Commercial banks in Vietnam have still using tricks to offer customers deposit interest rates higher than the regulated levels.
Commercial banks in Vietnam have still using tricks to offer customers deposit interest rates higher than the regulated levels.
Nguyen Duy Khoa, a big securities investor, said in the context of the frozen stock market he had withdrawn his money from the stock exchange and looked to deposit it in a bank for the higher return on the interest. He deposited more than VND500 million (USD23,809) into a bank for a one-month term. He was offered an annual interest rate of 11% per year compared to the level written on the saving book of 8.9%. The interest rate disparity was paid to him separately, not included in the book.
Earlier, he also received a real interest rate of 10.3% for a small deposit; meanwhile, the short-term ceiling deposit interest rate was stipulated at 9% per year.
Banks use different ways to violate ceiling deposit interest rates in the form of cash for the interest rate disparity, gifts or scratch cards.
A number of HCM City-headquartered banks are launching promotional programmes to offer lucky scratch cards for individual customers who make deposits in VND or USD. From July 5 to October 2, any people who deposits from VND30 million (USD1,428) or USD1,500 for terms between one month and two years, will receive a scratch card. The total value of cards will reach VND4 billion (USD190,476), including one first prize valued at VND100 (USD4,700) million and 10 second prizes of VND10 million (USD476).
From July 16 to October 10, SeABank has introduced the same programme with total value of the scratch cards reaching up to VND15 billion (USD714,285).
Hiding violations
According to Dr. Le Trong Nhi, a senior financial expert in the banking sector, banks seem to be increasingly blatant about their abuse of the ceiling, even helping each other to hide their violations. Bank liquidity remains weak as they suffer the pressure of maintaining old capital sources and increasing deposits, so they have to race to attract depositors.
However, an official from a major commercial bank said most of banks which gain sudden high deposits are small ones which are already on the black list of the State Bank of Vietnam (SBV) for weak liquidity. Their move to raise deposit interest rates has impacted other big banks. “I think that management agencies should allow interest rate liberalisation and also accept the bankruptcy of weak banks. This will help terminate the race to increase interest rates. The SBV has announced that it will not let any bad-performing bank go bankrupt, therefore, people are seeking to put their deposits into banks which offer them high interest rates.”
Pham Duy Hung, Former General Director of VietABank rejected this accusation, saying that small banks can not be the main factor for causing the interest rate rises because the 12 big banks presently account for more than 80% of the domestic customer market share.