Vietnam banks to stop gold deposit, lending activities this week

The State Bank of Vietnam (SBV) is expected to release a regulation to stop domestic gold deposit, lending activities this week at latest in an effort to tighten control of local gold market and ensure safety in bank operations.

The State Bank of Vietnam (SBV) is expected to release a regulation to stop domestic gold deposit, lending activities this week at latest in an effort to tighten control of local gold market and ensure safety in bank operations, a central bank’s official told VnExpress

The upcoming regulation will set a specific roadmap for local banks to suspend gold deposit/lending activities, said the Government in a meeting on April 7.

In late October last year, the SBV issued a circular to put restriction on gold deposit and lending activities of local credit institutions, asking local lenders to raise gold deposits only through issuing banknotes instead of raising gold deposits; lend gold only for jewelry production and trade purposes instead of lending for gold processing and trading bullion.

The SBV also banned local banks to convert gold value into the dong, deposit and lend the dong based on gold standard.

Earlier, the central bank announced closures of about 20 local gold exchanges and gold trading at foreign banks’ accounts, added gold import quota to local firms to meet mounting gold demand, and cooperate with local authorities to fight illegal gold import.

As of September 2010, Vietnam had 23 credit institutions that participate in gold deposit and lending activities, and the outstanding gold deposits were VND92.6trillion in the first nine months of the year. Gold holdings by the public were estimated to be about 400-500 tons at that time, said Vietnam Gold Associations.

The SBV is finishing a draft Decree on regulating local gold market which heads up to wipe off gold-trading transactions in the free market. However, the information of one way gold trading has not yet been clarified. – Stoxplus.com

Tags: gold deposit