Vietnam banks association proposes deposit rates cap at 13.5% for big banks

The State Bank of Vietnam, the country’s central bank, is suggested to cap interest rates at 13.5% for big banks while leaving the 14% rate cap unchanged for other small ones to balance the deposit inflows between big and small banks.

The State Bank of Vietnam, the country’s central bank, is suggested to cap interest rates at 13.5% for big banks while leaving the 14% rate cap unchanged for other small ones to balance the deposit inflows between big and small banks, the local online newspaper Thanh Nien quoted Duong Thu Huong, Secretary General of Vietnam Banks Association (VNBA), as saying.

Small banks found themselves in shortage of funds after the central bank took measures to strictly reinforce the interest rate cap at 14%. Total deposits outflows at these banks were estimated up to tens of trillions of dongs.

The SBV should apply different rate caps for small and big banks, said Tran Dang Khoa, Deputy CEO of SHB, worrying that savings will flowed to big banks, given the same level of interest rates.

However, an unnamed representative of BacA Bank doubted the feasibility of the VNBA’s suggestion, questioning which banks will have to mobilize funds at 13.5%.

It is difficult to place different rate caps for different banks’ scales, commented Nguyen Thi Nguyet Thu, Deputy CEO of BaoViet Bank, adding that the SBV is expected to increase the tender winning rates on OMO to help small banks overcome their serious liquidity problems.

Source Sophie/ News Writer/ StoxPlus

Tags: Vietnam banking industry, Vietnam finance, Vietnam financial

Posted by VBN on Oct 13 2011. Filed under Banking-Finance. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry