The Vietnamese government has issued a strict directive prohibiting commercial banks from arbitrarily raising interest rates outside of regulatory guidance. Prime Minister Pham Minh Chinh emphasized that unfair competition among financial institutions, especially in interest rate policies, will be strictly penalized.

On March 1, 2025, the Prime Minister signed Directive No. 05/CT-TTg, outlining key policies to accelerate economic growth, expedite public investment disbursement, and achieve a national GDP growth target of at least 8 percent in 2025. The directive assigns specific responsibilities to various ministries and agencies.

For the State Bank of Vietnam (SBV), the directive mandates a proactive, flexible, and effective monetary policy, ensuring close coordination with fiscal policy and other macroeconomic measures.

The central bank must focus on interest rate management, exchange rate policies, credit growth, open market operations, interbank lending regulations, refinancing measures, and money supply management.

The directive specifically calls for stronger oversight of interest rates, requiring SBV to closely monitor the deposit and lending rates of commercial banks.

The government demands decisive action to lower borrowing costs, making capital more accessible and affordable for businesses and individuals. The goal is to support economic recovery, stimulate business growth, and drive national economic expansion.

To prevent unfair competition and market instability, the directive also orders strict inspections and enforcement actions against banks that manipulate interest rates or violate lending regulations.

Banks engaging in non-compliant lending practices will face severe penalties. The government is firmly prohibiting commercial banks from unilaterally raising interest rates outside of policy guidance.

In addition to controlling interest rates, the directive proposes expanding low-interest credit programs, particularly in forestry and aquaculture, with an expected credit package of 100 trillion VND ($4 billion). The government is also exploring preferential loan programs to boost economic growth and support homeownership for individuals under 35.

Earlier, on February 25, the State Bank of Vietnam issued Document No. 1328/NHNN-CSTT, instructing commercial banks to stabilize deposit interest rates and work towards reducing lending rates.

The document emphasizes the need for banks to cut operating costs, adopt financial technology, and simplify lending procedures. Banks are also encouraged to absorb part of the cost burden to facilitate easier credit access for businesses and consumers.

SBV's provincial and municipal branches have been directed to monitor interest rate trends, ensure commercial banks comply with lending regulations, and publish transparent loan interest rates and preferential credit programs. These measures are intended to support businesses and promote economic growth.

Additionally, the directive assigns the Ministry of Finance and the State Bank of Vietnam the task of developing a legal framework for managing digital assets and cryptocurrencies, with a report due to the government by March 2025.

Tuan Nguyen