Credit institutions to stop mobilizing and lending gold

The State Bank of Vietnam issued a circular on April 29, banning the mobilization and lending of gold by credit institutions.

Credit institutions will henceforth stop gold asset transactions and lending of gold.  

Credit institutions will also not be allowed to mobilize gold, except issuing short-term certificates for gold deposits when they do not have sufficient gold amounts to make payments to customers.

Credit institutions will have to cease the issuance of short-term certificates by May 1, 2012.

According to the central bank, gold mobilization has taken place mainly in Ho Chi Minh City, which accounts for 75.85 percent of the country’s gold and Hanoi, which accounts for 11.67 percent.

At present, 22 banks are mobilizing and lending gold, with the exception of the Bank for Agriculture and Rural Development of Vietnam (Agribank).

Last October, the central bank slowly tightened the operations by only allowing gold mobilization via issuance of valuable papers instead of gold savings as done previously. Banks were permitted to lend gold for jewelry production, processing and businesses only, though not allowing production or trade of gold bars.

On the same day, the central bank decided to adjust important interest rates, including re-finance and discount rates.

The re-finance interest rates will be raised to 14 percent from the current rate of 13 percent per year and the discount interest rates will be hiked to 13 percent from 12 percent per year as of May 1.

By B. Minh - Translated by Chuong Hy

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