Vietnam banks to stop gold deposit, gold lending

Vietnam banks will stop gold lending starting this May 1 and will stop gold deposit activities starting May 1, 2013, announced the State Bank of Vietnam yesterday.
The move of the State Bank of Vietnam (SBV) is considered its latest effort in tightening control of local gold market and ensuring safety in bank operations, a central bank’s official said.
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.
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 and lend gold only for jewelry production and trade purposes instead of lending for gold bullion processing and trading.
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 then, said Vietnam Gold Association.

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