Vietnamese commercial banks have, since late July, lifted interest rates on deposits in VND, especially short-term ones, in a bid to mobilise more capital in the remaining months of the year.

The Ho Chi Minh City Housing Development Bank (HDBank) led the race, introducing an annual interest rate of 10.3 percent for 36-month deposits.

Such banks as the Orient Commercial Bank (OCB), the Saigon Commercial Bank (SCB), the Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) and the Saigon-Hanoi Joint Stock Commercial Bank (SHB) have increased deposit interest rate by 0.2-0.5 percent to stand between 8-8.5 percent a year.

Besides lifting the deposit interest rate, a number of commercial banks also introduced attractive promotional programmes. The Asia Commercial Bank (ACB) has, for example, awarded each depositor a 0.2 percent increase in their savings interest rate.

In the view of ACB Director General Ly Xuan Hai, the VND deposit interest rate will continue to rise slightly from now to the end of September, with no repeat of last year’s sudden fluctuations.

According to economists, a warm-up in the stock and real estate markets has driven commercial banks to “take a step in advance” (raising deposit interest rates) in an attempt to stem the abrupt flow of cash into those markets.

At present, savings of over one-year term account for a small proportion in banks’ deposits. As a result, some commercial banks have used capital mobilised from short-term deposits for their mid- and long-term loans, which, economists say, can lead to an imbalance in capital sources.

To deal with the situation, the State Bank of Vietnam has issued a decision to lower the cap on commercial banks’ usage of short-term capital for mid- and long-term loans to 30 percent, from the previous 40 percent cap.

The State Bank, at the same time, requested commercial banks to tighten lending activities and fix their VND deposit interest rates at an appropriate level that can satisfy the supply and demand of capital on the market.

On August 15, the Banking Monitoring Agency began examining commercial banks’ operations on a large scale, focusing on their lending activites./.