Central bank determined to curb deposit interest rates
The State Bank of Vietnam has asked its local branches to check the deposit interest rates now offered by credit institutions in the localities. The bank has also made a lot of decisions in an effort to force deposit interest rates down.
The branches of the State Bank have been asked to check the deposit interest rates being applied by commercial banks so as to request the banks to adjust the rates if necessary. The deposit interest rates must be set at suitable levels which ensure suitable profit for banks when giving loans at 21% at maximum.
The State Bank of Vietnam has maintained the basic interest rate of 14% for July, which means that the maximum lending interest rate is 21% per annum
The State Bank has asked the credit institutions, which are now mobilizing capital at the interest rates of 17.5% and higher, to report their business plan suitable to such a high interest rate.
The State Bank has threatened to make heavy punishment on the commercial banks which offer high deposit interest rates, but do not have suitable business plan for the capital mobilized at high cost, and cannot cover the expenses.
The State Bank of Vietnam has decided to establish 14 groups of inspectors who will examine the deposit interest rates applied by the banks in HCM City.
Ho Huu Hanh, Director of the HCM City Branch of the State Bank of Vietnam, said that all the banks, offering the interest rates of 19% and above, all have been asked to adjust the interest rates.
In the meeting with the press on July 1 afternoon, Hanh threatened to discipline banks if they apply overly high interest rates, which is considered an activity of unhealthy competition.
The HCM City branch of the central bank has summoned Kien Long Bank to ask for the explanation why the bank applied such a high deposit interest rate of 20% for 12-month term deposit.
Kien Long Bank said that he raised interest rate in order to retain loyal clients. Truong Hoang Luong, General Director of Kien Long Bank said that a mistake was made in information transferring within the bank has led to the misunderstanding that the 20% interest rate would be applied for all clients. In fact, the high rate was applied to some loyal clients, who have the deposit of over VND3bil (5-6 clients), while the rate is not applied for new clients.
Nevertheless, the central bank does not think that Kien Long should maintain the 20% interest rate, though it is just for some clients.
“Why do banks keep complaining that they are incurring loss, while they still want to increase the capital mobilization cost?” he questioned.
Director of the HCM City Branch of VIB bank has dismissed for daring ask a borrower to pay security money for a loan, which, at the very sensitive moment, is considered the violation of laws.
The former director lent VND42bil to a client, but asked the client to pay a security of VND8bil, or 19% of the credit, while the client still has to pay the interest rate of 21% per annum for the whole sum of loan worth VND42bil. This is a kind of dodging the laws, which makes the real interest rate the client has to pay become much higher than the rate of 21% quoted by the bank.
The State Bank of Vietnam has announced the hot line, through which everybody can contact the State Bank at 08.8211230 or nhnntphcm@hcm.vnn.vn to report about the cases of violating the laws in the interest rate policy.
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