VINACHEM

HA NOI — Banks are once again offering higher deposit rates of 11.5-11.9 per cent per year, in an effort to attract idle capital.

The rates are despite a voluntary agreement made between the Viet Nam Banks Association and the State Bank of Viet Nam last December to cap deposit interest at 10.5 per cent or face investigation by the central bank.

However, the association's general secretary, Duong Thu Huong, said the announcement of the higher rates was just a disclosure of what had been already going on.

"Banks have not increased interest rates," said Huong. "They've just made the rates more transparent."

Previously, to attract capital, banks had been offering bonus interest, cash or gold, bringing average effective interest rates to as much as 12 per cent, Huong explained.

"The change of deposit interest is just a matter of publicity," Asia Commercial Bank deputy director Nguyen Thanh Toai told Viet Nam News.

Under the Civil Code, banks are allowed to offer deposit rates up to one-and-a-half times the prime rate, or a maximum of 12 per cent at this time.

Asia Commercial Bank is offering 11.6 per cent per year on Vietnamese dong deposits, VietA Bank 11.9 per cent per, and Habubank 11.99 per cent. Sacombank's rates were up to 11.59 per cent annually, while Military Bank was offering 11.5 per cent.

Vietcombank is now offering 11.5 per cent on six- to nine-month term deposits, while Eximbank was paying 11.2-11.5 per cent on term deposits of one month to one year.

"The purpose of the change is to set up a new interest rate structure to attract capital at more reliable rates to support small- and medium-d enterprises," said a representative of Sacombank.

(Source: VNS)