Vietnam Banks Asked to Not Raise Deposit Interest Over 12 per cent
The State Bank of Vietnam (SBV) has asked local commercial banks not to increase deposit interest rates to more than 12 per cent/year in order to ensure safety in payment among banks and stabilize monetary market.
Banks can adjust interest rates to a reasonable level, but cannot raise the deposit rates to over 12 per cent a year, SBV said in a notice February 26.
SBV Governor Nguyen Van Giau said that the state-owned commercial banks should actively participate in the open market and other recapitalization channels to strengthen payment capability and support other commercial banks in the inter-bank market.
The notice came as some days before SBV said it would interfere in the interest rate hike race among banks recently.
Nguyen Ngoc Bao, head of the SBV’s Monetary Policy Department, said the rate race started as many small lenders increased credit much late last year and early this year, resulting in a liquidity crunch.
The lacking of liquidity was partially happening with some banks only, not with the banking system, Bao said, adding that SBV, therefore, had asked banks to meet with each other to have negotiations on interest rates.
The central bank was mulling methods to supply capital for banks via open market operations, he said, hoping that the monetary market would be stable soon.
The average overnight rate on the inter-bank market was around 8-10 per cent February 25, much lower than in the previous week, Bao said. (Local sources)
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