VINACHEM

HA NOI — The State Bank of Viet Nam will institute a series of measures to keep lending interest rates under control while ensuring reasonable profits for commercial banks, said the head of the bank's monetary policy department, Nguyen Ngoc Bao, yesterday in Ha Noi.

To lower interest rates, the central bank would simultaneously apply a number of measures, including injecting and withdrawing capital from the banking system, urging major State-owned banks to make more money available for lending at more reasonable rates, and addressing liquidity issues at smaller banks, Bao said.

Prime Minister Nguyen Tan Dung ordered the central bank earlier this week to flexibly apply measures to lower market interest rates in order to allow credit to expand at reasonable costs to enterprises and households.

Late last week, the central bank injected VND11 trillion (US$578.94 million) into the nation's capital-starved commercial banking system, hoping to stabilise lending interest rates that had skyrocketed to as high as 20 per cent per year on medium-term loans.

Bao suggested that State-owned banks manage interest rates pursuant to market rules. Addressing concerns among some State-owned banks that major depositors would move funds to banks paying better interest rates, Bao urged these banks to inform the authorities whenever enterprises moved large amounts of capital contrary to Government regulations.

To help the central bank stabilise the monetary market, Bao said, the Ministry of Industry and Trade would enhance monitoring of bank interest rates and punish any banks found to be manipulating the market. — VNS