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    Reserve Bank of India eases gold import norms

    May 22, 2014

    The Reserve Bank of India (RBI), on Wednesday, allowed star trading houses (STH) and premier trading houses (PTH) to import gold under the 20:80 scheme. This follows representations made by jewellers and bullion dealers over the last several months. In August 2003, the RBI banned import of gold through star trading houses which led to a rise in the parallel market, resulting in high premiums.

    The guidelines of RBI specifically tackle the 20:80 scheme, which were introduced to combat a huge current account deficit (CAD) last year.

     

    According to the guidelines of the scheme, importers can buy gold provided a fifth of the imported quantum is exported as finished products like jewellery. Accordingly the number of institutions which can now import gold will go up, and this will increase supply of gold which was choked as well as an easing of prices.

     

    The RBI has also permitted banks to provide gold metal loans (GML) to domestic jewellery manufacturers out of the eligible domestic import quota to the extent of GML outstanding on their books as on March 31, 2013.

     

    The very indication of the likely relaxation saw premium drop from $125 levels two weeks ago to $80 an ounce and it is expected to go down even further and could drop to $20 an ounce level.’

     

    According to Suresh Jain, Director, India Bullion & Jewellers Association (IBJA) gold price could reach Rs.26,000 per 10 gram level soon and would remain flat.  (KH/SI)

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