The State Bank of Vietnam has asked commercial banks to cease lending gold in May and stop accepting gold deposits two years from now.
Vietnam has already forbidden banks from lending gold for the production and trade of gold bars since October last year. But starting May 1 banks are not allowed to offer gold loans to jewelry makers either.
The new rule is an attempt to eliminate the role of gold as a means of payment in Vietnam, the central bank said. It noted that the government will, however, continue to recognize the right of citizens to have gold holdings.
Banks in Vietnam are offering interest rates of 0.5-1 percent a year on gold deposits. A banker said the rates would fall when banks are banned from lending gold.
The central bank is expected to issue a decree soon that further tightens control over the gold market in Vietnam.