Raghuram Rajan says govt will review gold import policies

Reserve Bank of India (RBI) Governor Raghuram Rajan said the decision to scrap a rule mandating traders to export 20 per cent of all gold imported into the country was a "reasonable" one and the government will review its gold import policies.

The RBI held key rates steady as widely expected at its monetary policy review on Tuesday, but said it could cut interest rates by early 2015 depending on whether inflation eases further and on fiscal developments.

"The government decided that it was probably best at this point to scrap the (80:20) rule and it has been scrapped," Rajan said during a media interaction post policy.

"Of course, there are now further requests to change the duty structure that the government will review in its own good time and decide... I think the decision is reasonable and let us see how it plays out," the central bank Governor said.

Rajan also clarified that RBI's forward positions in foreign currency is "one reason" for conducting open market bond sales.

The central bank added a net US $1.79 billion of up to one-year forwards in October, lower than the US $2.6 billion added in September, according to Reuters calculations based on data from RBI's website.

(Reuters)