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Banks have quietly entered a new interest rate race. Though being capped at 10.49 percent, they have found ways to apply higher interest rates.


Ceiling deposit interest rate broken

Businesses with idle short term capital are now being ‘hunted’ by commercial banks. H. Son, General Director of a joint stock company, said that a week ago a bank persuaded him to deposit his idle capital at bank at 12 percent per annum. Son said that banks are seriously lacking capital and have to call for capital at an interest rate higher than the ceiling rate.

Banks have many to dodge the laws to offer the interest rates higher than the ceiling level.

 Nam Viet Bank’s highest interest rate now is 10.49 percent per annum, but the bank allows clients to overdraft 10 percent of total deposits. This means that if clients deposit one billion dong at the bank at the interest rate of 10.49 percent, they will be able to borrow 100 million dong without having to pay interest. The sum of 10 percent is always deposited back at the bank, which means that the actual interest rate clients can enjoy is 11.54 percent.

VIB Bank also quotes the highest interest rate at 10.49 percent. Meanwhile, from December 10, depositors can get awards in cash.

 Prior to that, some other banks applied bonus interest rates to depositors. Viet A bank, for example, gives an additional interest rate of 0.005 percent per annum to those who deposit one billion dong.

 The 10.49 percent ceiling interest rate has been set up after the State Bank of Vietnam threatened to inspect the banks which offer an interest rate higher than 10.5 percent per annum. However, it seems the ceiling rate is being broken

SBV will make intervention to the market?

 The Deputy Chairman of the National Finance Supervision Committee, Le Xuan Nghia, said that though banks’ liquidity in 2009 is not as bad as in 2008, they still need the support from the State Bank of Vietnam. Nghia said that the central bank needs to strengthen refinancing to commercial banks which have problems with liquidity.

 The Governor of the State Bank of Vietnam, Nguyen Van Giau, stated in a working session with banks on December 14 that the central bank is ready to intervene to help banks with liquidity problems. However, he said that no bank has been short of liquidity so far.

 According to the State Bank of Vietnam, the mobilized capital of the banking system has increased by 28 percent.

 Giau denied the rumour that the central bank will pour 30 trillion dong to commercial banks to help improve liquidity.


Source: VietNamNet/LD
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