RBI makes gold import norms tougher to rein in CAD

Mumbai: The Reserve Bank of India today extended the restrictions on gold import to other agencies in addition to banks, a move aimed at curtailing demand for the precious metal for domestic use amid widening current account deficit.

“It has now been decided to extend the provisions (of May 13 circular) to all nominated agencies/ premier / star trading houses…accordingly, any import of gold on consignment basis by both nominated agencies and banks shall now be permissible only to meet the needs of exporters of gold jewellery,” the RBI said, adding the restrictions are applicable with immediate effect.[caption id=“attachment_841631” align=“alignleft” width=“380”] Gold norms. AP[/caption]

On 13 May, such restrictions were put on banks.

RBI also said all Letters of Credit (LC) to be opened by nominated banks and agencies for import of gold “under all categories will be only on 100 percent cash margin basis”.

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Further, it said, all imports of gold will necessarily have to be on “Documents against Payment (DP)” basis as the imports on “Documents against Acceptance (DA)” will not be permitted.

The restrictions will, however, not apply to import of gold to meet the needs of exporters of gold jewellery.

The government and RBI have been taking steps to reduce gold import. High import has widened the CAD, with such deficit hitting a record high of 6.7 per cent of GDP in the third quarter of 2012-13.

The import of the yellow metal during the first two months of the current fiscal are estimated at USD 15 billion. Gold imports by India, the world’s largest consumer, stood at 860 tonnes in 2012.

On Monday, the Financial Stability Development Council (FSDC), chaired by Finance Minister P Chidambaram, had discussed the issue of high import of gold.

PTI