Smaller banks raise deposit rates

Some commercial banks have raised deposit rates. This has caused concerns about a wider range of increases across the banking sector. And once again, the State Bank of Vietnam's efforts to lower interest rates is being challenged.

On a closer look, these attractive interest rates are applied only to terms of 1.5 years, 2 years or 3 to 5 years. This reveals that banks are looking for long-term deposits.

Dr. Can Van Luc said, there are three reasons for the move. Firstly, banks want more money, especially medium and long term funds to achieve credit growth rate of 18% this year. Secondly, banks must restructure their medium and long term capital. Third is the new regulation of the State Bank from this year which reduces the amount of short-term savings being able to be used for long-term loans from 60% to 50%

Only 50% of short-term deposits will be available for long-term loans, instead of a previous 60%. Not all banks meet this requirement immediately. Experts think the fluctuation of interest rates is only temporary.

Banks are also suggesting that in order to maintain stable interest rates, consider raising dollar interest rates from a current nought percent is under consideration.

Despite the recent changes in interest rates, the lending interest rate has remained relatively stable. Short-term lending interest rates are currently 6-9% per year, medium and long term stand at between 9 to 11% per year.