Another lender found breaking interest rate cap

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The State Bank of Vietnam has accused partly private lender HDBank of "seriously" violating interest rate regulations, and the central authority has vowed to punish the bank "strictly."

Police and central bank officials discovered the violations at a Tan Binh District branch in Ho Chi Minh City on September 4, the central bank said in a statement, without giving further details on the violations.

The central bank, however, emphasized that the violations were unhealthy competition practices that "go against the rights of other credit institutions."

It said some individuals concerned would face criminal charges.

The State Bank of Vietnam banned commercial banks from paying more than 14 percent on dong deposits last month in an attempt to effectively lower lending rates.

News website VnExpress reported that the HDBank branch offered to pay an extra 1 percent interest to a depositor. The report also said the case may have been reported to the central bank by an official of another bank.

VnExpress cited an HDBank official as saying the branch had not been greenlighted to pay extra money for deposits.

However, the central bank said there had been a policy within the HDBank system allowing such a violation. As a result, police and central bank investigators will look into HDBank headquarters and other branches as well.

Last month, the State Bank of Vietnam decided to ban another partly private lender, Dong A Bank, from opening new branches for one year after one of its branches was found violating the 14 percent rate cap.

The central bank has issued a statement showing its support for commercial banks that report interest rate violations by other lenders.

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