Effective credit solutions put forward amid Covid-19

le Hang

Over the past time, the State Bank of Vietnam (SBV) and credit institutions have proactively and drastically come up with solutions to help ease difficulties faced by businesses and people.

The SBV has cut key interest rates three times, with policy rates reduced by 1.5-2.0 percent p.a.; and deposit interest rate cap by 0.6-1.0 percent p.a. for less-than-six-month term deposits; reducing lending rate cap by 1.5 percent p.a. on short term loans for the priority sectors (currently at 4.5 percent p.a.). The lending interest rates decreased by about 1 percent p.a. on average, and maintained this downward trend the first half of 2021.

Implementing the Government’s Resolution No.63/NQ-CP, 16 commercial banks (accounting for 75 percent of the total outstanding loans of the economy), have agreed in the principle to further cut the lending interest rates on the existing loans by up to 1 percent p.a. until the end of 2021 for Covid-affected customers. The total reduced interest amount is estimated at VND20,613 billion (USD900 million). Four State-owned commercial banks (BIDV, Vietcombank, VietinBank, Agribank) have committed to a VND4 trillion (USD175 million) support package through lowering lending rates and reducing service fees during the social distancing time.

As of 31 August 2021, the credit institutions had exempted and/ or reduced interest rates for over 1.13 million customers, with total outstanding loans of over VND1.58 quadrillion (USD69 billion). According to the accumulated estimates from 23 January 2020 to 31 August 2021, the total amount of interest that has been exempted or reduced by the credit institutions for their customers is as big as VND26,000 billion (USD1.14 billion).

The credit outstanding for the whole economy had reached over VND9.87 quadrillion (USD431 billion) in the first eight months of the year, up 7.42 percent year-on-year; the credit for economic sectors had registered higher growth rates than the same period last year. The credit growth for the priority fields and sectors including agriculture and rural areas, export, supporting industries, and hi-tech enterprises, had experienced a positive growth rate.

In addition, the SBV issued Circulars 01/2020/TT-NHNN and No.03/2021/ TT-NHNN which have created a legal framework for the credit institutions to reschedule the debt repayment, waive and reduce interest and fees, maintain debt classification, for customers affected by the Covid-19 pandemic until December 2021. On 7 September 2021, the SBV issued Circular No.14/2021/TT-NHNN amending and supplementing Circular No.01/2020/ TT-NHNN, extending the timeline until 30 June 2022.

In the coming time, to continue to support the people and businesses as well as to prepare for the postpandemic economic recovery, the SBV will continue to maintain reasonable credit growth associated with improving the credit quality, strictly controlling the credit growth in potentially risky sectors. The central bank also monitors and asks the credit institutions to deliver their commitments to reduce the lending interest rates and service fees.