Official Dispatch No. 3254/NHNN-TTGSNH dated May 06, 2016 of the State Bank of Vietnam tightening of adherence to regulations on deposit interest rate

THE STATE BANK OF VIETNAM

Official Dispatch No. 3254/NHNN-TTGSNH dated May 06, 2016 of the State Bank of Vietnam tightening of adherence to regulations on deposit interest rate

To:Credit institutions and foreign banks branches

State Bank has recently received market reports on banks unlawful increase of interest rate for US dollar deposit beyond the ceiling rate to mobilize foreign currency (one of the banks artifices as reported is their advising customers to, instead of taking a direct interest in US dollar, to make another deposit in Vietnam dong. Afterwards, all interest from the USD deposit shall be added to that of the VND deposit). Such activity violates the laws and State Bank’s directives on capital mobilization.

In order to maintain legal compliance, credit market security and currency market stabilization thereof, the Governor of the State Bank requests credit institutions and foreign banks’ branches:

1.To abide by current regulations and the Governor’s directives on interest rates of deposits, particularly those in US dollar, in a strict manner.

2.Not to implement technical measures to transgress the ceiling rate of interest for USD deposits and not to mobilize capital in unfair manners of competition.

3.To strengthen internal inspections and audits, to expose violations of ceiling deposit interest rate in active manner, to rectify and take strict actions against heads of credit institutions branches and units that overlooked violations or did not adhere to regulations and State Bank s directives.

4.To monitor, expose and report other credit institutions’ unfair competition and violations of regulations on capital mobilization to the State Bank (Bank Supervision and Inspection Authority).

State Bank shall not consider and ratify credit institutions requests of the establishment of new branches, transaction offices, ATMs, representative offices or the performance of new services or business lines if such credit institutions overlooked violations of regulations on deposit interest rate. Moreover, we shall restrict, suspend or cease certain banking activities of their, if deemed necessary. Such actions of ours shall only end upon their termination of all violations./.

For the Governor

The Deputy Governor

Nguyen Phuoc Thanh