Gold loans at 10 commercial banks in Ho Chi Minh City stood at 157,317
taels by the end of June, representing an 11 percent decrease over last
June.
Thoi bao Ngan hang (The Banking Times) reported that the
volume of gold loans may require more attempts to encourage clients to
convert gold into Vietnamese dong, which the State Bank of Vietnam would
like to see.
In principle, the central bank ordered commercial
banks to close accounts of deposit and loans on gold on June 30th, 2013.
However, it was not bankers who could make that decision. Terms of gold
loan contracts were quite long and clients often did not want to end
contracts before their maturity.
To wipe the slate clean, banks
offered to exempt charges for overdue interest payment for clients who
borrowed gold at 5 to 7 percent yearly in 7 to 10 years.
However,
banks reported that such a solution was not working out since a large
number of clients were jewellery processing firms and real estate
developers. They were supposed to pour capital into projects and ran out
of money to pay the loans.
A representative of an HCM City based
bank said that the picture might get brighter if gold prices fell. At
lower gold prices, clients would benefit from the lower values of gold
loans.
Local gold on July 31 dipped by 0.2 percent to set at a
one-month low between 36.56 – 36.68 million VND (1,724-1,730 USD) per
tael.
The loss was driven by a decline in world gold prices to
below 1,300 USD per ounce, as investors nervously awaited the end of US
Federal Reserve’s two-day policy meeting on July 31 to see if the
central bank would raise interest rates faster than expected.
Spot
gold was down 0.4 percent at 1,299.10 USD an ounce after rising to as
high as 1,312.10 USD earlier in the day. Banks quoted the US dollar
between 21,195 – 21,270 VND, up 5 to 10 VND against July 29.-VNA