Vietnamese banks strive to offer low-cost loans

Prime Minister Phạm Minh Chính has just signed Directive No. 05/CT-TTg on March 1, 2025, outlining key breakthrough tasks and solutions to promote economic growth, accelerate public investment disbursement, and ensure the national growth target of at least 8% in 2025.

The directive emphasizes the spirit of "only moving forward, not backward," with the consensus of the Party, the Government, the National Assembly, and the people. The guiding principle is rapid but sustainable economic growth, ensuring macroeconomic stability, controlling inflation, and improving people's living standards without sacrificing social progress and environmental sustainability for mere economic expansion.

Fiscal and Investment Policies to Stimulate the Economy

To stimulate economic growth, the Prime Minister has assigned relevant agencies to research and propose tax, fee, and land rent exemption, reduction, and deferral policies to support individuals and businesses, with a reporting deadline set for March 15, 2025.

To boost domestic consumption, the Prime Minister has requested ministries and sectors to study tax and credit policies to enhance purchasing power and promote domestic tourism.

Ministries, agencies, and localities must accelerate public investment disbursement, striving to achieve at least 95% of the public investment disbursement plan assigned by the Prime Minister in 2025. The approach prioritizes public investment as a driver to activate and attract all social resources.

Facilitating Access to Low-Cost loans

Regarding monetary and banking policies, the Prime Minister has directed the State Bank of Vietnam (SBV) to proactively, flexibly, and effectively manage monetary policies, ensuring close coordination with reasonable expansionary fiscal policies and other macroeconomic policies. The focus should be on improving the effectiveness of interest rate and exchange rate management, credit growth, open market operations, interbank market regulation, refinancing, money supply, and bond issuance.

The SBV must regularly monitor and strictly oversee the movements of deposit and lending interest rates in commercial banks, implementing more determined and effective measures within its authority to lower lending rates. This aims to provide individuals and businesses with better access to affordable credit, supporting economic recovery and business expansion while driving economic growth.

The Prime Minister has also requested the SBV to enhance inspection, supervision, and control over credit institutions, especially ensuring transparency in interest rates and lending activities. Any violations, particularly unfair competition in interest rates or non-compliance with regulations on both deposit and lending rates, must be strictly handled according to the law. The directive explicitly prohibits commercial banks from arbitrarily raising interest rates in a non-transparent and uncompetitive manner.

Additionally, the Prime Minister has assigned the SBV to study and expand the loan program for the forestry and fisheries sectors to approximately VND 100 trillion while broadening its scope to cover agriculture, forestry, and fisheries. Further research should be conducted to introduce preferential credit packages that drive economic growth and support homeownership for young people under 35.

In order to maintain macroeconomic stability, key economic balances, and inflation management, the government continues to maintain its policy that economic growth must be both swift and durable. In addition, it seeks to safeguard social security, promote social justice and advancement, enhance people's material and spiritual well-being, and preserve the environment. Medium- to long-term development and short-term goals should be balanced with economic growth. The administration is unwilling to compromise environmental sustainability, social advancement, and justice for the sake of economic growth alone.

Economic growth must be driven by science and technology, innovation, digital transformation, high-quality human resources, and labor productivity improvements. The ultimate goal is to achieve sustainable, inclusive, and comprehensive growth that benefits all citizens.

The Government calls for the maximum mobilization of resources, proactive and creative policy implementation, flexibility, and bold initiatives from ministries, sectors, and local authorities. It emphasizes a citizen- and business-centric approach, considering the challenges faced by individuals and enterprises as collective challenges that must be proactively addressed. The guiding spirit is: "Do not say no, do not say it is difficult, do not make empty promises." The Government urges the participation of all economic sectors, businesses, and individuals in economic and social development.

Regulatory Framework for Digital Assets and Cryptocurrencies

The directive also assigns the Ministry of Finance, in coordination with the SBV, to submit a drafted legal framework for the management and development of digital assets and cryptocurrencies to the Government within March 2025.

Earlier, the Prime Minister issued an urgent directive to the Governor of the SBV, requiring inspections and audits of commercial banks that have increased deposit interest rates against Government directives.

Despite repeated Government instructions for the banking sector to reduce lending rates to support businesses and individuals, some banks have continued to raise deposit rates, leading to negative impacts on lending rates. Consequently, the Prime Minister has ordered the SBV to coordinate with relevant agencies to inspect and strictly handle banks that fail to comply.

The Prime Minister has also instructed the SBV Governor to consider using regulatory tools such as credit growth caps and revoking licenses for violators, with a report on the results due by February 28.

Following the Prime Minister’s directive, the SBV held a meeting with commercial banks last week. At the meeting, Deputy Governor Phạm Thanh Hà affirmed that the banking system has ample liquidity, leaving no justification for raising deposit interest rates. He stressed the importance of maintaining stable deposit interest rates to support economic growth.

According to Phạm Chí Quang, Director of the Monetary Policy Department, as of February 18, the total credit outstanding in the banking system reached VND 15.62 quadrillion, rising only 0.02% from the end of 2024. With such slow credit growth and the SBV’s continued liquidity injections, the pressure to increase deposit interest rates is almost nonexistent.

Regarding deposit interest rates, Quang noted that as of February 24, some banks had slightly increased rates, but overall, the rates remained stable. Data from the SBV showed that eight banks raised deposit interest rates by 0.1-0.4% per year, while three banks reduced rates by 0.1-0.5% per year, and four banks adjusted rates within a range of ±0.3% per year.

At a weekend seminar, Deputy Governor Đào Minh Tú reiterated that the banking sector remains committed to expanding credit to support economic growth. Given the diversity of banks in the system, a uniform interest rate is unrealistic. He explained that some smaller banks raised interest rates to secure funding for lending.

Market observations indicate that following the Prime Minister’s directive and the SBV’s enforcement, many banks—including VIB, SaigonBank, Vietcombank, and BacA Bank—have reduced deposit interest rates, following similar moves by Eximbank, BVBank, KienlongBank, VietBank, and MSB. The rate reductions vary by term and whether deposits are made online or in person.

Simultaneously, banks such as ACB, SHB, LPBank, and Eximbank have launched loan programs, particularly for home purchases, offering ultra-low interest rates. Some, like HDBank, have introduced ultra-low home loan rates with repayment terms extending up to 50 years.

Confirming that this year’s credit growth target of 16% and GDP growth target of 8% are achievable, Nguyễn Đức Lệnh, Deputy Director of the SBV’s Ho Chi Minh City branch, emphasized that the key issue is ensuring businesses can effectively absorb and utilize capital. The banking sector is now focused on providing affordable financing, reducing input costs, simplifying loan procedures, and improving loan disbursement efficiency while strengthening bank-business connections.

For 2025, responses to the SBV’s survey indicate that credit institutions plan to maintain or slightly loosen overall lending standards, particularly for businesses. Greater access to credit at reasonable costs, coupled with stable lending rates, will be crucial for stimulating business recovery and economic growth.