Wednesday, March 26, 2008

Six percent cap suggested for US dollar deposit interest rate


Members of the Vietnam Banks’ Association have agreed to cap the yearly interest rate for US dollar deposits at 6 percent, a reduction from the current 6.9 percent.

They also suggested the yearly rate for Vietnam dong deposits is no more than 11 percent against the current 12 percent.
The VBA members also agreed the rates paid for dong deposits within 1-6 months will be lower than those within 6 months to one year, at 10.5 percent per year compared to 11 percent per year. The ceiling interest rates, announced after a meeting of VBA members on March 24, will be proposed to the State Bank of Vietnam (SBV) for approval. The proposal is expected to get the green light from the central bank and brought into effect on April 2. “We are going to ratify it soon”, an official from the SBV, who asked to remain anonymous, said. He also said the ceiling rate for dollar deposits was not an “administrative command” because it was set by the banks themselves. Banks which do not honour the new rates will be punished in accordance with the law of competition, not the law of the central bank. Vietnam Association of Financial Investors President Nguyen Hoang Hai says the ceiling rates will help limit unfair competition

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