Banks Accept 15 Percent Ceiling on Deposit Interest Rates

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Dec. 22 — Twelve commercial banks in Hanoi entered an agreement with the State Bank of Vietnam’s Hanoi branch and the Vietnam Banking Association (VNBA) to cap deposit interest rates at 15 percent.

The agreement, which takes effect immediately, was struck after news broke that Techcombank and SeABank were offering interest rates as high as 18 percent per year for deposits.

Under the agreement, nominal rates would be capped at 14 percent or less. Combined with special bank offers such as cash prizes or gifts, real rates would not exceed 15 percent per year.

The new agreement, accepted by 12 banks, is compulsory—with violations punishable by state regulators, according to the VNBA.

VP Bank General Director Nguyen Hung predicted the new agreement would stabilize the economy, do more to prevent an interest rate war, and introduce much needed liquidity into money markets.

The central bank recently pumped tens of trillions of dong into the inter-bank market, with total trading volume peaking at VND40 trillion (US$1.92 billion) on Tuesday.

Earlier this month, the central bank also relaxed compulsory reserve ratios for credit institutions that lend to the agricultural sector, further reflecting the government’s goals of injecting liquidity into markets and promoting rural development.