Gold trading institutions are not allowed to offer gold deposits, and these illegal businesses can be inspected and penalized, according to chief officials from the State Bank of Vietnam.

The gold market is currently managed by the SBV’s Decree No.24, which regulates the gold trading activities of both banks and gold businesses, an official, who preferred to remain anonymous, said.

There is a very important clause in the decree, which stipulates that all activities other than trading gold by the businesses should be licensed by the central bank and the government, in order not to negatively affect the market.

Hence, gold businesses cannot launch programs to accept gold deposits from customers without permission from the central bank, the official concluded.

Some gold businesses have offered to pay customers interest of up to 2 percent a year for the latter’s gold deposit at these entities, after all banks were banned from accepting gold deposits and offering gold-keeping services as of June 30.

However, as their gold mobilization attracted media attention, such companies, fearing intervention by the central bank, said they were temporarily closing the services to wait for further directives from superiors.

More caution

Many experts have warned that depositing the yellow metal at gold businesses is a risky move, as it is likely that depositors will lose the gold in case the borrowers go bankrupt and are financially unable to pay them back.

“Gold holders may be convinced by the 2 percent per year interest rate, but they should bear in mind that profits are accompanied by risks,” warned Associate Professor and Doctor Tran Hoang Ngan, vice rector of the Ho Chi Minh City University of Economics.

Trinh Van Tuan, chairman of Orient Commercial Bank (OCB) board of directors, said depositing gold at gold businesses is a different story from creating a gold savings account at a bank.

“Banks are under close management by the central bank, while they also have much stronger financial muscle compared to gold businesses,” he said.

Meanwhile, Tran Thanh Hai, general director of the Vietnam Gold Business, said depositors and the gold businesses may end up with their transactions in court in case of disputes.

“Then, depositors will have to undergo a very complicated procedure in order to get their gold back,” he warned.