 "RBI tightens gold import norms")
Industry experts said the measures announced on Tuesday would dampen gold imports, which might come down by 100-120 tonnes during the current financial year.
Similar restriction had last month been imposed on banks, which are also allowed to import gold. Following the restriction on banks, there had been a choking of gold supply and a 10-fold rise in premiums charged by importers. The premium over international rates on an ounce of gold rose to around $10 from $1.25-1.75 earlier.
“It was decided the import of gold on a consignment basis by banks would be restricted to meeting the genuine needs of gold jewellery exporters. It has now been decided to extend the provisions of this circular to all nominated agencies/premier/star trading houses that have been permitted by the government to import gold,” RBI said on Tuesday.
The central bank added banks could issue letters of credit for import of gold only on a 100 per cent cash margin basis. This means the importers will have to keep the entire value of imports with banks as cash or in fixed deposits.
RBI also said all imports of gold would have to be on a Documents against Payment (DP) basis, and not a Documents against Acceptance (DA) basis. This will mean the importers will have to pay banks before taking physical delivery of gold.
However, RBI added, these restrictions would not apply on import of gold to meet the needs of gold jewellery exporters.
Kishore Narne, associate director & head (commodity & currency), Motilal Oswal Commodity Broker, said: “Panic started to set in after the gold import number for May came higher than the expected 162 tonnes. Prices started correcting after the RBI notification on import of gold on a 100 per cent cash margin basis and ‘documents against payment’ basis. The impact was a knee-jerk reaction. There will be more clarity on this over the next few trading sessions.”
World Gold Council Managing Director (India) Somasundaram PR said: “Addressing the gold demand by curbing supply may have a short-term benefit but this demand will be met from the unauthorised grey market. This will not be a positive for either the economy or for society.”
Time line on increasing duty
17 Jan-2012: import duty on gold has been fixed at 2% of the value, instead of the earlier rate of Rs 300 per 10 grams
28 Feb-2012: customs duty further increased to 4%
21 Jan. 2013: customs duty further increased to 6%
RBI steps
Bank were allowed to import gold on consignment basis only to meet the genuine needs of the exporters of gold jewellery
RBI also restricted advances against gold coins per customer weighing up to 50 gms