Hanoi (VNA) - The latest instructions from Le Minh Hung, Governor of theState Bank of Vietnam (SBV), require credit institutions and commercial banksin Vietnam to strictly comply with the SBV’s regulations on mobilising capitalin foreign currencies and not offer interest rates exceeding the ceilinglevels.

The SBV’sintention is to ensure a balance between mobilised capital and lending capital,which is a way to minimise systematic risks in providing foreign currencycredit.

Issued onSeptember 13, an official document numbered 7295/NHNN-TTGSNH from the SBVdemands credit institutions keep a close watch on foreign currency creditgrowth rates, while monitoring the ratio between credit and capitalmobilisation in foreign currencies so that an equilibrium is maintained.

Inparticular, the SBV requested their local offices and other inspectionauthorities to monitor commercial banks’ other practices to ensure thatofficial regulations on foreign currency interest rates are respected andimplemented.

Document7295 stated that any infringement of the SBV’s regulations would lead to anumber of penalties, depending on the level of violation. These range fromdenial of granting permits for opening new banking branches, representativeoffices or ATMs, to prohibition of issuing new services.

Competitionamong credit institutions by offering foreign currency interest rates exceedingthe regulated ceiling levels would also result in penalisation from the SBV.

The SBValso asked credit institutions to take the initiative in monitoring andexposing interest rate violations in foreign currency lending, mobilising andliquidating activities within their branch offices, and to implement theappropriate disciplinary actions.

On theother hand, the Governor requested that banks and other credit institutionsconduct promotional programmes to encourage borrowing, while tending to customerservices, especially businesses, to ensure productivity.

Previously,the SBV had issued Circular 06/2014/TT-NHNN and Decision 2589/QD-NHNN,requiring credit institutions to apply regulated interest rates, avoid usingtechnical methods to bypass the SBV’s control, or participating in illicitcompetition by raising interest rates above the SBV’s designated maximum rates.

At themoment, the SBV’s regulated maximum deposit interest rate for US dollar is zeropercent for both individuals and organisations.

Accordingto reports from the National Financial Supervisory Commission (NFSC), by theend of August 2017, total credit growth rate in the banking sector has reached11.5 from the start of the year, as compared to 10.2 percent in the same periodof 2016.

Creditgrowth rate for lending in foreign currencies in the first eight months of 2017is now 11.5 percent, a staggering increase of 6.7 times from the same periodlast year at 1.7 percent, while credit growth rate for loans in VND is11 percent.

Nonetheless,foreign currency credit only accounts for 8.5 of total national outstandingdebt.-VNA