The State Bank of Vietnam has imposed a 14 percent ceiling on dong deposit rates after commercial lenders agreed to the cap in order to stabilize the money market.
Starting December 15, lenders are required to offer no more than 14 percent on dong deposits, the central bank said on its website after meeting with members of the Vietnam Bank Association on December 14.
The ceiling includes any kind of promotion, the bank said, adding the cap will be adjusted later in accordance with inflation and the supply and demand situation.
Representatives of commercial lenders agreed that it was necessary to prevent unhealthy competition (by raising interest rates) and hidden negotiations between banks and depositors, which distorted the market and rendered it opaque, the central bank said.
The meeting was held to reach an agreement among banks after Hanoi-based Techcombank triggered a rate race on December 8 by launching a program titled "Three golden days" in which dong depositors received the interest rate of 17 percent per annum.
The central bank immediately stepped in and ordered the bank to stop the program.