On 29 April 2011, the State Bank of Vietnam (SBV) issued Circular No. 11/2011/TT-NHNN (Circular 11) to terminate gold mobilisation and lending by credit institutions, including branches of foreign banks.
Circular 11 was released in an effort made by the Vietnamese Government to curb dollarisation and gold speculation in the economy, stabilise the foreign exchange and gold market and minimise using gold as a means of payment.
The key points of Circular 11 are presented below:
- Credit institutions are not allowed (i) to extend gold loans to clients and other credit institutions (any drawdown to be made under the signed gold loan contracts is also not allowed); (ii) to deposit gold at other credit institutions; and (iii) to provide trust services, to invest, or otherwise to provide credit in any form, in gold;
- Credit institutions are prohibited from mobilising gold, except for issuing short-term gold-denominated certificates in order to make gold repayment at the request of clients in cases where the amounts of gold loan collection and gold inventory are not sufficient to pay. However, the issuance of these certificates by credit institutions is only permitted until 1 May 2012; and
- Credit institutions are not allowed to convert their previously mobilised gold resources into VND and other forms of cash. The amount of those mobilised gold resources which have already been converted into cash must be closed out by 30 June 2011 at the latest.
Circular 11 took effect as of 1 May 2011 and replaced Circular No.22/2010/TT-NHNN dated 29 October 2010 of the Governor of the SBV regulating mobilisation and lending in gold by credit institutions.