Vietnam's government asks banks to cut lending rates by 1.5–2 percentage points as deposit costs rise

Implications for lenders

Lenders in Vietnam serving businesses and priority sectors may face supervisory pressure to cut rates by 1.5–2 percentage points while new deposits cost 6.38%, which can narrow margins on those loans. Underwriting standards may need to hold even if pricing falls, because the meeting also asked for tighter control of bad debt. Non-bank lenders funded by bank lines may see little relief on their own funding costs unless deposit rates ease.

Implications

Facts

The meeting: on the afternoon of 16 October 2026 Deputy Prime Minister Nguyen Van Thang chaired a meeting at Government headquarters on monetary policy for the rest of 2026, attended by State Bank of Vietnam (SBV) Governor Pham Duc An, Ministry of Finance officials, the Government Office and commercial banks. According to the state news agency's report, it followed Party Central Committee Conclusion No. 106 of 15 October 2026, and its stated aim was to bring lending rates down to support businesses, households and growth.

The request: banks were asked to reduce lending rates for production, business activities and priority sectors by 1.5–2 percentage points ¹. The report does not say which rate the cut is measured from, whether it covers new or outstanding loans, or by when it should happen. The SBV was asked to provide refinancing at reasonable rates to banks lending under the social housing programme, without a figure. Banks were told to cut operating costs and speed up digital transformation to make room for lower rates, and lenders that fail to follow rate-stabilisation instructions or compete unhealthily on rates are to be dealt with strictly. The meeting also called for tighter control of bad debt, especially in real estate.

The starting point: SBV data put the average lending rate at 10.7% in August, nearly 2 percentage points above end-2025 ². On the funding side, the average rate on new deposits was 6.38% on 20 September, up 1.15 percentage points from end-2025 ³, while system credit had grown 11.59% since end-2025 by 30 September ⁴.

Analysis

Over time, the request repeats a tool Vietnam used before: a July 2023 government resolution asked for lending rates on new and outstanding loans to fall by at least 1.5 percentage points a year ⁵. The difference now is the funding side. In 2026 the average new-deposit rate is up 1.15 percentage points from end-2025 and the average lending rate is nearly 2 percentage points above end-2025, so a cut of the size requested would have to come mostly out of bank margins and operating costs unless deposit rates fall too. The SBV's own SME programme already prices loans 1–2 pt a year below normal rates ⁶, so for that segment the new request may partly overlap with discounts banks already give.

Across the Mekong, central banks are pulling different levers on credit. The Bank of Thailand chose risk-sharing rather than rate instructions, aiming for about THB 100 bn a year of new SME lending through a bank-funded guarantee ⁷. The Bank of the Lao PDR went the other way and capped credit growth at 16% a year to contain inflation ⁸. Vietnam is the one asking banks directly to lower the price of loans while credit is still growing fast.

Counterpoints and uncertainties

The request has no published baseline, scope or deadline, so how much rates actually fall, and for whom, depends on SBV guidance and bank-by-bank decisions. With deposit rates rising and banks competing for liquidity, lower lending rates could come with tighter credit selection rather than cheaper credit for riskier borrowers. Inflation could also limit how far the SBV can ease funding conditions through refinancing.