Banks want to trade gold via accounts

Commercial banks are trying to persuade the State Bank of Vietnam to allow them to make payments for gold trading in the domestic market via accounts instead of paying in cash and real gold as at present.
Gold trading has become one of the most lucrative businesses, which explains why more and more commercial banks are getting involved in this kind of business.

Banks now want to make payments for trading deals through accounts instead of cash, and trade virtual gold (gold on account) instead of real gold. The banks say this will help prevent risks for both sellers and buyers, while the State can control the money flow on the gold market.

Currently, gold trading deals all are being carried out in material gold and payments are not made through banks; therefore, no management authorities can control the trading volume. Gold traders may take unfair advantage of the loopholes in the law to evade tax, while the profit from gold trading proves to be very big.

Moreover, transactions with actual gold prove to be inconvenient for both sellers and buyers, and can lead to risks during the transportation process.

The Saigon Jewellery Company (SJC) has been allowed by the central bank to trade gold with foreign partners through offshore accounts. However, in Vietnam, SJC, which has its head office just several tens of metres from Vietcombank, cannot make payments through accounts when dealing with clients.

“It is illogical that gold is considered a kind of currency, but transactions via accounts are not allowed,” an official said.

SJC said that the company might apply to open transaction accounts at two banks, ACB and Eximbank, which will serve the company’s gold trading. However, one of the two banks said that it had not got permission from the central bank to accept SJC’s account.

Commercial banks insist that paying through accounts will benefit both banks and State management authorities. This will provide a tool which can ensure safety in trading deals, while the central bank can easily control the money flow.

However, financiers have warned that private gold trading companies may protest the plan to make payments via accounts. If the scheme on making payments via accounts is applied, the companies will have no way to evade tax.

Source: VNE