Friday, June 7th 03:41 PM IST

India also restricts Gold loans via rural co-op banks

# RBI  # India gold reserves  # forex reserves  

In a notification, the RBI said while granting advance against the security of specially minted gold coins sold by banks, state/central co-operative banks should ensure that the weight of the coins does not exceed 50 grams per customer.

NEW DELHI(BullionStreet): Realising that majority of country's gold loan trade was completed through co-operative banks based in rural areas, India's central bank,the RBI has extended the restriction on advance against gold to them as well.

In a notification, the RBI said while granting advance against the security of specially minted gold coins sold by banks, state/central co-operative banks “should ensure that the weight of the coin(s) does not exceed 50 grams per customer.’’

Also, 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. Earlier, similar restrictions were imposed on commercial banks.

The RBI’s latest move comes in the backdrop of Government raising the import duty on gold to 8 per cent from 6 per cent.

The central bank has also advised banks not to sell gold coins, Finance Minister P. Chidambaram had said yesterday.

The RBI has also imposed restrictions on gold imports by banks.

Surge in gold imports has become a cause for concern for both the government as well as the RBI as it is putting pressure on the current account deficit, which is likely to be around 5 per cent of the GDP in 2012-13.

In the first two months of the current fiscal, there has been a significant spurt in gold imports as the average imports stood at 152 tonnes in April and May. The monthly average import in 2012-13 was 70 tonnes.

The increase in gold import is attributed to the slump in its prices in the international market.

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