RBI mulls ban on gold-coin sales at banks to clamp import
Jul 12 2012, 08:23 | By CNBC-TV18
The sharp rise in gold imports has the Reserve Bank worried. After clamping down on gold-loan companies, the central bank is now internally debating on banning banks from selling gold coins, reports CNBC-TV18's Gopika Gopakumar.
Akshaya Tritiya may not be auspicious for banks in the future. The Reserve Bank is considering a ban on sale of gold coins by banks to partly curb rising gold imports and because the central bank believes it is not relevant to core banking operations.
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The central bank had earlier expressed its concern over the sharp rise in gold imports which led to the widening current account deficit. It had even clamped down on gold loan companies by restricting lending. The government supported this by a hike in the import duty of gold.
India imported 963 tonnes of gold in 2010 and another 878 tonnes of gold in 2011. A part of these imports was abetted by banks.Gold coins sales at banks rose 33% in 2011 to 18 tonne as against 13.5 tonne in 2010.
Banks are estimated to make a profit of Rs 150 crore at a 3% of margin from sales of gold coins. But the Reserve Bank is of the view that the sale of gold coins is not a bank's core business and hence plans to phase it out.
There is another view that the role of banks is to convert savings into investment and promote economic activity. Selling gold coins therefore is not in line with the role of banks. However no decision has been taken so far.
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