The Vietnam Banks Association has asked members to reduce deposit rates to no more than 11 percent by Oct. 15 from 11.2 percent, according to a statement on the central bank's website.
For non-term deposits and deposits of less than three months, the association asked commercial banks to make a bigger reduction to create a "suitable" interest-rate curve to attract long-term funds, according to the statement. Members were also asked to lower dollar-deposit rates and to cut borrowing costs to spur lending, according to the statement.
The Southeast Asian nation's government has been asking commercial banks to increase lending to support the economy and meet a target for 25 percent credit growth this year. The State Bank of Vietnam on Sept. 28 allowed lenders to use 25 percent of non-term deposits made by businesses for loans. Bank credit has grown 19.27 percent from the start of the year to Sept. 27.
Vietnam's gross domestic product may expand 6.7 percent this year, surpassing a target of 6.5 percent, Nguyen Xuan Phuc, chairman of the Government Office said Sept. 30. The government in May asked the State Bank of Vietnam to lower deposit rates to 10 percent and cut borrowing costs to 12 percent to spur economic growth.