RBI puts curbs on RRBs lending against gold coins, ETFs
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RBI puts curbs on RRBs lending against gold coins, ETFs

Last Updated: Tuesday, June 25, 2013, 19:14
 
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RBI puts curbs on RRBs lending against gold coins, ETFs
Mumbai: The Reserve Bank Tuesday tightened norms for lending against gold coins as well as units of gold ETFs and mutual funds by Regional Rural Banks (RRBs) with an aim to curb demand for the precious metal.

"...It is advised that while granting advance against the security of specially minted gold coins sold by banks, RRBs should ensure that the weight of the coin(s) does not exceed 50 grams per customer...," a RBI notification said.

Earlier, the RBI had imposed similar restrictions on commercial banks and NBFCs.

RBI also asked RRBs that the amount of loan to any customer against gold ornaments, gold jewellery and gold coins (weighing up to 50 grams) should be within the Board approved limit.

In monetary policy statement of May, RBI had pointed there is a risk that some of these coins would be weighing much more, thereby circumventing the guidelines regarding restriction on grant of advance against gold bullion

The notification has been been issued in this backdrop.

The central bank further said that banks cannot give advances against gold Exchange Traded Funds (ETFs) and units of gold Mutual Funds.

RRBs are currently permitted to grant advances against gold ornaments and jewellery and specially minted gold coins.

RBI has also put restrictions on banks on gold imports, which has led to forex outflow and widening of the current account deficit (CAD).

Government too has taken steps like raising customs duty to 8 percent to curb gold imports.

CAD, which adversely affects rupee value, is likely to around 5 percent of the GDP in 2012-13.

Gold and silver imports rose nearly 90 percent to USD 8.4 billion in May. Cumulatively, in April-May the import of precious metal stood at USD 15.88 billion.

PTI


First Published: Tuesday, June 25, 2013, 19:14


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