Vietnam banks cut gold deposits on falling demand

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Vietnam's commercial banks have reduced their gold deposits in response to a new rule that prohibits them from lending the metal to gold bar traders.

Since the passage of the new regulation, many banks have decided to stop luring long-term gold deposits,VnExpress reported Sunday.

Asia Commercial Bank, for instance, now offers interest rates of between 0.65-1.1 percent on gold deposits of between one and nine months.

Eximbank has cut its interest rates on gold deposits to as low as 0.2 percent. The longest terms offered on gold deposits at the bank are now 364 days, compared to previous terms which extended as long as 60 months.

Meanwhile, Sacombank only pays 0.01 percent interest on gold deposits.

In October, the central bank forbade banks from lending gold for the production and trade of gold bars, which are used widely in the country as savings and in real estate transactions.

Under the new rule, banks are only allowed to lend gold for the purpose of producing and trading jewelry.

Tran Trong Quoc Khanh, director of the gold center at Asia Commercial Bank, was quoted by VnExpress as saying that this new regulation has caused gold demand at commercial banks to fall sharply.As a result, the bank is looking to reduce their gold deposits.

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