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Worried over surge in gold imports, Finance Minister P Chidambaram today said RBI has already advised banks against selling gold coins and banks on their part should dissuade customers from buying the metal.
The Finance Minister's caution comes a day after the government raised import duty on gold to 8 per cent from 6 per cent.
This was in the backdrop of average monthly gold import more than doubling to 152 tonnes in the first two months of the current fiscal, putting further pressure on the current account deficit (CAD).
On the price front, Chidambaram hoped that the forthcoming rabi crop would ease pressure on food inflation.
He also urged banks to pass on the benefits of RBI rate cut to retail and commercial borrowers to help boost growth.
"I think the RBI has advised banks they should not sell gold coins ... Banks have a role to play in dampening the enthusiasm for gold.
"I would urge all banks to advise their branches that they should not encourage their customers to invest in or buy gold," Chidambaram said while addressing the AGM of the Indian Banks' Association (IBA).
He said gold imports at 142 tonnes in April and 162 tonnes in May, as against monthly average of 70 tonnes during 2012-13, is not sustainable.
"How do we sustain? How can we finance these gold imports?" he asked, while hoping that "a day will come when we regard gold as any other metal, it just shines a little more than copper or bronze".
He further said that gold import, which is mainly responsible for rising CAD, rose sharply after the fall in prices in the international market.
"With the sharp drop in gold prices, millions were happy. I am afraid I was not among the millions. I told the (RBI) Governor that the drop in gold prices internationally is a bad news for India. Our fears came true," Chidambaram said.
