Vietnam to cut Banks reserves tnterest rate to 1.2 per cent, cap credit growth at 25 per cent

Vietnam to cut Banks reserves tnterest rate to 1.2 per cent, cap credit growth at 25 per cent 23/07/2009 08:48:00 352

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The State Bank of Vietnam (SBV), the country’s central bank, said on July 21 that it has decided to slash interest rates of compulsory reserves of local banks to 1.2 per cent per annum from the current 3.6 per cent, the second time so far this year...

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The State Bank of Vietnam (SBV), the country’s central bank, said on July 21 that it has decided to slash interest rates of compulsory reserves of local banks to 1.2 per cent per annum from the current 3.6 per cent, the second time so far this year.

 

“The central bank’s move has demonstrated that the local monetary market is stable and bank liquidity is good,” Tran Hoang Ngan vice dean of the Ho Chi Minh Economics University said.

 

“It is time that the SBV should not support local banks any more after they posted impressive earnings reports in the first half,” Ngan noted.

 

The SBV’s move will probably cut earnings of local banks, but will not have big effects on credit policies that local banks are adopting, Nguyen Hung general director of VPBank said.

 

Also, in the second half of this year, the SBV will adopt monetary policies to cap total credit growth of the entire economy between 25 per cent and 27 per cent and total payment balances at 25 per cent.

 

Late last week, the SBV urged two major banks Vietinbank and Vietcombank to maximize their credit growth rates at no more than 25 per cent this year, the state-run Lao Dong newspaper said.

 

Meanwhile, ACB was leading local commercial banks with credit growth at 45.6 per cent in the first half of this year, followed by Eximbank with 43 per cent growth, Sacombank with 37.1 per cent and ABBank with 33 per cent, the Financial Investment newspaper said Monday.

 

This year, the government is striving for GDP growth of 5 per cent and curbing inflation at single digits, state media said.

 

(SBV, Financial Investment, Labor)