shortfall regarding clearing of SBV for credit institutions and branches of foreign banks was 6.0%/year).

2. 1% increase in the maximum interest rate for deposits in Vietnam Dong

On October 24, 2022, the State Bank issued Decision 1812/QD-NHNN on the maximum interest rates of deposits in vietnam dong of organizations and individuals at credit institutions and foreign bank branches according to Circular 07/2014/TT-NHNN.

Thus, the maximum interest rates of deposits in Vietnam Dong of organizations (except credit institutions and foreign bank branches) and individuals at credit institutions and branches of foreign banks according to Circular 07/2014/TT-NHNN as follows:

- The maximum interest rate applicable to demand deposits and term deposits under 1 month is 1.0%/year.

(According to Decision 1607/QD-NHNN dated September 22, 2022, the maximum interest rate applicable to demand deposits and term deposits under 1 month is 0.5%/year.)

- The maximum interest rate applicable to term deposit from 1 month to less than 6 months is 6.0%/year; in particular, People's Credit Funds and microfinance institutions shall adopt the maximum interest rate of 6.5%/year with respect to term deposit from 1 month to less than 6 months.

(Compared to before, all interest rates increased by 1.0%/year)

The interest rate on deposits in Vietnam with terms of organizations and individuals arising before October 25, 2022, at credit institutions and foreign bank branches shall be applied until the term expires; if the agreed term expires and the organization or individual does not come to receive the deposit, the credit institution or foreign bank branch shall apply the interest rate on the deposit as prescribed in Decision 1812/QD-NHNN. 

3. Maximum interest rate for short-term lending in Vietnam Dong

According to Decision 1813/QD-NHNN dated October 24, 2022 on the maximum interest rates for short-term lending in vietnam dong of credit institutions, branches of foreign banks applicable to borrowers for financing of economic fields and sectors as specified in Clause 2, Article 13 of Circular 39/2016/TT-NHNN is as follows:

- Credit institutions and branches of foreign banks (except the People's Credit Funds and microfinance institutions) shall adopt the maximum interest rates for short-term lending in Vietnam Dong of 5.5%/year.

(Increasing 1% compared to the previous Decision 1730/QD-NHNN dated September 30, 2022.)

- The people's credit funds and microfinance institutions shall adopt the maximum interest rates for short-term lending in Vietnam Dong of 6.5%/year.

(An increase of 1% compared to the previous regulation.)

Note: Interest rates applied to credit contracts and loan agreements signed before October 25, 2022 will continue to be applied according to signed credit contracts and loan agreements in accordance with provisions of law at the time of signing the credit contract or loan agreement.

Decision 1809/QD-NHNN, Decision 1812/QD-NHNN, Decision 1813/QD-NHNN took effect from October 25, 2022 and respectively replaced Decision 1606/QD-NHNN dated September 22 2022, Decision 1607/QD-NHNN dated September 22, 2022, Decision 1730/QD-NHNN dated September 30, 2022.

Nhu Mai

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