More curbs on gold imports

OUR SPECIAL CORRESPONDENT

Mumbai, June 4: The Reserve Bank today extended the restrictions on the import of gold to nominated agencies to curb the domestic demand for the yellow metal. Last month, the RBI had decided to restrict gold imports by banks and ruled that the lenders could import the bullion only to meet the genuine needs of jewellery exporters. In a circular issued today, the RBI noted that it was extending the provisions (of the circular issued in May) to all nominated agencies/premier/star trading houses. "Accordingly, any import of gold on consignment basis by both nominated agencies and banks shall now be permissible only to meet the needs of exporters of gold jewellery," the apex bank said, adding the restrictions are applicable with immediate effect. The RBI said all letters of credit (LoC) issued by nominated banks and agencies to import gold under all categories would have to be on a 100 per cent cash margin basis. An LoC is a letter issued by one bank to another guaranteeing that a buyer would make payments to a seller or an exporter on time. Both the government and the central bank have been taking steps to curb imports. The depreciation of the rupee against the dollar leading to imports getting dearer has instilled a sense of urgency. http://www.telegraphindia.com/1130605/jsp/business/story_16971524.jsp#.Ua9EftKBlA0