Close X Cookies are necessary for the proper functioning of By continuing your navigation on our website, you are accepting the use of cookies.
To learn more about cookies ...

India`s RBI gunning for gold imports - Capital Controls on Gold Imports!

IMG Auteur
Published : February 08th, 2013
506 words - Reading time : 1 - 2 minutes
( 1 vote, 5/5 )
Print article
  Article Comments Comment this article Rating All Articles  
Our Newsletter...

What evidence could the Indian citizens be looking at to lose confidence in their own fiat money? Maybe because the their RBI only holds a scant US$24B in gold - AND much has been swapped (traded) out which in all likelihood will NEVER be recovered. See IMF statement.

Now then, perhaps those US$ reserves are overwhelming their domestic consumption? Why not dispense with those lame dollars, add physical gold at home to their reserves, or do as the Chinese, start buying up natural resources?

In order to manage gold demand in India, the apex bank is to allow banks to buy back gold coins and impose export obligation on bulk gold importers.

Author: Shivom Seth
Posted: Thursday , 07 Feb 2013
MUMBAI (Mineweb) -

Gold prices are set to soar in India with the Reserve Bank of India limiting the value and quantum of banks’ gold imports, as a tool to rein in runway current account deficit.

India's central bank is to consider imposing value and quantity restrictions on gold imports by banks, which account for 60% of India's imports of the precious metal. Though ‘extreme conditions' would be necessary for the crackdown, the apex bank is clearly gunning for gold brought into the country.

India is the world’s biggest gold consumer. It imported 1,080 tonne last fiscal, 56% of that through banks.

A working group of the central bank has said that a combination of demand reduction and supply management steps and measures to increase monetisation of idle stocks of gold would soon be put in place.

This is expected to make gold costly, say analysts. The group has also noted the need to impose export obligations on bulk gold importers. Banks are among the chief importers.

To reduce the demand for gold imports and recycle the domestically available gold, estimated at around 18,000-20,000 tonne, banks have been allowed to buy back gold coins from the public by offering buy sell quotes.

Banks would also be allowed to use the futures markets to hedge risks in bulk gold purchases. To contain gold demand, the group recommended differential pricing of banking services and finance for gold imports.

These could include stipulation of high cash margin on opening letter of credit for the import of gold and an imposition of surcharge on interest on gold metal loans to domestic jewellery manufacturers.

The apex bank is also keen to introduce gold linked financial instruments to divert the savings of inflation wary Indians from gold bars and coins into bonds.

Though just last month, the Indian government upped customs duty to 6% on gold imports, the bank has declared that it would review import duties from time to time, in a clear signal that it wants to dissuade gold imports further.

Analysts have termed the proposed restrictions a desperate attempt by the regulator, that would merely drive up gold prices without curbing imports. They add that the underlying demand is not dependent on cost considerations and that gold imports could be diverted from banks to illegal channels.

Source: MineWeb

Companies Mentionned : Signal |
Data and Statistics for these countries : India | All
Gold and Silver Prices for these countries : India | All
<< Previous article
Rate : Average note :5 (1 vote)
>> Next article
All the stuff you don't want to know about, but should. And, when you do know, you realize that for the present you are powerless to change it This article is brought to you by the Charleston Voice E-mail List. To subscribe FREE to the distribution list, send an e-mail to the author with 'SUBSCRIBE' in the subject line.
Latest comment posted for this article
Be the first to comment
Add your comment
Top articles
World PM Newsflow
Mining Company News
Batero Gold(Au)BAT.V
Batero Gold Corp. Appoints Juan David Uribe as Chairman
CA$ 0.06+0.00%Trend Power :
Corporate news
Bellatrix ExplorationBXE.TO
Bellatrix Announces Borrowing Base Redetermination and Mutual Expiration of Shareholder Agreement with Orange Capital
CA$ 2.13-1.84%Trend Power :
Corporate news
Nemaska ExplorationNMX.V
12/1/2015 6:30:00 AM Nemaska Lithium Receives DTC Eligibility
CA$ 0.35-4.11%Trend Power :
Corporate news
Nemaska ExplorationNMX.V
Nemaska Lithium Receives DTC Eligibility
CA$ 0.35-4.11%Trend Power :
Corporate news
Tasman Metals(Zr)TSM.V
Tasman Files Annual Report on Form 20-F
CA$ 0.26-7.14%Trend Power :
Corporate news
Kangaroo ResourcesKRL.AX
Board Changes and Change of Registered Office Address
AU$ 0.00+25.00%Trend Power :
Corporate news
GBX 63.10+2.02%Trend Power :
Corporate news
Analyst Research Report
AU$ 0.12+0.00%Trend Power :
Corporate news
African QueenAQ.V
CA$ 0.02+0.00%Trend Power :
Corporate news
Mantle Mining Corp.(gems)MNM.AX
Victorian Brown Coal Resources Update
AU$ 0.02+0.00%Trend Power :
Corporate news
Comments closed