Tuesday, June 4, 2013

RBI extends gold import restrictions to agencies

The Reserve Bank of India extended restriction on gold import on consignment basis to all nominated agencies involved in gold imports including star trading houses, besides further tightening gold import procedures. Earlier on May 13, the RBI had announced its decision to restrict gold imports 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." The RBI said in a circular issued to bank on Tuesday. 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.

The circular also states that "All Letters of Credit (LC) to be opened by Nominated Banks / Agencies for import of gold under all categories will be only on 100 per cent cash margin basis." Besides, all imports of gold will have to be on Documents against Payment (DP) basis and 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. This is the third time in the last one month that RBI has come out with new restrictions for gold import for banks. Earlier on May 27, the banking regulator had restricted banks from extending loans against gold ETFs and units of gold mutual funds.

These restrictions are in addition to the proposal made in its annual monetary policy statement on May 04, which said banks should ensure that the weight of the gold cosin does not exceed 50 grams per customer and the amount of loan to any customer against gold ornaments, gold jewellery and gold coins should be within the Board approved limit. The central bank also notified the proposal. In a separate circular on May 27 had also clarified that no advances should be granted by NBFCs for purchase of gold in any form, including primary gold, gold bullion, gold jewellery, gold coins, units of gold ExchangeTraded Funds (ETF) and units of gold Mutual Funds.

Source : Economic Times

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