Government's efforts to curb gold import may lead to rise in smuggling, which could be nearly 30 per cent of total imports in 2013, an industry official said.
The Reserve Bank, Chidambaram said, has already "advised banks they should not sell gold coins...I hope a day will come when we regard gold as any other metal, it just shines a little more than copper or bronze."
The restrictions will, however, not apply to import of gold to meet the needs of exporters of gold jewellery.
Jewellers in India faced shortage of the yellow metal ahead of the key wedding season, keeping premiums supported at higher levels, despite meeting part of the demand through left over consignment stocks from banks.
India's gold imports are likely to exceed last year's level to around 900 tonnes in the current calendar year on higher demand. Domestic demand has increased since the prices have fallen significantly in the last one month.
"To moderate the demand for gold for domestic use, it has been decided to restrict the import of gold on consignment basis by banks, only to meet the genuine needs of exporters of gold jewellery," the RBI said in a statement.
A 138 percent jump in gold imports in April heightened worries about India's current account deficit, offsetting any comfort policymakers took from slowing inflation and limiting space for monetary easing to help revive a moribund economy.
India is looking at "some other" steps to curb gold import which has led to widening of the Current Account Deficit (CAD), Finance Minister P Chidambaram has said.