At present, many banks are seeking to raise interest rates above the fixed ceiling of 14 percent per year, and in some cases even up to 17-19 percent per year.

Governor Giau said the central bank is investigating a serious case of violation in Ho Chi Minh City and also considering the possibility of stopping its banking operations.

Giau told the press briefing that the State Bank will closely coordinate with media and law-enforcement agencies to investigate and detect violations in a timely manner.

He emphasized that banks should join efforts to prevent ‘chaos’ in the market as a result of high inflation.

According to the latest report by the State Bank of Vietnam, two banks have raised their credit rates to more than 20 percent. They are Phuong Tay Joint Stock Commercial Bank (24 percent), and Vietnam Thuong Tin Joint Stock Commercial Bank (26 percent).

Some foreign banks have even asked the State Bank to allow them to go beyond this level, arguing that they operate on a small scale and increasing credit rates will not affect the market. Regarding this, the Governor of the State Bank said there is no exception to the rule.

By May 2011, the total credit debt of the whole system rose 6.2 percent over late 2010. The rate of VND credit growth increased by 2.59 percent and that of foreign currency credit growth by 18.9 percent. The amount of net credit growth hit VND135.8 trillion.

The credit arrangement for the production sector increased by 22.2 percent, or about 3.5 times higher than the average level but that for the non-production sector declined by 1.92 percent.

The mobilization of capital increased by 1.48 percent from late 2010 to May 23, 2011, mostly from individuals instead of organizations.

The period between April 30 to May 25 saw a 2.89 percent drop in the amount of people’s deposits in foreign currency. In other words, more and more people inclined to sell hard foreign currencies to the bank and then deposit in VND. This was considered a positive signal for the economy.