Mumbai: Contrary to speculation that the Reserve Bank may ban banks from selling gold coins, Governor D Subbarao today said there was no such proposal at present as the proportion of gold coin sale by banks was very small.
“The answer is no! because gold coins themselves are a very small proportion of the total import of gold,” Subbarao told reporters at the customary post-policy interaction, when asked if the RBI is contemplating such a ban.
“If your concern really is at the macro level about gold, gold coin is not a very big variable in that problem,” he added.
Subbarao said the RBI does not permit lending against gold if the amount raised by the borrower is to be used for speculative purposes, but cannot stop lending against gold as a segment.
“We cannot ban or restrict loans against gold beyond a certain point, because that is indeed a lifeline for millions of households who keep gold as a hedge for difficult times,” the governor explained.
Subbarao, however, pointed out that the RBI is against giving loans against raw gold or bullion.
Fearing a concentration of risks, the RBI in the recent past initiated a slew of measures against gold loan companies, including reducing their loan to value ratio at 60 percent, from a high 75 percent.
After these changes, and especially after the strong uptick in gold imports was witnessed, there has been speculation that the RBI may ban banks from selling gold coins.
According to analysts, gold does not have any intrinsic value and what is seen as a safe haven for investment in the current uncertain times, ends up hurting the current account deficit situation.
The RBI brass, led by the vocal deputy governor KC Chakrabarty, has been harping against obsession with gold and also called for a social and cultural change to reduce demand for gold.