Banks told to hold deposit interest rate at 9.5% maximum

VNBA Chairman Nguyen Quoc Hung said at a meeting with bank representatives Thursday that the popular interest rate is now at 9-10% annually for a 12-month term, with some banks offering up to 11.5%.

"This creates intense competition in mobilizing money, which causes instability among depositors and borrowers," he said, adding that rising deposit interest rates means rising costs, which makes it more difficult to lower loan interest rates to support businesses.

Bank representatives at the meeting agreed with the proposal to keep deposit interest rates at 9.5% maximum.

But several finance companies do not want such a cap imposed.

Representatives of FE Credit and Post and Telecommunications Finance Co. said that as their organizations are only allowed to mobilize funds from businesses and organizations, and not from individual citizens, they need high deposit interest rates.

Deputy Governor Dao Minh Tu of the State Bank of Vietnam said that banks need to lower their deposit interest rates but still must ensure financial security.

Bank shareholders need to accept lower profit when deposit interests are lowered, he added.