return icon Vietnamnet.vn

Banks’ interest rate war could hurt economy

VietNamNet Bridge - Economists have voiced their concern about the new bank deposit interest rate war, saying this would affect the national economy recovery.
VietNamNet Bridge - Economists have voiced their concern about the new bank deposit interest rate war, saying this would affect the national economy recovery.

{keywords}

One month after small commercial banks raised the deposit interest rates, large banks have joined the race.

Even Vietcombank, which stayed outside the interest rate races in 2015, has raised the dong deposit interest rate by 0.3-0.5 percent per annum. The interest rates for 24-60-month term deposits have increased to 6.5 percent after staying unchanged for one year.

At BIDV, the interest rates for long-term deposits have increased by 0.4 percent to 7.2 percent per annum. Being a large state-owned commercial bank, BIDV now offers interest rates which are far higher than that offered by joint stock banks for some short-term deposits.

As for 3-month term deposit, for example, BIDV offers the interest rate of 5.5 percent per annum, while Sacombank and Eximbank 5-5.3 percent. The same rate is also being applied by VietinBank for 3-5 month term deposits from individual depositors. Meanwhile, 12-36 month-term deposits have interest rates of 6.8-7 percent.

Bui Quang Tin, a lecturer of the HCM City Banking University, said on Zing news that the deposit interest rates have been raised partially because of the draft Circular 36 which says that banks must not use more than 40 percent of short-term mobilized capital for medium- and long-term loans instead of 60 percent as previously set.

Economists have voiced their concern about the new bank deposit interest rate war, saying this would affect the national economy recovery.
“If the regulation occurs, banks would lack capital for lending,” he explained. “This has forced them to step up capital mobilization by pushing the deposit interest rates up.”

A report by the Ban Viet Securities Company recently also said that the new regulation has raised concern about a new interest rate war.

Ly Thanh Sinh, general director of Minh Long Hung Garment & Embroidery Company, which borrowed VND10 billion last October at the interest rate of 10.5 percent per annum, said on Tuoi Tre he was worried about the deposit interest rate increases.

In principle, banks have the right to adjust the lending interest rate after the first three months.

Le Xuan Nghia, head of the Institute for Business Development, warned that if the lending interest rates go up, the efforts by businesses to recover their production and the efforts by the government to revive the national economy and restructure the banking system may be in vain.

Tin estimates that with the current interest rates of 10-11 percent, businesses can make profit of 3-5 percent.


Thanh Mai

MORE NEWS

FDI hoped to help realty market develop sustainably in long term

Vietnam’s real estate sector last year attracted an additional 1.85 billion USD in foreign direct investment (FDI), retaining its second place among industries drawing FDI with combined investment of 4.45 billion USD.

Party chief’s book on fight against corruption and negative phenomena released

A ceremony was held in Hanoi on February 2 to release the book by General Secretary of the Communist Party of Vietnam (CPV) Nguyen Phu Trong.

Make in Vietnam drives ICT firms into international markets

Global expansion has become a trend in domestic ICT enterprises in recent years.

Schools launch digital-related majors to meet students’ needs

In 2023, many universities have launched new subjects associated with the digital era to meet students’ needs.

Southeast region prepares for new FDI wave

The southeast region is preparing conditions in infrastructure, administrative procedures and human resources to welcome a new wave of foreign direct investment (FDI), as investors have flocked to the region from the beginning of this year.

VIETNAM NEWS HEADLINES FEBRUARY 2/2023

PM chairs monthly teleconference with localities

Experts call for stricter penalties as drink driving soars over Tet

The maximum punishment for car drivers with alcohol concentration levels exceeding 0.4mg per litre of breath, or 80mg in 100 ml of blood, is a fine of VND40 million (US$1,693) and a two-year suspension of their driving licences.

Over 32% of apparel firms remain closed in Hanoi

Nearly a third of textile and garment firms have yet to reopen in Hanoi although the Lunar New Year holiday has ended.

Domestic tourism hits five-year high

Domestic tourism numbers hit 13 million in January, the highest in the last five years, according to the Vietnam National Administration of Tourism.

VIETNAM BUSINESS NEWS FEBRUARY 2/2023

Businesses exporting medicinal herbs to China required to register

Cashless payments on the rise: convenience and security for expats in Vietnam

As digital payment methods surge in popularity, expats in Vietnam are not alone in embracing the change to cashless transactions.

My Dinh Stadium needs money for more upgrading

Having been upgraded with a package worth VND408 billion, My Dinh Stadium is still in poor condition.

Vietnam needs more submarine cables to ensure internet services

Vietnam will need at least two or three more submarine cables to ensure proper internet services for the country's development in the next five years, according to Vu The Binh, Secretary-General of the Vietnam Internet Association.

Government convenes January meeting

The Government convened its first regular monthly meeting for 2023 in Ha Noi on Thursday under the chair of Prime Minister Pham Minh Chinh.

Scammers steal information, money on first days of Year of the Cat

The first days of the New Year are the time for scammers to increase their activities. The most common tricks are stealing information and money from victims’ accounts.
back_to_top