Banks agree to cap interest rate at 12% a year

At a meeting on April 28 in Hanoi by northern members of the Vietnam Banks’ Association (VBA) on April 28, the VBA reached a consensus to increase the annual interest rate cap for deposits in Vietnamese dong to 12% from the current 11%. The agreement becomes valid from today, April 29.

Specifically, with deposits of over 6 month terms, the interest rate cap is 12% and for terms of six months and below, the cap is set at 11.5% annually.

The yearly interest rate cap for deposits in US dollar is agreed to be maintained at the current 6% rate.

The adjustment in the yearly interest rate cap has originated from the fact that the total mobilised capital of the whole banking system in the first quarter of 2008 increased by only 4.14% compared to the figure in late 2007 while credit account standing increased by 11.3%.

One of the reasons that led to the slow increase of deposits into banks is said to be due to the low interest rates.

ND

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