>> Banks strike deal with SBV to cut lending rates
>> Vietnam seeks to lower deposit interest rates
>> Businesses bemoan loan-shark interest rates
The State Bank of Vietnam (SBV) has issued a regulation to apply stricter punishments to those that violate capped deposit interest rates.
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| The State Bank of Vietnam has increased monetary controls through to the year end |
The regulation stipulates that managers and operators of any financial institutions that apply deposit interest rates higher than 14% per year from now on will be suspended from their posts for three years.
The SBV, for the first time, publicly admitted that many commercial banks had flagrantly ignored caps on deposit interest rates.
“The violations are extremely serious and carry possible risks for financial institutions,” an official from the SBV emphasised.
In order to deal with the situation, the SBV has requested all commercial banks and branches of foreign banks in Vietnam to strictly comply with the capped deposit interest rate. They have been granted the power to investigate possible violations and adopt solutions in needed.
The regulation indicates the SBV’s strong determination to tackle illegal rises in deposit interest rates by requiring investigation agencies and branches of SBV nationwide to set up hotlines to allow reports of violations to be made.
Curbing credit growth
The SBV’s new regulation demonstrates the Government’s determination to curb credit growth rate to less than 20%, money supply growth rate at around 15-16%, and lower interest rates.
According to the state bank, credit structuring has indicated positive changes. By August 2011, credit for production was up 14.8% from a year earlier, with credit for exports up 35%.
In the meantime, credit for non-production sectors was down nearly 17% on-year with outstanding stock market loans dropping 43%, and outstanding real estate loans down 10%.
Twelve Vietnamese banks reached an agreement on August 26 with the SBV to reduce their deposit interest rates to 14% per annum and lending interest rates to between 17% and 19% per year beginning in September.