HCM CITY (VNS)— A week after banks stopped accepting gold deposits the bullion market has yet to see benefits from the central bank's move.
The State Bank of Viet Nam's prohibition on gold deposits took effect on November 25 and was expected to persuade people to sell gold to banks rather than hoard it.
Now banks charge a fee for safekeeping of customers' gold.
The rationale was that customers would avoid keeping the gold if they had to pay for it, and would rather sell it off, increasing supply in the market.
But bullion sales barely increased in the last week.
Only 10 and 15 per cent of the gold withdrawn from banks was sold, a gold trading company based in HCM City's Tan Binh District said.
The price of the precious metal remained high as a result – at between VND47 and 47.15 million per tael – on November 30.
Earlier the gap between global and domestic gold prices was only VND3.2-3.3 million per tael (37.5gm), but since the banks stopped accepting gold deposits it has risen to VND3.7 million, with local prices being higher.
An analyst said this was because some banks had to buy 20 tonnes of gold bullion to return to their customers while supply was low.
The big gap in prices would continue if supply does not improve, he warned.
The banks' safekeeping services, which cost 0.01-0.05 per cent of the value, has failed to elicit interest.
Nguyen Hoang Minh, deputy director of the State Bank of Viet Nam's HCM City branch, said people have yet to get used to the new concept since for a long time they were paid interest for depositing gold.
He also revealed that only eight banks and 13 companies have registered for gold bullion trading, a tiny number considering 12,000 companies are involved in gold trading.
But analysts are optimistic that the gold market would see a distinct improvement by early 2013 when banks completely stop trading gold bars. — VNS