Banks have restarted the interest rate race after a short period of interruption. However, analysts say the interest rate increases are not overly high.

  Thanh in My Dinh residential quarter in Hanoi said an officer of a joint stock bank offered the interest rate of 17 percent if she deposits 400 million dong at the bank. Especially, unlike previously, when banks only accepted to pay high interest rates for short term deposits, she now can deposit for up to six months at the same interest rate.

 

 However, Thanh decided not to deposit at the bank, because another bank offered the higher interest rate, at 18 percent per annum. The bank said that it would pay up to 18.3 percent per annum for the bigger deposits, worth 500 million dong or more

 A credit officer of a ban on Lang Ha Road in Hanoi has also affirmed that depositors can enjoy the interest rate of at least 18 percent per annum for the deposits worth 400 million dong and more.

 She said her bank could offer higher interest rates, but it dare not do that because the State Bank recently has continuously taken inspection tours and threatened to punish heavy fines on the deposits with overly high interest rates.

 Under the current regulations, the deposit interest rate must not be higher than 14 percent per annum.

 In the past, the market once witnessed the interest rate hike wave, where the deposit interest rates were pushed up to 18 percent per annum. Later, with the strong intervention by the central bank, the interest rates have been eased by a little. However, in recent days, the interest rates have increased again, even though the bank liquidity is very good at this moment.

 General Director of a Hanoi-based bank said that it is the fear for the gold and dollar price increases which has pushed the deposit interest rates up. Since the gold prices have been escalating in accordance with the price hike in the world market, people tend to withdraw money from banks buy gold. Commercial banks, fearing that the deposits would go down, have to raise the interest rates in order to attract more capital.

 Several days ago, when the interest rates slightly decreased, the same banker warned that the interest rates won’t go down sharply in 2011, because the inflation rate remains very high.

 His prediction has come true: the interest rates now tend to move up. Especially, small joint stock banks are offering the interest rates higher than state owned banks and big banks. Depositors now can enjoy the interest rates of 17-20 percent per annum, depending on the scales of the deposits. Even state owned banks are also reportedly the interest rates of 17 percent per annum.

 Meanwhile, experts say that the 0.2 percent interest rate increase should be seen as a normal thing.

 Deputy General Director of a state owned bank said he cannot see the signs of a new interest rate war. “The interest rate increases would only be described as “high” if the increases are higher than 0.5 percent,” he said.

 The banker has stressed that the liquidity is now good, while the credit does not increase sharply; therefore, banks have no reason to raise interest rates. However, he admits that the interest rates will still be high unless the inflation rate is low.

 Meanwhile, the newly appointed Governor of the State Bank of Vietnam Nguyen Van Binh has said the interest rate may go down to 17-19 percent from September.

 CV