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VietNamNews

Small banks breach interest-rate cap

Update: January, 12/2012 - 10:27

HCM CITY — Nguyen Thy Nguyet Cam of HCM City's District 3 said a joint stock bank offered her 3 per cent extra interest on top of the central bank limit of 14 per cent on her deposit of VND1 billion (US$47,600).

The 3 per cent would be brought to her house in cash the day she deposited the money, the bank told her.

After lying low for several months, several banks, especially smaller ones, appear to be again breaching the 14 per cent cap.

Branches of DongA Bank and HD Bank had been, in mid-September, caught violating the rule, and related officials were dismissed.

Speaking at an annual review meeting held by the central bank on Tuesday, Truong Thi Thuy Nga, head of Vietcombank's HCM City branch, said deposit interest rates were again being pushed up to 16-17 per cent.

She herself had to talk to many large customers to persuade them against withdrawing their deposit, and often had to put up with it since customers found deals elsewhere.

"If deposits keep flowing out of our bank to others, we have to have some flexibility to retain our customers, but will make an honest report to the State Bank of Viet Nam," she said.

Dao Hong Chau, deputy general director of Eximbank Viet Nam, noted that a number of smaller banks were breaching the cap due to lack of liquidity.

Nguyen Ngoc Thang, deputy head of the HCM City office of the central bank, said deposit mobilisation by lenders, especially joint-stock banks, in HCM City fell significantly in September and October last year. Since September 7 they have in fact reported an erosion of 10.5 per cent in deposits.

He said deposits by individuals at joint-stock banks declined by almost VND41 trillion ($2 billion) between September 7 and November 10 due to the regulation on 14 per cent cap, with part of the amount going to State-owned banks. State-owned banks reported an increase of VND1.442 trillion ($69 million) in that period.

Investment in gold had also caused a fall in deposits at joint-stock banks. — VNS

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