What is the maximum interest rate in case a client withdraws all of the deposit before maturity in Vietnam?

What is the maximum interest rate in case a client withdraws all of the deposit before maturity in Vietnam?

Pursuant to Article 5 of the Circular 04/2022/TT-NHNN stipulating interest rates on premature withdrawal of deposits as follows:

1. When a client withdraws all of the deposit: credit institutions shall apply a maximum interest rate equal to its lowest interest rate of demand deposits based on the type of client and/or the currency of the deposit when such client withdraws it.

2. When a client withdraws a part of the deposit:

a) Regarding the part of withdrawn deposit before maturity, credit institutions shall apply a maximum interest rate equal to its lowest interest rate of demand deposits based on the type of client and/or currency of the deposit when such client withdraws it;

b) Regarding the remaining deposit, credit institutions shall apply the interest rate equal to the interest rate applied to the deposit that the client has withdrawn a part.

Pursuant to Article 3 of the Circular 04/2022/TT-NHNN stipulating forms of deposits eligible for premature withdrawal as follows:

1. Time savings deposits

2. Time deposits.

3. Deposit certificates, bills, treasury bills, and bonds issued by credit institutions.

4. Other forms of receiving time deposits according to the Law on Credit Institutions of Vietnam.

Pursuant to Clause 1, Article 1 of Decision 1607/QD-NHNN in 2022 stipulating the maximum interest rate for demand deposits as follows:

1. The maximum interest rate applicable to demand deposits with a term of less than 1 month is 0.5%/year.

According to current regulations, in case of early withdrawal of deposit, customers will receive the highest interest rate equal to the lowest interest rate on demand deposits of the bank according to customers. and/or according to the currency deposited at the time the customer withdraws before the deposit maturity. The maximum demand interest rate is currently 0.5%. Therefore, the maximum interest rate when withdrawing deposits before maturity is 0.5%/year.

Do commercial banks have the right to decide the interest rate in their business in Vietnam?

Pursuant to Article 91 of the Law on Credit Institutions in 2010 stipulating interests and charges in business activities of credit institutions as follows:

1. Credit institutions may fix and shall publicize deposit interest rates and service charge rales applied in their business activities.

2. Credit institutions and their clients may agree on interest rates and credit extension charges to be applied to their banking operations according to law.

3. In case banking operations experience abnormal developments, in order to assure safety for the credit institutions system, the State Bank may provide a mechanism for determining charge and interest rates applicable to business activities of credit institutions.

Pursuant to Article 4 of the Law on Credit Institutions in 2010 stipulating as follows:

1. Credit institution means an enterprise conducting one, some or all banking operations. Credit institutions include banks, non-bank credit institutions, microfinance institutions and people's credit funds.

2. Bank means a type of credit institution which may conduct all banking operations under this Law. Based on their characteristics and operation objectives, banks include commercial banks, policy banks and cooperative banks.

As regulations above, commercial banks have the right to decide the interest rate in their business in Vietnam. In case banking operations experience abnormal developments, in order to assure safety for the credit institutions system, the State Bank may provide a mechanism for determining charge and interest rates applicable to business activities of credit institutions.

What are regulations on the maximum interest rate in the civil code in Vietnam?

Pursuant to Article 468 of the Civil Code in 2015 stipulating interest rates as follows:

1. The rate of interest for a loan shall be as agreed by the parties.

The rate of interest for a loan agreed by the parties may not exceed 20% per year, unless otherwise prescribed by law. According to actual conditions and at the proposal of the Government, the Standing Committee of National Assembly shall adjust the above interest and send report to the National Assembly at the latest session.

If the agreed interest exceeds the maximum interest prescribed in this Clause, the agreed interest shall become invalid.

2. Where parties agree that interest will be payable but fail to specify the interest rate, or where there is a dispute as to the interest rate, the interest rate for the duration of the loan shall equal 50% of the maximum interest prescribed in Clause 1 of this Article at the repayment time.

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