VietNamNet Bridge - The last time the State Bank of Vietnam (SBV) announced the prime interest rate was in 2009, or six years ago.

 

The current Civil Code stipulates that the interest rates of commercial loans in civil credit contracts must not be higher than 150 percent of the prime interest rate set by SBV at different times.

In the draft of the amended civil code, the threshold is 200 percent.

However, according to Deputy Judge of the Supreme People's Court, Tong Anh Hao, SBV has not announced the prime interest rates since 2009, and therefore, no limit for the lending interest rates has been established ove the last six years. Judges are embarrassed about this when dealing with civil disputes.

“We asked the State Bank about the prime interest rate some days ago and we were told to take the 2009 prime interest rate for reference,” Hao said.

However, chair of the National Assembly’s Finance & Budget Committee, Phung Quoc Hien, commented that it is unreasonable to set the 2009 prime interest rate for now, emphasizing that the State Bank has to take responsibility for this.

Citing current provisions on commercial loan interest rates stipulated by different laws, Hien pointed out that major problems exist. While credit institutions can lend money at any interest rate, civilians will be charged as usurers if they require interest rates higher than 200 percent.

Hien said there are two options for now, either remove the prime interest rate mechanism, or maintain it. 

If the first solution is chosen, Hien said, it will be necessary to amend the Banking Law and free those who have been prisoned for lending money at high interest rates.

Minister of Justice Ha Hung Cuong said under the current laws, it is the responsibility of the State Bank to announce the prime interest rate. However, for the last few years, the central bank has only announced the interbank market interest rates.

Explaining this, a banking expert said that the interbank market interest rate can more accurately reflect the performance of the market.

However, while the interbank interest rate sounds more “professional” in the experts’ eyes, it is not really good for the courts.

Cuong said the interbank market interest rates change daily, therefore, it cannot be updated by people and the courts.

Also according to Cuong, at first, the central bank intended to remove the prime interest rate mechanism and replace it with the interbank interest rate. However, it later agreed on maintaining the prime interest rate mechanism, though it said the prime interest rate would not be announced periodically.

The Chair of the National Assembly, Nguyen Sinh Hung, also thinks that it is necessary to maintain the prime interest rate mechanism.

TBKTVN