Deposit rate touches two year high of 8%

14:54 | 03/03/2016 Finance - Banking

Some commercial banks have continuously increased interest rates to attract depositors, setting a record two-year high of 8 per cent per year.

Deposit rate touches two year high of 8%

Currently, commercial banks list their highest rate between 7.4 per cent and 7.5 per cent per year for long-term deposits — Photo motthegioi.vn

Eximbank last week increased its deposit rate from 7.5 per cent to 8 per cent per year for some terms. The new rate was applied for deposits of at least VND10 billion (US$450,000) with 36 month term.

The Orient Commercial Joint Stock Bank (OCB) has also just listed the same rate for 36-month deposits. The bank even offered an additional 0.1 percentage points per year for depositors those make online savings.

SeABank is also offering the 8 per cent rate for 13-month deposits, however, beneficiaries must be the bank's regular customers for five years with deposits of at least VND200 billion.

Currently, other commercial banks list their highest rate between 7.4 per cent and 7.5 per cent per year for long-term deposits.

Under the current regulation, the central bank sets the cap of 5.5 per cent per year only for short-term deposits of under six months. The rates for medium- and long-term deposits are float.

Banks said that besides aiming to restructure their facilities to have more long-term capital sources, the deposit rate hike is also expected to help them retain their customers.

However, experts were concerned that it could initiate a rate hike race among banks to attract depositors. The deposit rate hike could also cause a rise in lending rates next time as input costs of banks increase.

Earlier, in the first month of the year, the central bank required credit institutions to obey legal regulations on deposit interest rates to ensure safety of institutions and stabilise the local monetary market.

The central bank said that credit institutions are not allowed to use ‘technical measures' as a loophole to indirectly exceed the central bank's rate cap. The central bank prohibits any unhealthy competition in the capital attraction of credit institutions./.

 

Source: VNS

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