- Green Growth
- Your Consultant
Last Friday, August 26, the State Bank chewed the fat with 12 large-scale banks over feasible measures to pull the lending rate to 17-19 per cent, per year.
According to a State Bank source, the authority would first tighten control over mobilisation breaches. “Local lenders would have to mobilise at no higher than 14 per cent, per year and the State Bank would accelerate inspections,” said the source.
Early in 2011, the State Bank placed a 14 per cent, per year cap on deposit rates amidst local banks’ race to hike deposit rates. However, since April, local lenders started breaching this restrictions by offering deposit rates at 18-19 per cent, per year.
“The low interbank market interest rate proves that local banking system is not short of funds, but the competition has pushed some banks to break the rule. If the 14 per cent, per year cap is respected, both lending and mobilising rates can be brought down,” said the State Bank source.
So far, negotiable dong deposit rates are still high at 14-18 per cent, per year. Meanwhile, interbank market interest rates vary between 10-14 per cent, per year. On the other side, local lenders are lending at interest rates of 19-23 per cent, per year.
In early August, newly appointed State Bank Governor Nguyen Van Binh said that the authority would do everything to pull the market interest rate to 17-19 per cent, per year from September.
Phan Dao Vu, general director of Bao Viet Bank, said the State Bank should inspect all banks to detect lenders offering highest rates to depositors.
“Then the authority needs to assist them in terms of liquidity as a condition to lower mobilisation rates. On lending side, banks are finding it hard to lend out at this high rate, they also want a lower rate level,” said Vu.
As of July 20, total Vietnam dong denominated credit growth was estimated to decline by 0.88 per cent month-on-month, pulling Vietnam dong denominated credit growth down to 2 per cent year-to-date.
Last week, in the working session with Deputy Prime Minister Vu Van Ninh, the State Bank governor said that the State Bank would keep all the policy interest rates and maintain the deposit interest rate cap of 14 per cent, per year this year.
The nationwide consumer price index (CPI) for August was up by 0.93 per cent month-on-month, making year-on-year figure to reach 23.02 per cent, the highest level since December, 2008.