LookAtVietnam - The deposit interest rate ceiling of 10.5 percent, which has existed for one year, has been shattered when ACB raised its rates even higher.
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Banks hope for deposit interest rate autonomy
Bankers and businesses want interest rate ceiling gone
Banks want interest rate ceiling removed, central bank says ‘no’
ACB announced new deposit interest rates on April 13, with the highest at 11.6 percent per annum. This special rate applies to clients who deposit 10 billion dong or more for at least 36 months.
The interest rate will also be adjusted every 12 months in accordance with the market interest rate so that depositors will enjoy higher rates in the future, and vice versa.
The highest available rate of 11.6 percent will also be applied to other deposits when clients deposit more than 10 billion dong for 13 months.
Interest rates for one-month and longer term deposits are all higher than 10.5 percent per annum.
The ACB decision has been described as “shocking,” because the State Bank of Vietnam (SBV) has not directed the removal of the ceiling on deposit interest rates. Other commercial banks offer only care to offer the highest interest rate allowed by SBV, 10.49 percent per annum.
Meanwhile, Ly Xuan Hai, General Director of ACB, claimed that ACB is not violating the law. He stressed that the Government now seeks to liberalize interest rates based onmarket demand.
In reality, ACB’s new interest rates are old news. Banks pay high interest rates to depositors, but they quote interest rate at 10.49 percent.
Just one day after the ACB announcement, Viet A pushed its deposit interest rate beyond 10.5 percent. They are now the highest levels, offering 11 percent and higher for nearly all kinds of deposits. The highest interest rate of 11.8 percent is applied to 12-13 month term deposits. If clients deposit more than 100 million dong, they will enjoy additional interest rates of 0.03-0.1 percent.
According to Tien Phong, many other banks are also considering an interest rate hike, although they warn that the rates will not be as high as in 2008. Deposit interest rate must be lower than 12 percent per annum, because the lending interest rate has been cut to 14-15 percent. If banks mobilize capital at over 12 percent, they will not profit and must face high risks.
VnExpress quoted Cao Thuy Nga, Deputy General Director of Military Bank, as saying that the bank would raise the deposit interest rate if the ceiling rate of 10.5 percent is removed. Nga also stressed that the increase will not be decided immediately and increases will not be big, because the bank’s liquidity is not in good condition.
One year ago, SBV made an effort to stabilize the market interest rate by decided that commercial banks should not mobilize capital at higher than 10.5 percent. SBV also threatened to inspect banks offering higher rates.
Source: Tien phong, VnExpress
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