From The Indian
Express, New Delhi
Monday, November 19, 2012
The Reserve Bank today directed banks not to give loans for purchase of gold in any form, including
primary gold, bullion,
and jewellery, to dissuade people from indulging in speculative activity.
"It is advised that
no advances should be granted by banks for purchase of gold in any form, including
primary gold, gold bullion,
gold jewellery, gold coins, units
of gold exchange-traded funds,
and units of gold mutual funds," the RBI said in a
No advances should be granted by banks against gold bullion to dealers or traders in gold if, in their assessment, such advances are likely to be used for purposes of financing gold purchase at auctions or speculative holding of stocks and bullion,
However, it said banks can provide
finance for genuine working
capital requirements of jewellers.
The decision was taken in view of the significant rise in imports of
gold in recent years
putting pressure on the country's current account deficit.
In the 2011-12
fiscal year, India's gold
imports stood at $60
billion and the quantum of import was 1,067 tonnes.
In the April-June quarter of the current fiscal,
however, gold imports had
contracted by 18.4 percent year-on-year to Rs 71,912 crore ($13 billion).
The Monetary Policy Statement of
April 2012 announced the constitution of a working group to study issues relating to gold imports and gold loans
by Non-Banking Financial Companies
(NBFCs) in India.
The working group submitted its draft report in August
2012, suggesting that other than working
capital finance, banks are not permitted
to finance purchase of gold in any