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Regulators draw interest rate line at 12% (29/02)
06/08/2010 - 28 Lượt xem
The State Bank of Viet Nam’s Governor, Nguyen Van Giau, has told commercial banks to limit their annual interest rate on dong deposits to 12 per cent.
Ho Huu Hanh, head of SBV’s HCM City branch, said the regulation would put an end to the recent flurry of activity by banks trying to outdo one another by offering higher interest rates on deposits.
To take advantage of competing interest rates, many customers have been withdrawing their money from banks and transferring it to banks with higher rates.
Techcombank had raised its annual interest rate to 14.2 per cent, the highest among banks, an SBV official said, and last week DongA Bank’s rates went up to 13.56 per cent and Viet A Bank, 13.92 per cent. Following the State Bank ruling, Techcombank, SeA Bank and DongA Bank yesterday complied immediately by lower rates.
Nguyen Tien Thinh, head of HCM City’s representative office of Viet Nam Banking Association, said only a few days ago he witnessed a customer who wanted to withdraw VND1,800 billion (US$112.5 million) and deposit in another bank.
On Tuesday, interest rates in the inter-bank market fell while interest rate at banks rose. The rise in interest rates at small banks has drawn customers away from major banks.
"We must increase the interest rate to keep our clients, but we don’t want to create problems on the market. We will agree to offer them the rate if customers ask," one bank director, who declined to be named, said.
Rates on loans
Interest rates on loans have also jumped to 15–16 per cent, discouraging investors from borrowing money for production or trading projects.
Dang Van Thanh, chairman of Sacombank, said banks had raised rates on loans as interest rates on deposits rose.
Small- and medium-sized enterprises unable to issue stocks or borrow money from commercial banks would suffer, several officials said.
"With a 15 per cent rate on loans, small-and-medium size enterprises could die," one director of a foreign investment fund said.
Source: Vietnam News
