VN Central Bank gets tough with interest rate violators

14:19 | 12/05/2016 Economy

The State Bank of Viet Nam will strictly tackle credit institutions that violate regulations on interest rates, said a bank official.

VN Central Bank gets tough with interest rate violators

A customer at a Maritime Bank office in Ha Noi

According to Nguyen Duc Long, the deputy head of the SBV's Monetary Policy Department, the central bank will issue a directive to guide lenders to stabilise the monetary market, especially the foreign exchange market, while accelerating inspections to handle violations.

A violating credit institution may be subject to the heaviest punishment of being banned from expanding its network for a period of time, he said.

The SBV asked commercial banks to lower the dollar deposit rate from 0.25 per cent per year to zero per cent per year, applying for institutional depositors as from September 28, 2015.

It also stipulated the annual dollar deposit rate of zero per cent for inpidual depositors from December 18, 2015.

Long said this was part of the central bank's measures to restrict dollarisation in the economy and stabilise the foreign currency market. The policies were also expected to enable the central bank to operate exchange rates more flexibly and help the country control inflation and stabilise macro-economic conditions.

The measures have contributed to stability in the foreign currency market during the first four months of this year, with exchange rates and the liquidity of foreign currencies showing good performances, said Long.

During a major bankers' meeting last April 27, SBV Governor Le Minh Hung asked credit institutions to strictly obey the central bank's stipulations. However, some banks were reportedly offering higher dollar deposit rates such as one per cent, or 0.25 per cent plus gifts and special services.

A bank teller told Viet Nam Television (VTV) on the condition of anonymity that with a deposit worth more than US$30,000, this bank offered a customer three rate options: 0.5 per cent per year for a six-month term, 0.8 per cent for 12 months, and 1 per cent for 13 to 18 months.

Some bank employees reportedly guided customers to make dollar savings books, mortgage them for loans in dong, and deposit the loans to enjoy the interest rate difference amounting to 1 per cent.

Commenting on such a trick, Maritime Bank Deputy General Director Dang Tuyet Dung said some employees were intentionally making mistakes and their actions did not represent the policies of banks..

According to the SBV, annual interest rates ranged between 0.8 per cent and 1 per cent for dong deposits without terms or with terms of less than a month, during the last week of April.

The dong deposit rates were 4.5 per cent to 5.4 per cent for terms of a month to less than six months, 5.4 per cent to 6.5 per cent for terms of six months to less than 12 months, and 6.4 per cent to 7.2 per cent for terms of 12 months or longer. 


Source: VNS