Commercial banks all stated that they paid the interest rate of 14 percent per annum at the highest for dong deposits, while in fact, the actual interest rates were much higher at 17-18 percent. A commercial bank has been thought as ?falling into a trap? installed by another bank. Experts believe that it is now the right time to discuss about how to improve the business ethics.
State management agency also? tells lies
On September 23 and 27, the Vietnam Banking Association VNBA organized two meetings in Hanoi and HCM City which gathered its members in the north and the south, where commercial banks, once again, promised to apply the 14 percent ceiling interest rate mechanism as instructed by the State Bank of Vietnam on September 7.
At the meeting, VNBA?s representative said that wrong figures about the deposit interest rates not only could found in the reports by commercial banks, but also in the reports sent by the State Bank of Vietnam to VNBA.
?I burst out laughing when reading the reports. Every one knows for sure that all the commercial banks broke the regulations, offering the interest rates of 17-18 percent per annum for dong deposits. However, the central bank?s report showed that the deposit interest rates of all bank were all at 14 percent per annum,? an officer of VNBA said.
Telling lies seems to be a part of the banks? operation.
Business ethics and punishment
In 2008, when the credit boomed with the growth rate of 53 percent and the inflation rate exceeded 20 percent, the State Bank had to follow a tightened monetary policy. At that time, the demand for dong increased dramatically, which forces small and less competitive banks to raise interest rates in order to lure deposits.
As a result, the capital flew from the banks which offered lower interest rates to the banks which offered higher interest rates. Local newspapers also reported that they could see long queues in front of banks, who came to withdraw deposits or make deposits.
Finally, VNBA had to gather its member banks, asking them to stop the interest rate war by setting a ceiling deposit interest rate. All the banks then agreed to sign an agreement committing not to mobilize capital at the interest rates higher than the ceiling rate.
However, just several days after the agreement was signed, it was broken completely when banks, using different ways, raised the deposit interest rates to the levels much higher than the ceiling rate.
On March 3, 2011, the State Bank of Vietnam released a legal document, stipulating that the deposit interest rates must not be higher than 14 percent per annum. However, the document could not put things into orders. Banks continued offering the interest rates of 17-18 percent, because they feared that the money would outflow to other banks, which offered more competitive interest rates.
Tran Bac Ha, Chair of the Bank for Investment and Development of Vietnam BIDV, said: ?The business ethics of banks have been eroded for a long time.?
At first, state owned bank did not dare to pay the interest rates higher than 14 percent, but they could not follow the central bank?s instructions any more, when they saw thousands of billions of dong left their banks for smaller banks which paid higher interest rates.
A big shareholder of the Asia Commercial Bank ACB said on September 7, that as ACB strictly followed the ceiling interest rate mechanism, offering the interest rate of 14 percent at the highest, the bank lost 5000 dong worth of deposits into the hands of other banks just within one month.
A banker told Thoi bao Kinh te Vietnam he himself instructed his officers to break the regulations on the ceiling interest rate, and told them not to declare anything to the inspectors in case they were asked about the interest rate policy. ?I know that this is a violation of the regulations, but I have to, or our bank will die,? he said.
Source: TBKTVN
Source: http://talkvietnam.com/2011/10/banks-sit-discuss-business-ethics.html
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