In recent months, several commercial banks have flouted regulations by offering higher interest or bonus interest to entice depositors.

Some banks also gave depositors overnight interest of 14 per cent. These practices continued to introduce a high element of risk into the nation’s banking system, said the State Bank on October 12.

The October 12’s agreement was signed by Vietcombank, Vietinbank, Agribank, Vietnam Development Bank, Techcombank, Maritime Bank, VIB, VP Bank, PG Bank, Bao Viet Bank, GP Bank, Military Bank, Ocean Bank, SHB, Bac A Bank and Tien Phong Bank.

Their move was part of commercial bank efforts to implement Circular 30/2011/TT-NHNN issued by the State Bank of Vietnam, effective from October 1.

The State Bank regulated that non-term deposit interest rates offered by commercial banks and other credit institutions be capped at 6 per cent per year.

The cap on deposit rates for term deposits of one month or more remains unchanged at 14 per cent - or 14.5 per cent at credit unions.

About 23 representatives from commercial banks participated in the meeting in Hanoi.

However, several banks said the central bank should not apply such administrative methods in the long-term and that Circular 30 should be only considered a temporary solution until the market became stable.

VPBank, PG Bank, VIB and OceanBank complained about what they said was a significant decrease in deposits from customers.

Nguyen Thi Mai Huong, deputy general director of OceanBank, said that her bank witnessed a decline of 20 per cent in deposits in recent days.

Duong Thu Huong, general secretary of Vietnam Banking Association, said after the circular became effective, all banks slashed their non-term deposit interest rates to under 6 per cent per year, saying that although several small banks had found it hard to entice customers, the market is expected to become more healthy and transparent.

She also said that from the beginning of the year to September 12, the banking sector reached a deposit growth of 10.72 per cent and a credit growth of 8.63 per cent. She described this as an optimistic signal.

Hoang Viet Trung, deputy director of the State Bank in Hanoi, said that the central bank was classifying banks and that weak banks will receive support from the SBV.