Vietnam deposit interest rate cap is a temporary solution: official

The 14% deposit interest rate cap is just a temporary solution of the State Bank of Vietnam and could be removed when the financial market and interest rates become stable.

The 14% deposit interest rate cap is just a temporary solution of the State Bank of Vietnam and could be removed when the financial market and interest rates become stable, the local online newspaper quoted Nguyen Thi Hong, Deputy Head of the SBV’s Monetary Policy Department, as saying.

The deposit rate cap was set to monitor and limit unfair competition amongst local commercial banks, Hong reasoned, explaining that without the rate cap, commercial banks may race to raise interest rates to lure deposits, weakening the banking system.

Given the fact that the central bank strictly handled rate cap violations, an interest rate race in the banking system would not recur, Hong further commented.

Source Sophie/ StoxPlus

Tags: Vietnam banking industry, Vietnam finance, Vietnam financial, Vietnam interest rates

Posted by VBN on Nov 21 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