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| New ceiling rate from April 2, says bank association |
| 29-MAR-2008 Intellasia | Tien Phong |
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| 29 Mar, 2008 - 7:05:00 AM |
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Vietnam Banks Association yesterday March 27 announced that all its members agreed the ceiling deposit rate in dong and US dollar, regulations on lending activity and business administration.
Replying the question why members agreed the dong deposit rate of no more than 11% per annum while inflation rate is higher than that, the association said that if the positive real interest rates for depositors stand at 12% pa, adding to costs for compulsory reserve, payment reserve and purchasing SBV's T-bills, commercial banks' entry costs will be increased up to 14-15% leading to the lending rate of over 18% per annum. VNBA feared that production and business enterprises couldn't suffer such a high lending rate. If enterprises stop borrowing, banks will not be able to do business.
In the current inflation context, after borrowing with a high interest rate, enterprises cannot make profit to pay interest rate of bank debts.
In addition, VNBA's members also agreed the US dollar deposit rate of no more than 6% per annum to prevent unhealthy transactions that are taking place on the foreign currency market.
Also banks agreed not to add cash promotion programmes or prize-based programmes.
Banks will check over borrowers and centralise capital for businesses in fields of export, agriculture, and estimate lending growth so as to be matched with the market's capital mobilisation under SBV's director.
The association asked SBV's permission on the applying of new ceiling deposit rate from April 2 and proposed the central bank to adjust interest rate of the open market and interbank market so as to be matched with commercial banks' level, extend banks' race of hiking chartered capital and reduce the compulsory reserve ratio for US dollar.
Sending money at banks at the moment still brings in suitable and safe profit, and void more risks in business of gold, securities and real estate. Lower deposit rate will create better conditions for banks to re-calculate lending rate to help enterprises in terms of capital source, said VNBA.
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