The Reserve Bank of India (RBI) has extended the restrictions on import of gold on consignment basis by banks to all nominated agencies and trading houses. Such imports will now be restricted to meeting exporters' need for gold jewellery.
RBI had, in a circular issued on 13 May, restricted import of gold on consignment basis by banks, only to meet the genuine needs of the exporters of gold jewellery.
''It has now been decided to extend the provisions of this circular to all nominated agencies/ premier / star trading houses who have been permitted by Government of India to import gold. Accordingly, any import of gold on consignment basis by both nominated agencies and banks shall now be permissible only to meet the needs of exporters of gold jewellery,'' RBI said in a circular issued today.
All letters of credit by the agencies for import of gold will be only on 100 per cent cash margin basis, RBI said, adding that all imports will necessarily have to be on "documents against payment" basis, and not on "documents against acceptance" basis.
Accordingly, gold imports on documents against acceptance (DA) basis will not be permitted. These restrictions will, however, not apply to import of gold to meet the needs of exporters of gold jewellery.
The above instructions will come into force with immediate effect, the RBI statement added.
The measures by the RBI and the government to curb gold imports, however, did not help to discourage physical gold buying by private investors to any great extend. While investments in gold have slowed, there are still more buyers for gold than sellers, showing a net demand for the precious metal.