Decision 241/2000/QD-NHNN1 on changing the mechanism of controlling lending interest rates of credit institutions for customers issued by the Governor of the State Bank

DECISION

ON THE CHANGE OF OPERATIONAL MECHANISM OF LENDING INTEREST RATES OF CREDIT INSTITUTIONS FOR CUSTOMERS

THE GOVERNOR OF THE STATE BANK

Pursuant to the Law on the State Bank of Vietnam No. 01/1997/QH10 dated 12 December, 1997;
Pursuant to the Decree No. 15/CP dated 02 March, 1993 of the Government on the assignment, authority and responsibility for the State management of the ministries and ministerial-level agencies;
Based on the direction of the Prime Minister stated in the Dispatch No. 322/VPCP-KTTH dated 25 July, 2000 of the Office of the Government on the operation of the interest rates;
Upon the proposal of the Director of the Monetary Policy Department,

DECIDES

Article 1. To change from the operational mechanism through the maximum lending interest rate (the ceiling rate) to the operational mechanism through the base interest rate for the lending in VND and the market rate mechanism for lending in foreign currency in accordance with detailed provisions stated in following articles:

Article 2. For the lending interest rate in Vietnam Dong:

1. Credit institutions shall determine lending interest rates for customers on the basis for the base interest rate announced by the State Bank of Vietnam in line with the principle that lending interest rates are not in excess of the base interest rate plus the bands provided for by the Governor of the State Bank of Vietnam from time to time.

2. The State Bank shall announce the base interest rate on the basis for reference to commercial lending interest rates for best customers applied by a group of credit institutions which are selected in accordance with the Decision of the Governor of the State Bank from time to time. The base interest rate and the bands shall be announced monthly; when necessary, the State Bank shall timely announce the adjustment.

Article 3. For the lending interest rate in foreign currency:

1. Lending in US$: Credit institutions shall determine the lending interest rate on the principle that the lending interest rate is not in excess of the 3 months US$ interest rate in the Singapore Inter-bank Market (the SIBOR rate) for the short-term lending and the 6 months US$ SIBOR for medium, long-term lending at the time of the lending and within a band provided for by the Governor of the State Bank from time to time.

2. Lending in other foreign currencies: Credit institutions shall determine the lending interest rate on the basis for the international market rate the domestic demand and supply for funds in each foreign currency.

Article 4.

1. At the effective time of the announcement by the State Bank of the base interest rate, the outstanding loans and credit contracts which have been entered into but not fully disbursed or not yet disbursed shall continue to be subject to the interest rate stated in respective credit contracts. The adjustment of the lending rates for those credit contracts to the new interest rate level shall be considered and decided upon by credit institutions.

2. The overdue interest rate shall be agreed upon by credit institutions and customers in the credit contract but shall not exceed 150% of the lending interest rate stated in the credit contract.

Article 5.

1. The preferential lending interest rates shall be applied in accordance with current provisions of the Prime Minister and the Governor of the State Bank.

2. The lending interest rate of the local peoples credit funds applied to their members shall continue to be subject to the provision of the Decision No. 50/2000/QD-NHNN1 dated 3 February, 2000 of the Governor of the State Bank on the adjustment of the maximum lending interest rate in Vietnam Dong of local peoples credit funds applied to their members.

Article 6.

1.This Decision shall be effective from 5 August, 2000

2. Heads of units of the State Bank, General Managers of the State Bank branches in provinces and cities, Chairman of the Board of Directors and Directors General (Directors) of credit institutions shall be responsible for the implementation of this Decision.

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