Gold owners unable to earn interest

Jan 22nd at 22:05

22-01-2013 22:05:31+07:00

With banks no longer accepting deposit in gold bullion, and while gold-keeping services are being offered at high prices, gold owners now have no choice but to keep their bullion at home.

It is ironic that gold bullion owners now have to pay fees for the banks’ gold-keeping service, while they used to enjoy monthly profits from their deposits, said Phuc, a Go Vap resident who has withdrawn all of her gold from a local bank.

“I heard that the central bank has considered mobilizing gold from the public to feed the economy, so how far has this been implemented?” she sarcastically asked.

A number of other gold owners have done the same, and a huge source of gold bullion thus lays untouched at home.

“A bank says the gold-keeping fee is VND10,000 per 1/10 tael a month, but customers must pay at least VND50,000 a month,” said Lan, a District 1 gold owner who is desperately searching for a safe place to store her precious metal.

“The smaller your gold amount, the higher fee. They really do not encourage using the service. This is unreasonable,” she commented.

In March 2012, some banks even began paying interest to people using their gold-keeping services, a move intended to deal with the ban on gold deposits set to start in May.

Banks are currently prohibited from offering loans in gold bullion, or convert it into money for lending. The credit institutions thus have no reason to mobilize gold to their systems, they said.

The Vietnamese gold trading network was in mid-January narrowed down under a central bank bid for better management, and banks prefer selling and buying gold rather than keeping it for fees, a Techcombank employee in Phu Nhuan District said.

Wasting gold capital

The central bank once intended to mobilize gold from the public, but the plan has become infeasible thanks to a number of restriction and bans imposed on the metal, said Tran Thanh Hai, CEO of the Vietnam Gold Business.

In January 2012, State Bank of Vietnam Governor Nguyen Van Binh said the gold bullion mobilization plan was going to be submitted to the government for approval. Under the plan, banks would function as dealers for the central bank to buy gold bullion from the public.

But the plan remains nothing more than a blue print.

The public is holding some 300 to 500 tons of gold, according to figures from the SBV, equal to an enormous US$30 billion.