Vietnam central bank encourages lenders to report violations

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The State Bank of Vietnam said Wednesday that local media should encourage, instead of criticizing commercial banks that report interest rate violations by other lenders.

According to the central bank, local lenders have generally complied with the deposit interest rate ceiling of 14 percent and their lending rates are falling.

"Some cases of violations have been discovered by banks and reported to the State Bank of Vietnam and have been strictly dealt with, creating transparency and equality in banking activities and receiving supports from the public and financial institutions," the monetary authority said in a statement.

The State Bank, however, said some reports published in local newspapers between September 20 and 23 had criticized the reporting of the violations and called it an unethical business practice. The central bank requested local media to end such a criticism and stop supporting violators.

In a separate statement on its website, the State Bank of Vietnam said it will maintain the 14 percent rate cap on deposits with terms of one month or longer. Starting October it will also cap interest rates on non-term or under-one-month deposits at 6 percent.

According to news website VnExpress, the criticism so far centered around the case of Dong A Bank, which has been banned from opening new branches for a year after one of its branches was found violating the 14 percent rate cap.

The bank's branch in the southern province of Tay Ninh was found to have paid 15.5 percent on a deposit of VND1 billion, higher than the 14 percent cap.

VnExpress said the manager of the branch reported that the depositor was actually introduced to him by the director of another bank.

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