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Banks resume paying interest on gold deposits

Update: July, 26/2012 - 10:27

HCM CITY — Banks have resumed mobilising gold at an interest rate of 0.6 – 1 per cent per annum after gold owners were required to pay interest on their gold deposits at banks.

Some experts believe that banks may be selling gold to receive benefits, as the interest rate on loans for gold is much lower than that for Vietnamese dong, which is about 9 per cent per year.

Under a new regulation issued by the State Bank of Viet Nam (SBV), all commercial banks were supposed to stop providing loans in gold in May.

But the ruling will only take effect after November 25 to allow commercial banks to have more time to pay back all the gold deposits they already have.

Yet experts say some banks have been engaging in some dubious practices.

In May, when SBV announced that the deadline had been extended, many banks sharply increased the gold interest rate, from 2 per cent to 3, 4 and 4.6 per cent per year.

Then the central bank was forced to issue another announcement, asking commercial banks to stop increasing the interest rate in late June.

When the gold interest rate fell, some banks began to ask gold owners to pay interest on their gold kept at their banks and began to actively mobilise gold deposits.

Some of the banks have set a due date of November 25 to return the gold to customers, including Eastern Asia Bank (Dong A) and Asia Commercial Bank (A Chau).

Other banks do not mention a due date, including Viet Nam Asia Commercial Joint-Stock bank (Viet A). Its customers can deposit their gold into the bank before November 25.

The interest rate for gold deposits is 0.6 – 1 per cent each year, but customers have been asked to have two different papers, one for the interest rate paid to banks to keep their gold, according to SBV's regulation, and another for the higher interest rate that banks pay customers.

With these two papers, customers will receive 0.6-1 per cent interest rate per year for their gold.

An expert at SBV has said that not all banks had been given the extension by the SBV and were supposed to no longer trade in gold.

But even those banks had returned to mobilise gold at higher interest rates because they could profit from selling gold. — VNS

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