What is the maximum interest rate of deposits at banks in 2024 in Vietnam?

What is the maximum interest rate of deposits at banks in 2024 in Vietnam?

Pursuant to Article 1 of the Decision 1124/QD-NHNN in 2023 stipulating maximum interest rates of deposits in Vietnam Dong (VND) of organizations and individuals at credit institutions and foreign banks branches:

Maximum interest rates of deposits in Vietnam Dong (VND) of organizations (except credit institutions and foreign bank branches) and individuals at credit institutions and foreign banks branches according to Circular No. 07/2014/TT-NHNN dated March 17, 2014 are as follows:

1. The maximum interest rate of demand deposits and deposits with a term less than 1 month is 0,5%/year.

2. The maximum interest rate of deposits with a term from 1 month to less than 6 months is 4,75%/year. Particularly, people's credit funds and microfinance institutions shall apply the maximum interest rate of 5,25%/year with respect to deposits with a term from 1 month to less than 6 months.

As regulations above, the current maximum interest rate of deposits at banks is as follows:

[1] The maximum interest rate of demand deposits and deposits with a term less than 1 month is 0,5%/year.

[2] The maximum interest rate of deposits with a term from 1 month to less than 6 months is 4,75%/year. Particularly, people's credit funds and microfinance institutions shall apply the maximum interest rate of 5,25%/year with respect to deposits with a term from 1 month to less than 6 months.

What is the maximum interest rate of deposits at banks in 2024 in Vietnam? - image from internet

How to calculate interest rate of deposits at banks in Vietnam?

Pursuant to Article 5 of the Circular 14/2017/TT-NHNN stipulating transparency of interest rate, when calculating interest rate of deposits at banks, following factors shall be considered:

- Interest duration is determined as follows: The interest duration is determined from the day following the day of disbursement of the loan or the day following the day of receipt of the deposit until the end of the last day of full payment for the deposit and loan (deleting the first day, including the last day of the interest duration) and the time to determine the balance for interest calculation is at the beginning of any day within the interest duration.

- Actual balance is the deposit balance, the due principal balance, the overdue principal balance and the actual balance of interest of late payment which is payable by the deposit recipient or borrower to the depositor or the creditor at the beginning of the day. It is used in calculation of interest according to the agreement and the law on receipt of deposits and credit extensions.

- Number of days allowed for maintaining actual balance is the number of days in which the actual balance at the beginning of the day remains unchanged.

- Stated interest rate is expressed in % per year

Interest calculation formula:

[1] The interest in one day is determined as follows:

Daily interest = Actual balance x Interest rate / 365

Interest in interest period equals (=) total daily interest of all days in the interest period

[2] The interest for more than one day is determined as follows:

Interest = Actual balance x number of days maintaining actual balance x Interest rate / 365

Where:

- Actual balance: The amount of money that the customer deposits into the bank.

- Interest rate: The interest rate (in % per year) applied by the bank at the time of opening the savings account.

- Number of days maintaining actual balance: The actual number of days the customer keeps the savings account, which varies depending on the month of opening. For example, January has 31 days, February has 28 days, and April has 30 days.

Note: This formula only applies to simple interest cases, where the interest is calculated only on the principal amount.

How to determine the time for interest rate conversion in Vietnam?

Pursuant to Clause 1 Article 4 of the Circular 14/2017/TT-NHNN stipulating interest calculating principles:

Interest rate is expressed by % per year (annual interest rate), a year means 365 days.

The period of time used to convert interest rate by % per month, % per week, % per hour into interest rate by % per day, convert interest rate by % per day into interest rate by % per year and vice verse is calculated as follows:

- A year means 365 days;

- A month means 30 days;

- A week means 7 days;

- A day means 24 hours.

Regarding deposits or loans with a term of one day or more:

The credit institution may negotiate with the client on the interest duration and the date of determination of the balance for the calculation of interest by employing either of the following 2 methods:

- The interest duration is determined from the day following the day of disbursement of the loan or the day following the day of receipt of the deposit until the end of the last day of full payment for the deposit and loan (deleting the first day, including the last day of the interest duration) and the time to determine the balance for interest calculation is at the beginning of any day within the interest duration.

- The interest duration is determined from the day following the date of disbursement of the credit extension or the day following the date of receipt of the deposit until the end of the day immediately preceding the date of full payment for the deposit and credit extension (including the first day, omitting the last day of the interest duration) and the time to determine the balance for interest calculation is at the end of any day within the interest duration.

Best regards!