The State Bank of Vietnam on April 29 issued a circular banning commercial banks from making gold loans from May 1, a move anticipated days ago.
Therefore, credit institutions cannot give loans in gold any more to customers and other credit institutions, including gold credit contracts already signed but not yet disbursed or credit contracts which have partly disbursed.
In addition, banks cannot deposit gold in other credit institutions. At this time, banks can give gold loans for purposes of making jewelries only.
In terms of gold mobilisation, banks cannot accept gold savings, but they can mobilise gold by issuing short-term certificates of deposits in gold to repay depositors if the bank’s available gold amount is not enough for payment. However, such short-term certificates in gold can only be issued between now and May 1 next year.
Under this circular, banks cannot convert mobilised gold into other currencies. For the gold amount that has been converted into dong, banks must undo it no later than June 30 this year.
Deputy Governor Nguyen Dong Tien in the regular government’s press meeting on April 29 said the central bank would strictly monitor the market to ensure compliance among banks, local media reported.
Tien said gold mobilisation was most rampant in HCM City, accounting for nearly 76 percent of the whole country’s total, while Hanoi’s gold mobilisation accounted for 11.7 percent and 31 other provinces the remainder. Tien presumed that gold speculation was more prevalent in the two biggest cities while the majority of people do not save big assets in gold and have little demand for gold trading.
Therefore, the circular banning gold mobilisation and lending operations will not make big impact on most people, especially in the countryside, he added.