The deposit of “unused cash” in commercial banks in general and in credit institutions or bank branches in particular makes the money grow more or less. It is only at the end of their tether that people have to withdraw the money prematurely because they will lose a lot of interest. From August 1, 2022, Circular No. 04/2022/TT-NHNN of June 16, 2022 relating to the application of interest rates on the early withdrawal of deposits from credit institutions, branches of foreign banks (Circular 04) replacing Circular No. 04/2011/TT-NHNN of March 10, 2011 officially enters into force and has positive effects on depositors, credit institutions and branches of foreign banks throughout the country.
Circular 04 specifically lists regulated entities including credit institutions and branches of foreign banks operating in Vietnam (hereinafter referred to as “credit institutions”), excluding strategic banks.
Circular 04 also defined customers required to withdraw advance deposits under this circular as organizations and individuals, the term “organizations” not including credit institutions.
Forms of deposits applicable to early withdrawal
Premature withdrawal of deposits occurs when a client withdraws part or all of the deposit before the due date or due date of that deposit. Circular 04 applies to the following forms of deposit:
- Time-saving deposits
- Term deposits
- Certificates of deposit, bills, Treasury bills and bonds issued by credit institutions
- Other forms of receiving term deposits according to the law on credit institutions
Regulations concerning interest rates in the event of early withdrawal of deposits
Circular 04 authorizes credit institutions and customers to enter into agreements on the early withdrawal of deposits in accordance with the regulations of the SBV. However, interest rates on early withdrawal of deposits do not exceed the maximum interest rates prescribed in Circular 02.
In the absence of agreements, credit institutions apply the following interest rates:
- If a customer withdraws the entire deposit: Apply a maximum interest rate equal to their lowest demand deposit interest rates based on customer type or currency.
- If a client withdraws part of the deposit: Regarding the part withdrawn prematurely: Apply the interest rates as 3.(a); Regarding the remaining deposit: apply the current interest rates that credit institutions apply to this deposit instead of obtaining very low interest rates for the entire deposit.