The Reserve Bank of India has asked banks in the country to restrict financing of purchases of gold in the form of bullion, jewellery and coins or units of exchange traded funds, in the latest of the measure to restrict gold imports to counter ballooning fiscal deficit.
Kumar Jain, vice-chairman of Mumbai Jewellers Association, which groups 15,000 jewellers said that the restriction won’t impact gold trade as only 1 per cent of traders used to depend on this form of financing.
Industry officials said traders hypothecate the gold stocks with the banks to finance their working capital requirements. Gold imports into India rose 9 per cent to 223 tonne in the September quarter, after a decline of more than 50 per cent in the first half to June as doubling of import duty and record high prices dented sales.
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