Ho Chi Minh City-based Eximbank has launched a free service to keep gold holdings for clients as interest rates on deposits of the precious metal continue to fall.

Eximbank said clients can send gold buillion to the bank from May 6, but they will not receive any interest during the period the gold stays in its vault. It is the first commercial bank in Vietnam that offers the service for free, Lao Dong newspaper reported Saturday.

In a separate move, the bank has encouraged gold depositors to switch to dong savings, offering to pay 0.15 percent higher than market price for the gold. That compares to an extra 0.35-0.4 percent at Viet A Bank.

The State Bank of Vietnam at the end of April had ordered commercial banks to stop lending gold and restrict deposits of the metal starting May 1. It said the move is aimed to reduce the use of gold as currency in the economy.

Following the order, many commercial banks have lowered their interest rates on gold deposits to as low as 0.01 percent a year. Dong deposits, on the other hand, can fetch interest rates of up to 14 percent per year.

Analysts have said as the habit of keeping savings in gold is still strong around the country, some people will not be convinced convinced to switch to the dong.

They will even accept to pay banks to look after their bullion holdings, the analysts said.

The price of gold has risen nearly 38 percent in Vietnam over the past year.