Gem & jewellery body pleads against gold curbs

With the RBI and government curbing gold imports, the mutual fund and jewelry industry have taken a hit. Reliance capital has pulled the plug on its gold products. The jewelry industry is asking the government for safeguards. Reports CNBC-TV18’ Manasvi Ghelani and Farah Bookwala.

Also read: Reliance Capital suspends gold sales Anil Ambani's Reliance Capital has become the first casualty of the RBI and the government's fight against a widening current account deficit by targeting gold. Its asset management arm, which holds a little over Rs 2,200 crore in assets under management under its gold saving scheme, has suspended the product. It has also suspended the sale of gold in physical form, and gold financing and will fall back on traditional products to make up the shortfall. Sam Ghosh, CEO, Reliance Capital said, “we have large number of businesses and we know that we can grow - AMC and insurance business. They have many funds as well as on our lending side we have many other businesses that will generate economic activity. We have SME financing, so we will push growth is those areas and slow down or stop business of gold distribution and lending.” However, it's not just the financial markets. The jewellery business, which is also taking a significant hit, is crying for help. The All India Gems and Jewellery Trade Federation is asking that the government many things. 1. Allow licensed jewellers to operate gold deposit schemes whereby gold sources from customers can be deposited in scheduled banks. 2. Permit ETFs to loan their idle gold stocks to the sector in the same way. 3. Stop the import of raw bullion by star trading houses, HNI’s and institutions. Nitin Kadam, Regional Chairman of Mumbai Jewellers Trade Federation said that we should restrict to whatever is the requirement for jewellery. “We should not invest in gold coin and bullion. They can invest in gold bonds but not physical gold,” he added. When the body meets government officials on June 27, it will also push for the government to reverse its ban on letting small jewellers avail of gold loans on 25 percent margin requirement, with a 180-day payment cycle. The federation argues that with gold accounting for nearly 75 percent of the retail jewellery business. These measures will be essential if the sector is to have any chance of survival.