Commercial banks over the past two months have been in a race to open savings funds to attract more depositors now that the central bank has introduced a policy restricting banks from opening new branches and offices.

Such savings funds, which are not allowed to give loans, are seen as the fastest way for banks to widen their networks. Such affiliates still are allowed to mobilize funds, issue and discount valuable papers issued by the bank, and offer money remittance and transfer services.

Techcombank on Tuesday inaugurated a savings fund in District 1 in HCMC just days after opening one at An Dong Plaza. Saigon Commercial Bank on Monday moved their headquarters to a new place and reserved the old premises for a saving fund of the bank.

Similarly, Vietnam Tin Nghia Commercial Bank in May and June opened four savings funds in HCMC. Late last month, Maritime Bank also opened its first savings fund in HCMC.

Although savings funds can not give loans, but if customers have such demands, staff at the savings fund would help them complete a borrowing document and transfer it to a transaction office with the function in the system, according to a banking expert. Therefore, savings funds can satisfy the demand of banks in mobilizing funds as well as widening their presence in big cities like HCMC.

The director of a Hanoi-based bank’s branch said that banks which had been prevented from opening more branches and transaction offices in big cities had turned to opening savings funds as a leeway. When those saving funds have enough conditions, they can be upgraded into transaction offices, he said.

An official from the central bank’s HCMC Branch admitted that some banks that are not permitted to open new transaction offices in the city could open savings funds that did not require strict conditions. Later, these banks can upgrade a savings fund into a transaction office easily.

The official said that recently, the State Bank of Vietnam had restricted widening networks of lenders as banks who have more than two branches in each city of Hanoi and HCMC could not open more while some who have less than two branches might do so at the discretion of the central bank, he added.

To open a savings fund, banks have to register with the provincial branches of the central bank where banks place the fund. In addition, banks must satisfy some criteria such as they must have been in operation for at least one year, have not been imposed administrative fines in the recent one year, and ensure a capital adequacy ratio.

The official said that a bank can open as many savings funds as they wish in one city. Experts in the banking industry said that banks rushing to open saving funds would not have bad impact if they can ensure risk management.

Rol.vn - Source: Saigon Times