Decision No. 241/2000/QĐ-NHNN on changing the mechanism for managing lending interest rates of credit institutions for customers

DECISION OF THE GOVERNOR

 OF THE STATE BANK OF VIETNAM YEAR
On changing the mechanism for managing lending interest rates for customers of credit institutions

GOVERNOR OF THE STATE BANK OF VIETNAM

Pursuant to the Law on the State Bank of Vietnam No. 01/1997/QH10 dated December 12, 1997 Male and the Law on Credit Institutions dated 12/12/1997;

Pursuant to Decree No. 15/CP dated 2/3/1993 of the Government on tasks, powers, and organizational structure of the Ministry of Finance;

Pursuant to the guidance of the Prime Minister in Official Document No. 322/VPCP-KTTH dated 25/7/2000 of the Government Office regarding interest rate management;

Pursuant to the proposal of the Director of the Monetary Policy Department,

DECISION:

Article 1. Now, the ceiling interest rate management mechanism for lending in Vietnamese Dong is replaced by the basic interest rate management mechanism for lending in Vietnamese Dong Male and the managed market interest rate mechanism for lending in foreign currencies as specified in the following articles.

Article 2. For lending interest rates in Vietnamese Dong Male:

1. Credit institutions shall set lending interest rates for customers based on the basic interest rate announced by the State Bank of Vietnam according to the principle that the lending interest rate does not exceed the level of the basic interest rate and the margin stipulated by the Governor of the State Bank of Vietnam for each period.

2. The State Bank of Vietnam shall announce the basic interest rate based on reference to the best commercial lending interest rate for customers of a selected group of credit institutions decided by the Governor of the State Bank of Vietnam for each period. The basic interest rate and margin shall be announced periodically monthly, and in cases of necessity, the State Bank of Vietnam will promptly announce adjustments.

Article 3. For lending interest rates in foreign currencies:

1. For lending in US Dollars: Credit institutions shall set lending interest rates according to the principle that the lending interest rate does not exceed the US Dollar interest rate on the interbank money market in Singapore (SIBOR) for a three-month term for short-term lending, six-month term for medium-term and long-term lending at the time of lending, and a margin stipulated by the Governor of the State Bank of Vietnam for each period.

2. For lending in other foreign currencies: Credit institutions shall set lending interest rates based on international market interest rates and domestic capital supply and demand for each type of foreign currency.

Article 4.

At the time when the basic interest rate announced by the State Bank of Vietnam becomes effective, the outstanding balance of loans already granted and loan contracts registered but not fully disbursed or not disbursed in the previous period shall continue to be implemented according to the interest rate stipulated in the loan contract. Adjustments to the lending interest rate for these loan contracts according to the new interest rate shall be considered and decided by the credit institution.

2. Overdue interest rates agreed upon in loan contracts between credit institutions and customers shall not exceed 150% of the lending interest rate stipulated in the loan contract.

Article 5.

1. Preferential lending interest rates shall be implemented according to the current regulations of the Prime Minister and the Governor of the State Bank of Vietnam.

2. The lending interest rate of grassroots People's Credit Funds for members shall continue to apply according to Decision No. 50/2000/QĐ-NHNN1 dated February 3, 2000 of the Governor of the State Bank of Vietnam on adjusting the ceiling interest rate for lending in Vietnamese Dong by grassroots People's Credit Funds for members.

Article 6.

1. This Decision shall take effect from the date 05/08/2000.

2. Heads of units under the State Bank of Vietnam, Governors of provincial and municipal branches of the State Bank of Vietnam; Chairmen of the Board of Directors and General Directors (Directors) of credit institutions are responsible for implementing this Decision.