The State Bank of Vietnam will issue new regulations banning banks from mobilizing and lending gold from May 2011.
The central bank will follow a 2-year roadmap to avoid shocks to the market and for banks to have time to re-structure their fund resources.
The new regulation will be effective from May 2011 and banks will then completely cease all gold mobilizing and lending operations by May 2013.
The Prime Minister has ordered the Ministry of Planning and Investment to tightly monitor licensing gold trade and severely penalize violators of foreign currency and gold trade.
According to the central bank, 22 banks have been 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 operation 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, while not allowing producing or trading in gold bars.
Once the ban is effect, it will further tighten the gold market as the Government resolution urges the central bank to gradually limit sale of gold bars in the market.