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State Bank to halt all gold lending

Update: June, 27/2012 - 10:18

HA NOI — The State Bank of Viet Nam on Monday issued a directive requiring credit institutions to comply with a deadline to halt mobilisation and lending in gold from November.

Accordingly, institutions will issue only short-term gold certificates to pay customers upon request, termination of which falls on November 25.

Before issuance, institutions must report to the State Bank clarifying need and purpose and drawing up effective roadmaps to meet the deadline.

The State Bank said it would strictly monitor the market to ensure compliance.

It expects the new regulation to help prevent gold speculation, which is popular throughout the country. Strict control over gold transactions is considered as part of efforts to stabilise the economy.

Currently, banks often mobilise capital in gold from the public to sell for dong to settle liquidity problems. The gold price is currently stable at VND41-42 million (US$1,950-2,000) per tael (1.2 ounces).

The State Bank said the new regulation would not have any impact on most people in the countryside who seldom had savings in the precious metal and little demand to trade in it. According to SBV statistics, gold mobilisation is highest in HCM City, accounting for nearly 76 per cent of the national total, with Ha Noi a distant 11.7 per cent and 31 other localities making up the remainder. — VNS

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