Vietnam banks to stop lending gold from May 1

Vietnam banks will stop lending gold from May 1 this year, the online newspaper Thoi Bao Kinh Te Sai Gon Online reported after the meeting between the State Bank of Vietnam (SBV) and local commercial banks on April 21.

Meanwhile, local lenders will be given a roadmap of 2 years to stop attracting gold deposits by May 1 2013 as it takes time for them to collect loans and raising gold deposits is to ensure gold liquidity, a banker said.

Commercial banks were requested to propose their specific plans for the roadmap to the central bank, the local media reported, noting that the new regulation will head up to refuse gold as a means of payment in the economy.

Local media noted that the meeting didn’t mention any restriction on gold-trading transactions in the black market.

An official regulation on stop gold and lending activities at commercial banks will be released next week, the online newspaper reported.

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.

Gold funds that have been converted into the dong earlier must be reduced gradually and settled no later than June 30, 2011 while gold deposit and lending transactions made before October 29, the circular’s effective date, are not subject to be recalled, it noted. – Stoxplus.com

Tags: vietnam gold, Vietnam gold market, Vietnam gold prices