Banks limit gold deposit terms to curb dollarisation of economy

January 22, 2011 | 15:00

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A number of commercial banks have continued to limit deposit terms and lower interest rates for gold deposits, in a bid to restrict these types of deposits pursuant to instructions issued by the central bank.

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Eximbank, a leading bank in the gold business, has eliminated terms of 12, 18 and 60 months on gold deposits, leaving only terms of under a year at interest rates of 0.2-1 per cent annually.

Asia Commercial Bank (ACB), a pioneer in the gold business and one of the busiest gold traders in the system, has also removed terms of 12, 13, 24 and 36 months from its deposit board. The bank now only accepts deposits of gold from one to nine months, at interest rates of only 0.65-1.1 per cent per year.

"These actions are aimed at gradually restructuring capital sources and making final settlement on gold deposits," said ACB gold centre director Tran Trong Quoc Khanh. ACB wasn't worried about meeting the June deadline for settling gold deposits since gold trading accounts were already suppressed, Khanh added.

Last October, the State Bank of Vietnam ordered commercial banks to stop converting gold deposits into cash and using the funds for loans or foreign exchange trading, partly to help ease the downward pressure on the dong and reduce further dollarisation of the economy.

Under State Bank Circular No 22, gold which had been given in security for loans had to redeemed and the loans repaid no later than June 30 this year. The central bank last year also shut down gold trading floors and banned gold trading abroad.

Sai Gon Commercial Bank, Oriental Commercial Bank and HD Bank were among other banks that had earlier reduced the interest rates they offered on gold deposits from an average of 2.7 per cent to just 0.8 per cent per year.

VNS

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