Vietnam Central Bank Seeks to Stop Deposit Rate Hike

Ho Chi Minh City branch of the State Bank of Vietnam will soon launch an inspection into banks which allegedly pushed deposit interest rates higher than 10% per year, fearing “problem loans” as the lending rate is still capped at 10.5%.

 

Ho Huu Hanh, director of the branch, said that the central bank discourages lenders from bolstering credits at this time, so there should be no reason for banks to raise their borrowing rates.

 

The inspection will be also conducted at those banks with high credit growth, Hanh added.

 

Branches of banks, which borrowed high-cost capital to boost lending to consumers, are now under the surveillance of the central bank.

 

Hanh said the Ho Chi Minh City branch had cooperated with officials from the central bank’s headquarters to start an inspection into such consumer loans as lending rates of those loans are negotiable and not subject to the cap of 10.5% a year required by the central bank.

 

Hanh said that the central bank wanted to know if such loans were properly used for registered purposes, adding “loans of over VND2 billion each will be checked.”

 

Commercial banks have recently scaled up their borrowing rates and boosted consumer credits as one of main banking activities since procedures involving such loans are simpler and the lending rate can be higher than the regulated ceiling.

 

Deposit interest rates are currently being offered at 8%-8.4% per year on three-month, 8.5%-8.9% on six-month, and 8.6%-9.1% on nine-month term. (CafeF)