VNBusinessNews – Following the government’s interest rate subsidising policy, many banks have retained an amount of lending interest as secured assets. The reason why commercial banks have to retain 20% of the clients’ interest is that the central bank now advances only 80% of the subsidised interest. In addition to credit, banks have also increased service charges for other previously unprofitable services.

According to Do Minh Toan, vice general director of Asia Commercial Bank (ACB), his bank now does not retain the 20% interest but deducts subsidised interest for clients. However, for those who are entitled to the 4% subsidised interest rate but pay loans prematurely [less than eight months], ACB will retain an amount equal to 20% of interest as secured assets until the central bank transfers the remaining 20% interest. The secured assets may be capital, savings books and others.

A representative from a bank said that the amount of interest retained by the central bank is significant. If banks wait until the central bank transfers the remaining 20% at the end of year, this will cause various difficulties for banks. Thus, retaining secured assets for clients that pay loans prior to eight months to offer loans to other borrowers is necessary for the banks.

In 2009, reduction of revenue from credit activities has forced banks to seek ways of revenue generation from other financial services, particularly service charges from retail banking products. Vietnam Bank for Foreign Trade charges fees for cash withdrawal from automated teller machines (ATMs), if cardholders use ATMs of other banks outside of Vietcombank’s system, they have to pay 3,300 dong a transaction. Meanwhile, searching balance, printing account statements and account transfers are charged 1,650 dong a transaction. All these charges will be directly deducted from the clients’ accounts.

Vietnam Bank for Agriculture and Rural Development (Agribank) charges both the transferors and receivers for money transfer or receipt using identity cards. For example, when 90 million dong is transferred, the money transferor from the northern area is charged 70,000 dong and the receiver is also charged 11,000 dong as a service charge. The fee charged for money receivers range from 11,000 dong to one million dong. According to a staff of Agribank, this is a new regulation applied since the end of 2008.

As for credit cards, clients that use cards of Eastern Asia Commercial Joint Stock Bank (EAB) to withdraw cash from other banks’ systems have to pay a charge equal to at least 3% of the total withdrawn amount for each transaction. If clients withdraw cash via EAB’s ATM system, the payable charge is 2% [at least 40,000 dong for each transaction]. Vietcombank’s credit cardholders also have to pay a similar fees when withdrawing cash outside the bank’s ATM system.

Trinh Thuong Thuc, head of Vietcombank’s credit card division, said that those charges are collected by banks outside his bank’s system and directly deducted from cardholders’ accounts. Thuc added that a part of these charges are used to compensate for expenses of investing in machines, upgrading equipment.