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On September 30, 2024, the State Bank of Vietnam (SBV) issued Circular 46/2024/TT-NHNN, introducing new regulations on USD deposit interest rates applicable to organizations and individuals at credit institutions and foreign bank branches. This circular is set to take effect on November 20, 2024, and brings notable changes to the way USD deposit interest rates are managed and applied across Vietnam’s banking sector.
Maximum USD Deposit Interest Rates Set by the SBV
One of the key provisions in Circular 46/2024 is that the USD deposit interest rates offered by credit institutions and foreign bank branches must not exceed the maximum rate determined by the SBV Governor for each specific period. This regulation applies to both organizations and individuals.
The maximum interest rate specified in this circular includes all promotional incentives, irrespective of the form in which they are offered. Whether interest is paid at the end of the deposit term or under any other method, the total interest must be converted and calculated according to the end-of-term interest payment method.
Transparency and Compliance
To ensure transparency, the circular mandates that credit institutions and foreign bank branches publicly post their USD deposit interest rates at all transaction locations within their networks. This information must also be made available on their websites, if applicable. Moreover, banks are strictly prohibited from offering any form of promotional incentives, whether in cash, interest, or otherwise, that contravenes the law. This requirement reinforces the need for compliance and prevents any potential manipulation or circumvention of interest rate limits.
Transition for Existing USD Deposit Agreements
For USD deposit interest rate agreements that were signed before the effective date of the circular, the circular allows for these agreements to continue until the end of the agreed term. However, once the term expires, and if the customer does not withdraw the deposit, the institution is required to apply the new deposit interest rates outlined in Circular 46/2024. This ensures that existing customers are transitioned smoothly into the new regulatory framework while respecting their initial agreements.
Implications for Organizations and Individuals
Organizations and individuals with USD deposits at credit institutions or foreign bank branches should be aware of these upcoming changes and review their current deposit agreements. The enforcement of a maximum interest rate, including promotional incentives, could impact the returns they receive on their deposits. Additionally, those with agreements expiring after November 20, 2024, should expect their renewed or continuing deposits to follow the new interest rate rules set forth by the SBV.
This circular aims to standardize the USD deposit interest rate system, protect depositors, and ensure the stability and transparency of the banking sector in Vietnam.
The SBV’s Circular 46/2024/TT-NHNN marks an important regulatory development for both domestic and foreign currency deposit management in Vietnam. By introducing clear guidelines on maximum USD deposit interest rates and ensuring transparency in the banking sector, the SBV seeks to maintain a balanced and legally compliant financial environment for all stakeholders.
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