Central bank to inspect interest rate violations

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The State Bank of Vietnam has ordered branches nationwide to inspect lending and deposit activities at commercial banks to make sure they abide by interest rate regulations.

According to the central bank, some lenders are offering bonus interest rates for deposits and charging extra fees on loans.

Violators have to be reported to the central bank by March 9, said the State Bank in a statement.

In late February, the central bank widened the scope of bank loans that could be offered at negotiable interest rates to include areas such as production, business, services and investment for development. Previously, only rates on consumer loans could be negotiated.

The move has resulted in higher lending rates, up to 19 percent a year. As lending rates increase, bankers say many clients insist on receiving deposit rates higher than the current rate cap of 10.5 percent.

In order to attract enough funds, commercial banks have to offer various perks to depositors, which can account as much as 30 percent of the total deposit rate. Perks include gifts, cash or bonus rates.

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