A number of small banks have raised their short-term deposit interest rate to 12.5%-13.5% per year, higher than the long-term levels despite the State Bank of Vietnam (SBV)’s ban.
The violation started right after the SBV decided to cap deposit interest rate at 9% since June 11, down from the previous 11%.
For small banks which faces weak liquidity, the 9% rate is not enough attractive to depositors, and from now to the year end, they need higher capital demand.
Tran Minh Tuan who deposits money at three banks said, “Last week, some staff called to inform me they were raising deposit interest rates to 12% per annum. A number of small banks offered up to 12.5% per year for one to three-month terms.”
He added that, previously, banks often gave customers a paper certifying interest rate disparities along with a savings book, but now, they only write down the interest rate of 9% per year on the book, meanwhile, the interest rate disparity is paid to customers in cash.
“Previously, only customers who deposited over VND1 billion (USD47,600) were carefully taken care of, but now, bank staff pay attention to VND100 million (USD4,760) deposits. On my birthday, banks sent me a flower basket worth around VND500,000 (USD23.8) as a gift,” he shared.
An unnamed bank director said his bank had raised deposit interest rates to 12.5% per year since September 19. Interest rate negotiations would be applied on deposit higher than VND150 million (USD7,142), instead of the previous VND500 million (USD23,800).
Staff encouraged to attract deposits
A bank clerk at a state-owned bank said “We’ve been set quotas to increase deposits. Our board has five members who have been told to raise at least VND110 billion (USD5.23 million) per month. The boss even sets quotas for each person if the situation is too difficult.”
After the introduction of the deposit interest rate cap at 9%, banks have had to set up separate funds to offer better under the table interest rates to big clients.
A new staff member of a commercial joint stock bank said that every month, she had to encourage customers to make deposits of VND2 billion.
“My relatives had to help find customers so that I could fulfil the target, but next month, I don’t know how I’ll manage to meet the target,” she said.
Banks are now racing to attract deposits to ensure liquidity from now to the year-end, said a leading commercial joint stock bank official.
