Vietnamese legislators on Thursday criticized the central bank for being too tolerant and not strictly punishing banks that set higher interest rates than allowed.
National Assembly delegate Truong Dinh Quyen said the large number of commercial banks has led to many problems.
Although the central bank has set a 14 percent limit on deposit interest rates, many banks continue to break the cap to compete for clients, Quyen said. This showed a weakness in banking management, he said.
Deputy Tran Hoang Ngan of Ho Chi Minh City said despite serious violations of the rate cap, the State Bank of Vietnam did not take any measure to solve the problem.
"The banking sector needs to be trustworthy because it is keeps the public's money," Ngan said. "But now banks are breaking the law."
The new central bank governor should deal with the situation, bringing deposit rates to 14 percent and lending rates to 17-18 percent, he said.
According to the central bank's latest weekly report, lending rates at some banks were as high as 25 percent a year.
Legislators said many businesses are struggling due to the high borrowing costs and tightened credit access.
"The banking system must be inspected to prevent unhealthy competition that could lead to difficulties for the economy and falling confidence among the public," said Deputy Truong Thi Anh.