Banks to stop gold loans, deposits

April 23, 2011 | 09:02

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Banks will stop lending gold from May 1 and will stop accepting gold deposits two years from that date, the State Bank of Vietnam said Thursday.

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The move is meant to tighten control over the gold market and ensure safety for banks, a central bank official said.

The SBV is drafting a decree on regulating the gold market which earlier this year sparked off public concern that gold bullion trading would be banned.

Last October the SBV issued a circular to restrict gold deposits and loans by lenders which allows banks to raise gold deposits only through issuing banknotes instead of raising gold deposits and lend gold only for jewelry production and trading and not for making or trading bullion.

It also bans banks from converting the value of gold into money for the purpose of deposits or loans.

Earlier, the central bank closed down 20 gold exchanges and gold trading at foreign banks’ accounts and increased gold import quotas to meet demand.

By last September 23 lenders had gold deposits worth VND92.6 trillion ($4.46 billion).

The Vietnam Gold Association estimated gold holdings by the public at around 400-500 tons then.

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