Clients at HDBank's Hoan Kiem office in Ha Noi. Some commercial banks have increased interest rates on dong deposits between 0.2 per cent and 0.8 per cent per year to meet rising capital demands toward the end of the lunar year. — VNA/VNS Photo Tran Viet

The increase in interest rates was between 0.2 per cent and 0.8 per cent per year.

LienVietPostBank, on the first days of 2016, announced a 0.2 per cent rise in the rate for short-term deposits, lifting a monthly deposit to 4.4 per cent per year. The rate for 3-month deposits has also been adjusted up to 4.8 per cent.

Previously, Sacombank also inched up the rate for deposits between three months and five months ranging from between 0.1 per cent and 0.2 per cent, to 7.5 per cent.

BIDV also increased the rates for monthly deposits by 0.5 per cent to 0.8 per cent, from 4 per cent to 4.8 per cent per year, two-month deposits from 4.3 per cent to 5 per cent, and 3-month deposits from 4.7 per cent to 5.2 per cent.

Besides, some banks have also offered promotional programmes to attract depositors.

VIB, for example, offered a bonus rate of 2 per cent per year for half-yearly deposits worth more than VND100 million (US$4,360), lifting the rate to 7.5 per cent.

Commercial banks expected that the rise would help them attract more deposits to balance their capital source and meet lending demands in the year-end.

Besides deposits, banks also have to increase their borrowings from each other to meet the demands, statistics from the State Bank of Viet Nam (SBV) revealed.

In the last week of December 2015, total transaction turnover in the inter-bank market reached VND162.278 trillion ($7.1 billion), up VND33.275 trillion ($1.45 billion) against the previous week. Most of the transactions were overnight and for a one week term.

According to experts, capital mobilisation at banks last year was busier than previous years as the credit of the entire banking system has increased to its highest level since 2012, causing a temporary shortage of liquidity in some banks. Credit in 2015 surged 18 per cent, compared with 12 per cent in 2011, 10.9 per cent in 2012, 12.51 per cent in 2013, and 14.16 per cent in 2014.

The central bank in 2016 is also targeting a credit growth rate of 20 per cent, and SBV Governor Nguyen Van Binh said the central bank would find it difficult to further drop interest rates as demand for funds would stay high, and the SBV needed to balance its efforts to keep the foreign exchange rate stable.

To guarantee credit expansion, mobilisation needs to grow parallel while banks have to allocate resources to buy government bonds, thus putting pressure on interest rates.

However, Binh said that the SBV would act to keep interest rates stable like in 2015 and strive to lower interest rates of medium and long term deposits by an additional 0.3 to 0.5 percentage points. — VNS