Vietnamlawmagazine

In order to prevent a number of banks from circumventing the Vietnam-dong mobilization interest rate cap of 14%/year and offering the interest rate of 14%/year even for very or extremely short-term deposits (24 hours, 2 days, 7 days or 14 days), causing risks to liquidity and safe operations of the banking system, the State Bank of Vietnam on September 28 issued Circular No. 30/2011/TT-NHNN to prescribe maximum interest rates for Vietnam-dong deposits of institutions and individuals at foreign credit institutions and bank branches.

Under the Circular, from October 1 credit institutions will be entitled to fix annual interest rates, covering also sales promotion amounts in any form, for Vietnam-dong deposits of institutions and individuals, at any level not exceeding 6% for both demand and time deposits of a term of under one month.

The maximum interest rate for time deposits of one month or more will continue to be 14%/year. Particularly, grassroots people’s credit funds may offer a 14.5%/year interest rate for these time deposits.

The State Bank of Vietnam also requires credit institutions to publicly post up Vietnam-dong deposit interest rates at places of receiving deposits under regulations. They are prohibited from providing sales promotion in any form in contravention of the law and this Circular.

This Circular replaces Circular No. 02/2011/TT-NHNN of March 3, 2011, providing the maximum interest rate for Vietnam-dong capital mobilization.

For Vietnam-dong time deposits mobilized before October 1, credit institutions and depositors may implement their interest rate agreements until deposit terms expire. If depositors do not withdraw their deposits on the due date, credit institutions will automatically apply the new ceiling interest rate for these deposits.-