Pre-mature bank withdrawals to be hit with fees

Many banks said that they well understand the habit that has become the customs of most of depositors in Viet Nam that in case of pre-mature withdrawal, depositors are not paid interest but are not fined. Thus, when developing deposit products as well as settling pre-mature withdrawal, banks should apply regulations flexibly. Even newly-established banks, small-scaled banks are well aware of such customs. A staff of a bank said that banks should explain depositors regulations before they deposit money, but banks should not explain regulations after clients deposit money.

However, the Hong Kong and Shanghai Banking Corp (HSBC) said that P Co had chosen term deposit programmes, hence, the company was only allowed to withdraw money upon the deadline. When the company asked for pre-mature withdrawal, HSBC put forward two options for the company's selection, re-borrowing capital or cancelling the deposit contract, which both are entitled to high charges. HSBC said that in case of the pre-mature withdrawal, as for the deposit amount of 2.6 billion dong, the company had to pay over 200 million dong as fine, and as for the deposit amount of two billion dong, the company had to pay more than 59 million dong as fine. HSBC also advised the client to cancel the deposit contract because it takes seven to ten days to make capital borrowing procedures.

Explaining the reason why the client had to pay fees in order to be able to receive deposits in case of the pre-mature withdrawal, HSBC said that because the bank had to re-borrow capital from the interbank market. The fees were the difference between the lending interest rate and the interest rate that the P Co was entitled to.

The P Co did not agree with such settlement. After that, HSBC offered another measure. On June 25, the P Co had no way but to agree to pay the fine amount of more than 54 million dong in order to be able to receive its deposit amount of 4.6 billon dong. According to a staff from HSBC, the fine was only for the deposit amount of 2.6 billion dong. As for the deposit amount of two billion dong, HSBC flexibly allowed clients to withdraw the deposit prematurely without having to pay fee. When collecting the fine, HSBC's staff said that they were following international rules and Vietnam's laws.

An individual depositor said that when she deposited money, HSBC's staff failed to warn and explain clients about charges for premature withdrawal.

Over the last time, many clients have meet different troubles when they are not allowed to withdraw deposits prematurely. Although the central bank has put forward statutes on premature withdrawals for deposits, depositors have not yet accepted such statutes because Vietnamese depositors think that if they withdraw deposits prematurely, they will not be paid interest.

According to a banker, from 1989, the central bank regulated that depositors would not be paid interest if they withdraw deposits prematurely. In 2004, the central bank supplemented some international rules, under which in case clients negotiate with banks about premature deposit withdrawal and inform banks of it in advance, clients would be entitled to demand deposit interest rates. On the contrary, without prior negotiation and announcement about premature withdrawal, clients were required to pay fees. However, such a regulation failed to be accepted by depositors.

Commercial banks themselves were afraid of applying such statute because it is too tough, making hard to attract depositors. Thus, in 2006, the central bank revised the statute. Accordingly, instead of demand deposit interest rates, banks are allowed to decide interest rates for premature withdrawal cases if depositors have negotiated with banks and inform banks of premature withdrawal in advance. In case of no negotiation and no in-advance announcement for premature deposit withdrawal, depositors are entitled to demand deposit interest rates and are charged some fees.

However, in fact, many banks have been flexibly applying the statute. A bankers said that disputes of premature deposit withdrawal have much reduced when banks have taken different measures so that depositors understand about some cases that deposits are not allowed to be withdrawn prematurely.

Additionally, banks have designed different kinds of deposits that are allowed to be withdrawn prematurely and entitled to high interest rates. Some banks even ask depositors to sign a commitment on not withdrawing deposits prematurely or stamping on deposit books with a symbol of not withdrawing deposits prematurely. (Tuoi Tre)