The State Bank of Vietnam has required commercial banks not to offer interest rates of more than12 percent a year on deposits in Vietnamese dong (VND) to curb the ongoing interest hike war among them.
The State Bank of Vietnam, the country's central bank, made the requirement on Feb. 26 after many commercial banks raised interest rates to lure customers, according to local newspaper Youth on Wednesday.
Recent policies of the central bank on tightening money supply have created an enormous thirst for capital on Vietnam's monetary market, resulting in the interest hike war, according to some banks in Vietnam. Major banks like Vietcombank and Sacombank held deposit interest rates of 8-9 percent per annum, and smaller banks10-14 percent.
In an effort to curb Vietnam's inflation, the central bank has recently raised key interest rates, further tightened rules restricting loans for investment in the securities market, and lifted the level of compulsory reserves that must be maintained by credit institutions. It has also ordered commercial banks to buy up treasury bills totaling 20.3 trillion VND (nearly 1.3 billion U.S. dollars).
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