NEW DELHI(BullionStreet): Indian central bank's recommendations to allow people to sell gold coins to banks is a right step towards cutting gold imports, analysts said.

The move will allow people to approach a responsible buyer rather than going to any private dealer and also enable them to get maximum prices for their gold.

Further, the group said banks could be allowed to use the futures markets to hedge risks in bulk gold purchases.

Banks can also benefit as the move helped them to better manage the cost-structures and will also help them to improve revenue by reselling the coins.

A panel constituted by the Reserve Bank of India to suggest measures to manage gold demand recommended that banks be allowed to buy back gold coins, which is not permitted now.

The move would improve liquidity of the commodity and as gold is seen as a form of investment, the customers should also have a facility to offload when needed, analysts said.

Indian banks used to sell huge quantities of gold coins every year and they expect the same with buying if allowed.

The RBI panel is of the opinion that buyback of coins might help recycle the domestically available gold which is estimated at 18,000-20,000 tonnes.

To contain gold demand, the group recommended differential pricing of banking services and finance for gold imports.