VietNamNet Bridge – A paradox exists that many commercial banks have raised the deposit interest rates to mobilize more capital, even though they cannot boost lending.

Under the current regulations, commercial banks can mobilize dong capital at the interest rate of no more than 7 percent per annum, and mobilize dollar capital at no more than 1.25 percent. However, the ceilings have been broken by many commercial banks.

When a customer in HCM City said to a bank officer on September 5 that she wanted to deposit VND300 million for one month, the officer gave her a piece of paper on which the customer could read 7%+1.5% = 8.5%.

The customer understood that the current ceiling interest rate is 7 percent per annum, and the figure would be written down in the saving book. But actually, the customer would get 8.5 percent from the bank.

Le Van Duoc in Phu Nhuan district in HCM City said he was promised the interest rate of 8 percent per annum when he deposited VND1 billion last month at a bank. Earlier this month, the same bank offered 0.5 percent more, which means that depositors can get 8.5 percent per annum.

Bui Thi Thanh, a retired officer in Binh Thanh district, also said the interest rates have been going up and down regularly, but she always can get higher than 7 percent.

“At first, the bank offered 10 percent, and then reduced to 9 percent and 8 percent. But just two days ago, a bank’s officer called me and informed that the interest rate has been raised to 8.5 percent,” Thanh said.

When the reporter contacted the head of a transaction office of Phuong Nam Bank, saying that he has VND200 million and $10,000 to deposit, he was told that the bank would pay 8 percent for dong and 2 percent for dollar deposits.

A banker said that the State Bank’s inspectors have been counting themselves helpless about the banks’ ceiling interest rate breaking, since banks all show lawful documents for the deposits.

When receiving the information that some banks pay higher than allowed for deposits, the State Bank can only send a dispatch to the banks to give warnings.

According to Vo Van Chau, former General Director of Phuong Dong Bank, some banks are now short of capital, while they cannot borrow money from other banks, therefore, they have to seek capital from the public to improve the short term liquidity.

Meanwhile, some analysts believe that banks need capital to buy gold to pay back to gold depositors. The banks mobilized capital in gold and lent in gold many years ago, but they still cannot recover the loans.

As the State Bank does not set any cap on longer term deposit interest rates, commercial banks can set up the interest rates as high as they want.

VP Bank, for example, pays 8.3 percent for 6-month term deposits. At SCB, middle aged depositors get 0.5 percent more. As such, they receive 8.8 percent in the first month, and get 0.12 percent more in the second. In general, depositors can get 8.92 percent per annum.

A banker revealed that banks fear the weak liquidity would occur in the last months of the year, therefore, they try to strengthen the capital mobilization at this moment to save the capital costs.

NLD