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The government has ordered the State Bank of Vietnam to consider cutting the deposit interest rate next year, since inflation has been held under 1 percent over the last four months.
Vu Duc Dam, head of the Government Office, delivered the statement at the government’s regular press briefing yesterday, adding that another reason for a deposit rate cut is the fact that local businesses are still facing exorbitant lending rates.
Regarding the question of whether the current ceiling of 14 percent a year slapped on the deposit interest rate will be lowered to 12 percent, the State Bank of VietnamDeputy Governor, Nguyen Dong Tien, said that since inflation is growing at a slow pace, the institution will lay the groundwork for a rate cut next year.
“However, the central bank still needs to consider many issues before it can decide when, and by how much, [the rate] will be reduced,” Tien said.
“The adjusted interest rate must ensure the rights of both depositors and the banks.”
Healthy bank restructuring
Regarding the topic of bank restructuring, both Dam and Tien assured that the restructuring will help boost development in scale, as well as in quality, of Vietnamese banks.
Banks whose operational effectiveness needs only small adjustments will receive assistance, while those with poor effectiveness will be acquired, they said.
Dam said the restructuring will be carried out in a “safe, healthy, and transparent way.”
He said Vietnam does not yet have any commercial banks or credit institutions strong enough to compete in the regional arena.
“Meanwhile, the challenges inherent in operating a bank, as well as a lack of liquidity, constantly threaten banks in Vietnam,” Dam said.
“These problems will be solved during the restructuring process.”
“One of the major aims of the restructuring is to build at least one bank capable of competing in a regional scale,” he added.
He said the government is willing to help private banks develop further without fearing that they will hold more market share than the state-run banks.
“Another important task, besides restructuring the banking system, is to put other credit institutions such as securities and insurance companies into order,” he added.
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