Bank lending interest rates in Ho Chi Minh City have dropped to as low as 17 percent as banks have begun to cut rates that had reached up to 25 percent.

The Export and Import Joint Stock Commercial Bank (Eximbank) was one of the first off the blocks, offering exporters additional loans at preferential interest rates to buy products or raw materials and for working capital.

They can get 36-month dong loans at 17 percent or six-month dollar loans at 7 percent.

These rates are the lowest in the market, and Eximbank said they would remain unchanged for the full term of the loans.

It said it had to combine many different factors to cut the interest rates to such low levels. The bank\'s general director, Truong Van Phuoc, said to avail loans under the programme, all customers had to do was to sell their foreign exchange earnings to the bank.

Eximbank planned to lend around VND1 trillion (US$4.8 billion) under the programme by the end of September, he added.

The Technological Commercial Joint Stock Bank, or Techcombank, has rolled out a programme called "Preferential loans for agro-forestry, fishery industries" with an interest rate of 19.5 percent. It will run from August 18 to December 31.

Again, borrowers have to sell all their dollar earnings from exports to the bank.

An Binh Joint Stock Commercial Bank has launched a loan programme for individuals and households for production activities at a discount of 1.5 percent from its current 21 percent rate.

ABBank is also one of the first to resume consumer loans.

It has tied up with Sai Gon Ford Company to offer personal loans to individuals for buying cars at 1 percent lower than its current 23 percent rate.

Nguyen Van Se, director of the Ho Chi Minh City-based Vietinbank, said his bank was offering consumer loans at a 2 percent discount.

A deputy general director of a joint stock bank in the city, who did not want to be named, said many banks wanted to further cut rates to increase lending, but it was not easy since they depended on the deposit interest rates.

The interest-rate cuts were easy to understand, Tran Hoang Ngan, deputy rector of the Ho Chi Minh City Economics University, said. In August the consumer price index had risen by only 0.93 percent while the banking industry\'s credit growth so far this year was just 8 percent. However, current loan interest rates were too high and dissuaded borrowers, he added.