As of June 29, Vietnam’s credit growth stood at 3.26% against early 2020, a significant increase compared to a 1.96% expansion recorded at the end of May, according to Le Minh Hung, governor of the State Bank of Vietnam (SBV).

SBV Governor Le Minh Hung said Vietnam's credit growth has been on the rise. Photo: SBV.

This indicates the credit demand has partially recovered following low growth rates in April and May at 0.12% and 0.53%, respectively, Hung said at a government meeting on July 2.

Since early July, the SBV, the country’s central bank, has adjusted credit growth quotas for a number of commercial banks, so that they could timely provide loans for customers, especially in priority fields to aid the country’s economic recovery process.

As of present, lenders have rescheduled debt payment deadlines for nearly 260,000 customers with outstanding loans of VND180 trillion (US$7.73 billion), Hung added.

Additionally, another 421,000 customers are benefiting from softer or reduced interest rates for loans worth VND1,300 trillion (US$55.85 billion), while 240,000 customers have received new loans worth VND1,100 trillion (US$47.41 billion) at interest rates of 0.5 – 2.5% per annum, lower than the rates applied before the outbreak of the pandemic.

According to Hung, the SBV is committed to managing the monetary policy in a flexible manner, aiming to stabilize macro-economic conditions and stimulate growth.

The banking system, therefore, would ensure sufficient capital for the economy, while standing ready to intervene the foreign exchange market in case of necessity.

The SBV is willing to increase the credit growth limits for banks from now until the end of the year to support economic growth, Hung stated. 

To date, the SBV has slashed its policy rates twice by a combined of 100 – 150 basis points to support the country's economic recovery.

Accordingly, the refinancing interest rate now stands at 4.5% per annum, rediscount rate at 3%, overnight interest rate at 5.5% and interest rate via open market operations (OMO) at 3%. 

The SBV also lowered the interest rate cap to 4.25% annually for deposits with maturities of one month to less than six months.

On May 7, the SBV issued a guidance for Vietnam Bank of Social Policies to provide loans at a 0% interest rate worth a total of VND16 trillion (US$686.42 million) for customers directly affected by the pandemic and businesses to pay salaries and wages for furloughed staff.