>> Deposit interest rates to decline
The State Bank of Vietnam (SBV) on March 3 issued a circular to cap interest rates for deposits in VND at 14% per year, for commercial banks.
This moves comes as a result of many commercial banks raising interest rates to upwards of 17-18% per year, citing their low liquidity as a major reason.
Under the new instructions in the circular, the ceiling deposit interest rates on people’s credit funds will be set higher, at 14.5% per annum.
The SBV will also require commercial banks to make their interest rates public by displaying them at their branches and offices nationwide.
In addition, they are banned from offering cash promotions, interest rates or any other forms which are not in line with the SBV’s regulations.
Any bank breaking these rules will be punished, said the SBV, adding that the circular is part of the bank’s efforts to control the local monetary market and curb inflation.
Experts said the SBV’s move is necessary to prevent a spiraling interest rate hike among commercial banks, which would hurt the Vietnamese economy.
The Saigon Times Daily cited a general director of a joint stock bank in Ho Chi Minh City as saying that “I even know a bank offering interest rates for savings accounts of 17.5%. My bank has yet to raise its rates, but if the situation continues, we will have no choice but to follow the trend.”
