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Banks breach interest rate cap to get deposits
Some banks are exceeding the interest rate cap of 14 percent by offering bonus rates and promotions to attract deposits, newswire Vnexpress reported.
One offers a bonus interest rate of 3 percent for long-time depositors, Vnexpress said without naming the bank.
The bank’s director blamed the violation on rising inflation and dollar exchange rates and the fact that the State Bank of Vietnam (SBV) has withdrawn VND30 trillion (US$1.44 billion) it had pumped in.
ABBank offers up to 16 percent on all deposits of at least VND500 million for one to three-month terms, according to online newspaper Dat Viet.
An analyst said the SBV injected VND26 trillion through open market operations on February 28 but only for a seven-day term, warning banks’ liquidity will be hit upon its withdrawal.
“As inflation and exchange rate pressures are rising, the government and the SBV have sent signals of stepping up the inflation fight, and small banks must seek ways to avoid liquidity risks,” he said.
“They must raise interest rates to raise funds in case of a liquidity shortage since they cannot rely on emergency support from the SBV.”
Nguyen Van Giau, the SBV Governor, assured there is enough liquidity in the banking system, pointing out demand is no longer high after the Lunar New Year.
If banks violate the interest rate cap, SBV will take measures to penalize them, including by closure of branches.
Last December Techcombank sparked off an interest rate war by hiking deposit interest to 17 percent. But the central bank stepped in a day later and called halt by setting a cap.
tuoitrenews, Vnexpress
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