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Regulators halt commissions on bank deposits
The State Bank of Viet Nam has showed a more determined attitude to enforce the deposit interest rate cap by banning payments of commission for deposit-related brokerage activities.
Late October, the central bank issued Document No.8376 which bans credit institutions and branches of foreign banks from paying commissions to individuals or firms that facilitate the placement of investor deposits.
To ensure transparency, credit organisations and branches of foreign banks in the country are also required by the central bank to establish interest rates on Vietnamese dong and US dollar deposits that do not exceed the regulated interest-rate caps, even including bonuses from promotions.
Banks that want to launch promotion prog-rammes will have to calculate their maximum deposit interest rates based on quoted rates, plus the percentage between their total value of bonuses and total deposits attracted during promotions.
The credit organisations will also be required to report their promotional programmes to the central bank so that the latter can monitor these activities. This will ensure that the programmes are carried out in line with current regulations.
The bank's move is aimed to miminise negative practices in the payment of brokerage commissions.
These kinds of payments harm the banking sector's prestige and adversely affect the stability of the domestic monetary market.
After the central bank began closely watching deposit interest rate caps, many credit institutions have begun competing with each other to mobilise more capital by launching attractive promotional programmes.
The Viet Nam Thinh Vuong Joint-Stock Commercial Bank (VPBank) is launching a promotion, with attractive gifts worth a total of VND9 billion (US$428,570) for deposits of VND30 million ($1,428), $1,500 or 1,000 euros upwards. It is offering a special gift worth up to 20 SJC (Sai Gon Jewelry Company) gold taels. The promotion lasts from November 3 to January 16.
The Asia Commercial Bank (ACB) also has a promotion for customers who buy certificates of deposit in Vietnamese dong, the US dollar or the euro, with valuable gifts worth a total of VND3 billion ($142,857).
Many other banks including Viet Nam Tin Nghia, Phuong Dong, Nam A and Agribank are also launching promotion programmes with thousands of attractive gifts.
However, industry insiders suspect that many of the banks carrying out these promotions set their maximum deposit interest rates higher than the SBV caps.
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