Banks and other credit institutions will be banned from making loans for the purposes of financing gold purchases, except when they are permitted by the State Bank of Vietnam (SBV), according to the SBV Circular No. 33/2011/TT-NHNN of October 8, amending a number of articles of Circular No. 13/2010/TT-NHNN of May 20, 2010, and the Regulation on Lending of Credit Institutions promulgated together with Decision No. 1627/2001/QD-NHNN of December 31, 2001.
Exceptions to the ban include loans approved by the State Bank Governor for purchases of gold to make gold bars or jewelries, as well as to import gold pursuant to import licenses.
Under the new circular, banks must assure collateral against such loans at a risk ratio of 250%.
Credit agreements already signed and taking effect before October 10, the effective date of this Circular, may be continously implemented, even though they are contrary to this Circular.
The Circular requires credit institutions to carefully verify capital and collateral of organizations and individuals which offer gold as security for loans, ensuring compliance with all current regulations, including SBV Directive No. 01/CT-NHNN of March 1, which asked credit institutions to formulate and implement reasonable business plans for 2011 in line with credit growth and quality improvement targets set by the Government.
The new regulation also requests credit institutions to bear full responsibility for loans to organizations and individuals to speculate in gold, as such activities contributes to disorder in the domestic gold and foreign exchange markets.