Vietnam likely to put curbs on gold lending/ borrowing

The State Bank of Vietnam is likely to issue new regulations this week that could restrict gold lending and borrowing at commercial banks, according to media reports.

The State Bank of Vietnam is likely to issue new regulations this week that could restrict gold lending and borrowing at commercial banks, according to media reports.

The central bank was considering restricting lending of gold and banning banks from using gold deposits to fund dong-denominated loans. Local banks are now allowed to include up to 30% of their gold deposits for making loans.

The regulation has allowed them to earn huge profits as they can attract gold deposits at low interest rates of around 1% and offer loans at not less than 12%.

Gold deposits in Vietnamese banks have reached 90 tons, equivalent to nearly US$4 billion. If banks cut back on lending and attracting gold, a portion of the deposits will find their way to the market, bringing local prices down.

The price of gold in Vietnam hit a record high of VND33.36 million per tael on October 19th.

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