RBI allows five private banks to import gold

The Reserve Bank of India ( RBI) has allowed five private sector banks to import gold, which is expected to ease the strict restrictions on the entry of the yellow metal. According to industry sources, RBI has allowed gold imports by HDFC Bank, Yes Bank, Axis Bank, Kotak Mahindra Bank and IndusInd Bank.

Apart from the high customs duty, it was the physical restrictions that had caused an acute scarcity of gold in the country and driven up prices in the domestic market. This had led to a surge in smuggling as well.

The government had enforced the 80: 20 rule in July making it mandatory to first export a fifth of all gold imports before applying for any fresh imports. While the curbs on gold imports have helped to bring down the runaway current account deficit ( CAD) and strengthen the rupee, it had also led to a sharp fall in jewellery exports.

The commerce ministry was in favour of liberalising imports of gold but the finance ministry was cautious as it did not want to see the CAD shooting up again. The government had allowed some public sector banks and three state- run trading agencies, including MMTC, that had facilitated export of gold or jewellery in the past three years to import gold.

Gold imports came down to 20 tonnes a month from a peak of around 80 tonnes earlier, which had made it the second- most expensive item on the import bill next only to crude oil.

With more banks being allowed to import gold, it will make it easier for exporters to get their shipments.

Union finance minister P. Chidambaram said earlier this month that the import duty could be revised only after final CAD numbers are out. The final CAD figures, expected to come in the first week of June, are likely to fall to less than $ 40 billion for the fiscal year ending March 31.

Courtesy: Mail Today